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Feature Article: Legislation and Technology: The Two-Pronged Advance of Ethanol Acceptance

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Feature Article

Legislation and Technology: The Two-Pronged Advance of Ethanol Acceptance

Introduction

Ecological and strategic concerns about the use of petroleum-based fuels have again given a boost to the use of ethanol. The increased use of ethanol is an alternative that has gained the support of industry, lawmakers, and consumers. Today, major manufacturers are responding to consumer demand by introducing ethanol versions of their standard models. Daimler Chrysler now offers several of its popular vans and mini-vans in E85 ethanol editions; Ford offers flex-fuel options on several of its most sought-after vehicles, including the Ford Ranger, the Taurus sedan, and the best-selling Ford Explorer. Mazda versions of these vehicles also come with the flex fuel options.

The Renewal Fuels Association (RFA) cites some impressive statistics on ethanol use. According to the RFA, the ethanol industry currently has a production capacity of over 1.5 billion gallons per year. The expansion is underway -- 34 existing ethanol plants are undergoing expansion, eight new plants are under construction, and over 40 additional plants are scheduled to break ground. It is expected that an additional 300 million gallons of production capacity will be on line by the end of the year. The Iowa Corn Growers Association recently quoted a 1997 study that estimated that ethanol production helped boost U.S. farm income by $4.5 billion overall, creating 200,000 jobs in rural America in the process. Ethanol reduced gasoline demand by an estimated 100,000 barrels a day, which translated into approximately $2 billion saved in oil imports for the nation.

The increased use of ethanol stems from scientific and policy innovations that have made it realistic to use ethanol-based fuels at a level feasible for popular consumption. These innovations have come in the shape of carefully calibrated government support and technological improvements.

Government Support

Such government support is exemplified by legislation passed in Minnesota. In the late 1980s, Minnesota shifted its disbursement structure from an incentive for in-state sales of ethanol to a payment for in-state production of ethanol. The payment applied only to the first 15 million gallons produced. Consequently, there has been a proliferation of smaller plants, with 14 reported operational by 2001.

Moreover, the DOE's Office of Transportation Technologies has sponsored a program that has assisted the Governor's Ethanol Coalition in introducing Minnesota residents to the advantages of ethanol fuels. Among other initiatives, the Minnesota State Grant Program has made it possible to: add three E-85 refueling sites in the state, assist in financing research on a clean snowmobile, (which went on to compete in the Clean Snowmobile Challenge), create a database and issue a report defining optimal growth areas with expected profits. The program has also helped projects convert the Toyota Prius to operate on E-85 fuel, test hybrid E-85 autos for performance, emissions, and energy use, and introduces the vehicles to the public through demonstrations at popular forums.

Similar to the Minnesota program, the State of Iowa's State Grant Program has utilized DOE assistance to advance ethanol acceptance. This assistance has resulted in the installation of two E-85 public refueling facilities, in addition to sponsoring research. Research dollars have been used to issue an annual Renewable Energy Newsletter, update the Iowa Renewable Energy Resources Guide, and develop studies for the Iowa Energy Bulletin. Minnesota and Iowa provide two examples of how policy and technological advancement can combine to produce exponentially greater advances in the use of ethanol.

California provides another instance of how technological advancement and government policy are intertwined. After California ordered a phase out of MTBE by 2003, ethanol became viable on a much larger scale. This raised the profile of one of DOE's Office of Transportation Technologies' ongoing sponsored projects -- an effort at Lawrence Livermore National Laboratory (LLNL) to compare fuel cycle analyses of ethanol and alkylates used in reformulated gasolines without MTBE and conduct experimental/field studies to fill data gaps. The work complements ongoing research at LLNL funded by the State of California.

While California has traditionally been at the forefront of Alternative Fuel Vehicle usage, many other states have begun to encourage ethanol use. For instance, assisted by DOE, the Michigan State Grant Program has issued solicitations for state-sponsored ethanol projects. Among other undertakings, the State of Michigan has installed an additional E-85 public refueling site, set up a working group to investigate the development of ethanol, distributed new E-85 refueling site maps and brochures, appointed an energy crops working group, and published an energy crops discussion paper.

Technological Improvements

Researchers have also made significant technical advancements related to ethanol production. The basic issue for researchers is how to commercialize the production of ethanol from cellulosic materials. Plant biomass is composed of three primary structural polymers: cellulose, hemicellulose, and lignin. An industrial process based on biomass feedstocks would benefit from low-cost and environmentally friendly methods for lignin removal, which is the objective of a DOE Office of Transportation Technologies-sponsored study at the University of Minnesota. Having successfully completed the isolation of a single gene product (enzyme) capable of depolymerizing lignin in vitro, Dr. Simo Sarkanen's lab at the University is well positioned to focus in on the objectives of the study, which are to:

• Purify milligram quantities of a natural lignin depolymerase,
• Conduct kinetic characterization of purified lignin depolymerase (LD) to permit evaluation by industry,
• Determine partial or full-length amino acid sequence of the pure LD,
• Clone and express LD in P. pastoris, and
• Transfer the LD assay protocol to the National Renewable Energy Laboratory for NREL testing.

At least part of this increased willingness to look at ethanol stems from greater flexibility in source materials and better development techniques. This is important not only as demand for source materials increases, but also because they make the case for using ethanol all the more compelling. For instance the DOE's Office of Industrial Technologies is currently sponsoring an ongoing study in "C5 and C6 Yeast For Lactic Acid." The project is designed to add xylose fermentation capabilities to Cargill Dow's lactic acid tolerant yeast strain, which will allow the major lignocellulosic agricultural product sugars (glucose and xylose) to be converted to lactic acid and ethanol.

A similar study into biofuels research sponsored by the Office of Transportation Technologies utilizes the by-products of the corn ethanol production process. The study examines the possibility of producing high value-added products such as succinic acid, diethyl succinate, and xylitol as part of the regular ethanol manufacturing process and also evaluates the direct microbial conversion of waste fiber to ethanol.

This biofuels/bioproducts effort is part of a greater macro-effort to bolster the ecological arguments for ethanol by extracting the maximum value from the production process itself. In addition, DOE is sponsoring "Corn Stover Removal Impact Assessment," a study of the environmental impact of using Stover for ethanol production in the Corn Belt. The study utilizes existing models created by the United States Department of Agriculture to predict the effects of corn stover removal on corn-soybean operations for a variety of tilling practices in corn producing states. Building upon earlier research jointly funded by the DOE and USDA, the study will estimate the erosion effects on continuous corn operations. The information compiled will be used as the dataset for the life cycle modeling of the environmental impacts of using corn stover to make ethanol.

Technological and governmental support has been matched by shifts in the underlying economics that have made ethanol production a key profit area for many of the main producers. The Biomass Research And Development Technical Advisory Committee Recommendations, submitted to the Secretaries of the USDA and DOE, noted that in 2000, many farmers who were shareholders in an ethanol plant received almost as much in dividends as they did for their corn, per bushel. This in turn, has resulted in the mushrooming of ethanol cooperatives across the nation. There are more than a hundred of these plants in existence, most of them built within the past decade.

Looking to the Future

Going forward, the thrust of research retains an emphasis on the complementary development of the economic underpinnings of ethanol production and consumption as well as the technological feasibility. The DOE Biofuels Program recently awarded a solicitation for the Bridge to the Corn Ethanol Industry initiative, which will help connect the established corn ethanol industry and the newer technologies that produce ethanol from agricultural and forest wastes and other types of biomass. The initiative will help define the technical and economic issues in using corn stover as a primary feedstock along with cornstarch in ethanol production.

The study looks to future issues likely to be encountered as ethanol use becomes more prevalent. The overall objective is to head off a potential cost concern in domestic ethanol production by expanding the number of economical feedstocks available to U.S. ethanol refiners. The overwhelming amount of domestically produced ethanol was processed from corn kernels in 2001. The potential issue there is that the primary market for U.S. corn farmers is food, so ethanol producers are likely to find themselves in competition for raw materials with food processors. Domestic availability of ethanol will not keep up with projected demand unless additional, economical feedstocks become available to keep pace with expected demand. Agricultural residues, such as corn stover, are the most likely candidates to help meet that demand.

The timing couldn't be better. Ethanol growth is expected to proportionately outstrip that for petroleum, with a robust 1.7% compounded growth rate projected through 2020 by the U.S. DOE, though some analysts expect it to be considerably higher. The Freedonia Group, for example, projects a 10% increase in ethanol utilization through 2004, driven in large part by state mandates. For instance, if ethanol becomes the chemical of choice to replace MBTE in California, the Golden State alone will require an additional 800 million gallons in 2003.

Part of the nationwide growth trajectory is contingent on continued government support. One cannot forget that it was the extension of the federal fuel ethanol incentive through 2007 that gave the industry a huge boost in 1998. Whether such support will continue to be forthcoming in the future is impossible to determine at this point; that such support is helpful for the prosperity of ethanol seems beyond dispute; what remains open to debate is the level of the influence of such support, and consequently the impact of its potential loss.

Grassroots

More Iowa Ethanol Plants Nearing Reality
At the beginning of 2001, Iowa only had five ethanol processing facilities, one of which was farmer owned. Today, nine plants throughout the state are in various stages of development, and all will be owned in part by Iowa farmers. The following groups have ethanol plants in the planning stages or currently under construction in Iowa: Siouxland Energy and Livestock Cooperative, Quad County Corn Processors, Tall Corn Ethanol Cooperative, Midwest Grain Processors, Little Sioux Corn Processors, Northeast Iowa Grain Processors, Pine Lake Corn Processors, Amaizing Energy and Big River Resources. To get the details, go to: http://www.farmprogress.com/frmp/articleDetail/0,1494,6489+45,00.html

School Finds Alternative Energy Source Down on the Farm
In an experiment that might be unmatched anywhere in the country, researchers and technicians at Northwest Missouri State University have developed a way to burn manure from the campus farm as a cheap substitute for natural gas. A patented process packs a mixture of dry waste and sawdust into odorless green pellets, which are fed into boilers to produce heat and energy. The process is the newest element in the university's innovative alternative fuel program, which for 20 years has been using common byproducts like cardboard and wood chips to heat and cool nearly 2 million square feet of campus space. In 2000 alone, the university's use of alternative fuels saved the state of Missouri $1.2 million in natural gas costs for the campus. To read the whole story, go to: http://199.97.97.163/

Monsanto to Use "Corn Fed" Trucks
As part of its "new way of doing business," Monsanto has announced that it is purchasing 50 ethanol-fueled pick-up trucks for its fleet of company vehicles. Monsanto President Hendrik Verfaillie says the company has placed the first U.S. corporate order to General Motors for Chevrolet Silverado pick-up trucks that use ethanol-based E85 fuel, a renewable fuel made from corn. They expect to take delivery on the new trucks this year. While Monsanto's initial order of 50 trucks will account for only a small fraction of the company's 2,000 vehicles, Verfaillie says the ethanol-fueled vehicles will eventually account for the majority of Monsanto's fleet. To find out more, go to: http://www.industryclick.com/magazinearticle.asp

New Digester Design Gobbles Up Odors
Ann Wilke, a researcher at the University of Florida Dairy Research Unit, has designed a new fixed-film anaerobic digester for treatment of dairy manure that reduces odor by 90%. In Wilke's design, solid manure and liquid wastewater are separated before they enter the digester. The solids are land-applied on dairy cropland and pastures, and the liquid wastewater is passed through the digester, where it is treated with bacteria that absorb odor. In two to three days, the water comes out of the digester, ready to go through the dairy's central pivot irrigation rigs or to recycle back through the freestall flush system. In addition to nearly odor-free water, the digester also produces biogas, which could be used for space heating, heating wash water, or generating electricity. To read the whole story, go to: http://www.agweb.com/news_show_news_article.asp

Market Place

Data Sources:
OxyFuel News: Ethanol (U.S. Avg: Terminal); MTBE (Houston, TX: spot); Gasoline (Gulf Coast: spot, regular grade)
USDA-National Agricultural Statistics Service, "Agricultural Prices," "Grain Stocks"

Data Sources:
U.S. DOE-Energy Information Administration, "Petroleum Supply Monthly"
USDA-National Agricultural Statistics Service, "Agricultural Prices," "Grain Stocks"

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