Don’t Call It A Comeback: Ethanol Is Bigger Than Ever

The Carbon Green BioEnergy Refinery in Lake Odessa, Mich. Photo courtesy of Carbon Green BioEnergy

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The ethanol refinery for Carbon Green Bioenergy rises up out of the cornfields outside Lake Odessa Michigan.

The refinery was built in 2006. Mitch Miller, the CEO of the company, says a lot of refineries were popping up then.

“Five years ago, ethanol was a craze,” he says. “It was the next best thing.”

Now, not so much. Refineries aren’t being built. Politicians aren’t stopping by with platoons of reporters.

Seriously, when is the last time you heard anyone talk about ethanol?

Here’s the crazy thing though: When the ethanol hype went away, the ethanol industry got bigger than ever.

Miller leads me on a tour of the refinery, pointing out a storage bin as big as an office building. From there, the corn is broken down, starch turns into sugar, and well, the very simple version is that it’s basically like distilling moonshine. Chemically-precise, 200 proof moonshine.

Inside another massive room, there’s a dryer – just like your clothes dryer, except that it’s big enough to drive a truck through. The dryer is used to prepare the leftover corn mash for animal feed.

Miller says there’s plenty of demand to keep this massive plant busy.

“This was built as a 40 million gallon plant,” he says. “We’re running at 50 million gallons per year. So we have not reduced capacity at all.”

If you still have any doubt about how big ethanol has gotten, consider that last year, for the first time ever, more corn in this country was used to make ethanol than to make livestock feed.

“Ten years ago, we were using about eight times as much corn to feed livestock and poultry as we were to make ethanol,” says University of Missouri agricultural economist Ron Plain. “And now we’re using more corn to make ethanol. So it’s a dramatic change.”

Five years ago, the federal government projected that in 2012, ethanol production would reach 11.2 billion gallons, and it would use up 30 percent of the nation’s corn supply. The actual numbers last year were 13.9 billion gallons, and 40 percent of the corn supply.

Ethanol exceeded expectations by a long shot.

But it didn’t happen because of E-85, the blend of 85 percent ethanol and 15 percent gasoline that starred in political speeches and TV commercials. It happened because ethanol makes up about 10 percent of almost every gallon of gasoline sold in this country. You use it every time you fill up your tank.

Ethanol advocates hope the next step is a 15 percent blend, known as E-15. The EPA already approved it for use in all vehicles built after 2001.

E-15 faces some challenges though.

“I’m a pro-ethanol guy,” says Craig Hoppen, president of J&H Oil Co., a company that owns 36 filling stations in West Michigan.

But Hoppen says, he doesn’t think E-15 will make a huge dent in the market anytime soon. He says most gas station owners will put E-15 in more expensive, specialized pumps, like they do for E-85. And that will keep it from growing, like it did for E-85.

“It’s a higher number today than it was then.” Hoppen says of ethanol. “Is it a real up-and-coming business? No, no, it’s still a niche business.”

Plenty of people will be happy if ethanol stops growing. Many environmentalists say ethanol isn’t much cleaner than gasoline, when you consider what it takes to raise corn. And livestock farmers aren’t happy that corn prices have almost tripled in the past six years, which has made feed more expensive for them.

Hopes that corn stalks, or switchgrass, could replace corn as the feedstock for ethanol have mostly come up empty.

So for now, ethanol will continue to be made from corn. And maybe the biggest expansions in the industry are behind us. Then again, ethanol projections have been wrong before.

11 Replies to “Don’t Call It A Comeback: Ethanol Is Bigger Than Ever”

  1. I am disappointing that there was no talk of Cellulosic ethanol.  Switchgrass was only mentioned at the very end of this report. I was hoping that the reporter will tour Mascoma Cellulosic Ethanol Plant in Kinross, Michigan. I hope the producers will consider making another copherhence show on Cellulosic ethanol.

    Cron ethanol cannot solve our energy problem, it can be bridge at best until the next-gen biofuel plant come online.

  2. If you want to be taken seriously,  you shouldn’t throw around bogus factoids suchas we now use 40% of the corn supply to make ethanol.  You can only arrive at that fraudulent figure by ignoring all the high protein cattle feed supplement derived from the ethanol mfg process.  Beef and pork farmers use this DDGS (Dried Distillers Grains and Solubles) as a feed supplement which replaces a good deal of corn (most corn in the U.S. is grown to feed cattle and pigs).  When you consider the DDGS that is produced the NET CORN usage for ethanol is more like 26% of the total corn crop.  Still less than the fraction  going to cattle and pigs.

    When you said:  “…
    the federal government projected that in 2012, ethanol production would reach 11.2 billion gallons, and it would use up 30 percent of the nation’s corn supply.”

      …What you left out is that whenever the government publishes information on corn usage to make ethanol, they generally also point out that the coproducts of ethanol (DDGS to name one) displace a certain amount of corn in the feeding of cattle and pigs.  You somehow managed to leave that part out of their projections.  

     Please try to be more complete in your future efforts at reporting on this issue.

  3. Let’s look a little further at ethanol’s impact.

    West Texas Intermediate crude oil has as far back as anybody can remember, has always sold at a 6% to 8% PREMIUM to North Sea Brent crude (basically, the price paid for oil coming from anywhere in the World other than the U.S.).  IN  2011 WTI SOLD FOR 14% LESS THAN NORTH SEA BRENT, on average.  That’s a total price swing of 20%.  Yes, that’s what I said: TWENTY percent.

    Now how did THAT happen?  It happened because ethanol is supplying a little over 10% of our light transportation fuel needs – that’s why.  Thus, ethanol is reducing the demand for gasoline in the U.S.  The premium that WTI USED TO SELL AT relative to NSB started to shrink ‘magically’ about the time we started to produce ethanol in a significant volume (about 2005). Then, in 2011, a risk of supply shortages started to be applied by speculators to the price of oil, first because of the Arab Spring and then even more-so because of the concerns over Iran’s development of a missile deliverable nuclear weapon. This magnified the impact of ethanol as the price of oil world-wide started to be bid up by speculators.  

      So, applying a 20% reduction in the price of oil to just the oil supplied by domestic sources that means ethanol saved drivers about $40 BILLION in 2011.  

     Thank you ethanol.  

     

  4. Of course, more could be done.  We continue to use ethanol in detuned Internal Combustion Engines (ICE) – not taking advantage of ethanol’s high octane property (115 octane for 100% ethanol)  relative to gasoline (92-93 high test).  

    An engine designed by three MIT scientists, called the Ethanol enabled Direct Injection engine (EDIE) can achieve 30% BETTER fuel efficiency than a typical gasoline powered ICE, using only 5% ETHANOL – yes, that’s FIVE percent! The rest of the fuel is gasoline.  The engine can be mass produced at a marginal cost of about $1,000 to $1,500.  Thus you get fuel efficiency gains comparable to a conventional hybrid at about one FOURTH the cost! 

    see:  http://www.ethanolboost.com/

    Since the engine uses only 5% ethanol (directly injected) if all the cars on the road were equipped with this engine we could supply them all the ethanol they needed and still have 5% of the fuel supply left over to blend with the gasoline.  A 30% gain in fuel efficiency means a 23% reduction in fuel consumption. So, if all cars on the road were equipped with this engine we would achieve a 23% reduction in total gasoline consumption – plus with another 5% of the total gasoline supply displaced by ethanol through blending that would yield a 28% reduction in total gasoline consumption.  Imagine what THAT would do to gasoline prices. 

     Apparently, few people have thought of this,but perhaps it’s a little more apparent now – the price of oil is going to climb so fast – long before we get enough electric cars on the road to make much difference ( in terms of reduced gasoline consumption) –  that our economy will  be adversely affected leading to lower growth and higher unemployment.  This will put  the  adoption of electric car technology even further out into the future.

    What we need are ways of reducing our gasoline consumption in LESS THAN the 20 to 25 years that it will take (under the best of economic conditions) to get enough electric cars on the road to appreciably impact gasoline consumption.  MIT’s Ethanol Enabled Direct Injection Engine (EDIE) is the most promising approach currently available and currently being ignored. 

     The current dogma  that using any approach involving ethanol will lead to our damnation is consigning us to a much hotter and more desperate future. 

  5. http://oilprice.com/Energy/Energy-General/Ford-Looks-at-Increasing-the-Quantity-of-Ethanol-in-Fuel.html

    Click on the link above for peer reviewed data from Ford. NASCAR and racers have known the advantages of alcohol for years. It’s octane, higher compression, direct injection, turbo charging and latent heat of evaporation that only ethanol provides at a low price that can get us to the 54 MPG eventual CAFE standard. If you’ve bought into the BTU BS perpetuated by those with a vested interest read the report and get educated. Please only form your opinions from peer reviewed data such as the DOE, USDA or National Research Laboratories.

  6. http://www.freerepublic.com/focus/f-news/1704554/posts

     

    NO on Prop. 87 (An ethanol support)

    Clean Air Performance Professionals

    Charlie Peters President

    (510) 537-1796

    cappcharlie@earthlink.net

     

    Federal ethanol policy increases Government motors oil use and Big
    oil profit.

     

    It is reported that today California is using Brazil sugar cane
    ethanol at $0.16 per gal increase over using GMO corn fuel ethanol. In this
    game the cars and trucks get to pay and Big oil profits are the result that may
    be ready for change.

     

    We do NOT support AB 523 or SB 1396 unless the ethanol mandate is
    changed to voluntary ethanol in our gas.

     

    Folks that pay more at the
    pump for less from Cars, trucks, food, water & air need better, it is time.

     

    The car tax of AB 118 Nunez is just a simple Big oil welfare
    program, AAA questioned the policy and some folks still agree.

     

    AB 523 & SB 1326 are just a short put (waiver) from better
    results.
     

  7. http://www.freerepublic.com/focus/f-news/1704554/posts

     

    NO on Prop. 87 (An ethanol support)

    Clean Air Performance Professionals

    Charlie Peters President

    (510) 537-1796

    cappcharlie@earthlink.net

     

    Federal ethanol policy increases Government motors oil use and Big
    oil profit.

     

    It is reported that today California is using Brazil sugar cane
    ethanol at $0.16 per gal increase over using GMO corn fuel ethanol. In this
    game the cars and trucks get to pay and Big oil profits are the result that may
    be ready for change.

     

    We do NOT support AB 523 or SB 1396 unless the ethanol mandate is
    changed to voluntary ethanol in our gas.

     

    Folks that pay more at the
    pump for less from Cars, trucks, food, water & air need better, it is time.

     

    The car tax of AB 118 Nunez is just a simple Big oil welfare
    program, AAA questioned the policy and some folks still agree.

     

    AB 523 & SB 1326 are just a short put (waiver) from better
    results.
     

  8. Where are you going to plant all these bushels of corn to fuel your EDIE? Last I checked, corn doesn’t grow very well in the ocean! Electric cars DON’T PRODUCE ELECTRICITY they only store it. The energy still comes from the grid, which is fossel fuel heavy. Get your facts straight before commenting again PLEASE.

  9. WTI is a tougher oil to refine than Brent oil. That is why we are closing east coast refineries that are not equipped to refine WTI, and a big reason for the price difference.
    WTI is also right there where they can pipe the raw oil to the plant. Ethanol makes every car in the US less efficent by at least 3%, which is huge!

    Then other costs include;  0.47 to blend, 0.53 tariff (which ended 12/31/11) on imports and increasing grains 250%. All of the food product prices affected by the grain increase; added to the increased fuel to run your car, plus the subsidy is greater than the gain from Ethanol. Ethanol is mandated by the feds @10%, which is clear evidence it wouldn’t work in the free market at todays level. The cherry on top is that ethanol has a more harmful carbon footprint than gasoline.

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