[ausev] Ethanol UPDATE

[Dan_Lee Vogler]

3/14/2007 from "Energy Biz" Magazine 
In his State of the Union address, President Bush said America should produce
20 percent of its energy from renewable sources while corn-based ethanol and
other bio-fuels would also be used to displace some imported oil.   ( Dick
Chaney, sitting behind Bush,.. made a huge smeark on his face, at this comment
)  

Toward that end, the administration has proposed spending $2 billion on
"cellulosic" ethanol such as wood chips, municipal waste and plant stems and
another $1.6 billion on research and development. The Democratic majority in
the House would one-up the president by spending about $15 billion to double
automobile fuel efficiency, expand ethanol distribution and build more mass
transit. 
Energy independence and environmental concerns are the driving forces behind
ethanol development. It is also political, with both parties trying to win the
influential farm vote by doling out billions in tax credits. Regardless of the
motive, ethanol could alleviate oil supply crunches while diminishing carbon
dioxide emissions tied to climate change. 
The global market for bio-fuels in 2005 was about 13 billion gallons, less than
2 percent of global transportation fuel consumption. Ethanol production costs
can be as low as $1.10-$1.20 a gallon, although they are rising because of
higher corn prices. Corn ethanol may be as competitive with gasoline when crude
oil is more than $50 a barrel. 
"Commodity price risk is the most significant risk factor inherent in the
bio-fuels industry," says Ryan Katofosky with Navigant Consulting. 
Ethanol supporters say that the immediate goal is to use more fuel additives
and less gasoline. The Energy Policy Act of 2005 set out to do just that by
requiring the use of 4 billion gallons in 2006 and 7.5 billion by 2012.
Altogether, there are 112 ethanol plants in operation and another 76 under
construction, which is plenty to meet the requirements under the current law. 
Ethanol detractors, however, contend that the amount of energy it takes to
convert corn to ethanol produces less energy and more emissions than if oil is
just refined and combusted -- a claim, however, that is disputed by certain
reputable scientists. Critics also note that in 2005, 13 percent of the U.S.
corn crop was used to make ethanol, which has created shortages and pushed up
the price of every product that uses corn as a feedstock. 
For its part, the investment community is developing a greater level of comfort
with first generation bio-fuels such as ethanol from corn, says Katofsky. But,
those opportunities are limited. That's behind the push to use cellulosic
ethanol, although there is a hesitancy to put capital into those second
generation technologies until they are more established. 

Government Help 
In the interim, the government will fill the void. The U.S. Department of
Energy is supporting both cellulosic ethanol research as well as
"gasification." In the case of the latter, the byproduct is "syngas" that could
be used to make hydrogen for fuel cell-powered vehicles. 
In the case of the former and as the process matures, the government would
expect the production costs of ethanol to drop from its current $2.26 a gallon
to about $1.07 by 2012. To help get there, the Energy Department says it will
invest up to $385 million in six projects over the next four years. When fully
operational, the "bio-refineries' are expected to produce more than 130 million
gallons of cellulosic ethanol per year. 
BlueFire Ethanol is one of the benefactors, which has been awarded $40 million.
That company creates ethanol from landfill trash that, in turn, reduces methane
emissions that contribute to global warming. The plant, which is to be built in
Southern California and is expected to be operational by year-end 2009, has the
potential to be replicated at most of the 1,600 landfill sites around the
country. 
Iogen, likewise, will be awarded research dollars. The Canadian company is
partnering with Shell to build a plant near Idaho Falls that will produce 18
million gallons of ethanol annually and use such feedstock as wheat,
switchgrass and rice straw. The technology could be implemented nationally,
producing as much 32 billion gallons per year. 
"I want to start off by saying that cellulosic ethanol is a lot closer to
reality than most people realize," says Brian Foody, President, Iogen
Bio-refinery Partners, noting that he drives a flex fuel car powered by
cellulosic ethanol. "So cellulosic ethanol is well beyond being an exciting,
but unproven, technology." 
Without question, all parties along the ethanol value chain receive tax
benefits. But, the technology's future is promising. While grain-based ethanol
requires substantial amounts of fossil fuel inputs, it is still cleaner than
conventional fuels, creating 20 percent fewer greenhouse gas emissions, says
the International Energy Agency. Oil giant BP, meantime, is on record saying
that bio-fuels could provide 30 percent of the global energy demand by 2030 and
do so without harming food supplies. 
That's why the House Democrats are pushing legislation to not just encourage
ethanol production but to also motivate the development of the infrastructure
to support that growth. It would reimburse companies to equip their filling
stations to pump gasoline blended with 85 percent ethanol. Beyond that, those
members would fund research meant to double automobile fuel efficiency as well
as expedite fuel cells and plug-in hybrids. 
Ethanol is expected to pick up the pace in the coming years. Indeed, it has
earned a constituency beyond the agricultural lobby. Foreign oil dependence
along with clean air concerns has catapulted the bio fuel into the mainstream
of national energy policy. Today's technologies work. But the next generation
of fuel additives is superior, although it is too costly today. With the
backing of government, however, supporters say ethanol has the real potential
to be even better and cheaper. 

end
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://www.austinev.org/pipermail/ausev/attachments/20070314/df00736f/attachment.html