Building Better Biofuels

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• Ethanol already obsolete colinnwn on 06/06/2007 at 8:49 PM

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  I don't understand people's fascination with ethanol.  It is not an alternative energy source.  It is only an energy carrier, given how much energy it takes to create the ethanol.  It is also a satisfactory oxygenate in place of MTBE. Creating ethanol with current technology drives up the price of food as whatever you make it out of displaces food crops.  Corn is normally used, so the price of it and beef rise most. For alternative energy sources you need something that can take waste feed stocks and convert it to a useable power source with minimal additional energy input.  Here is hoping LS9, among other bioengineering firms, will be successful. Rate this comment: (Reply)

  • Re: Ethanol already obsolete Brian H on 06/16/2007 at 4:53 AM

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    Yes, ethanol is great if you've got a huge tropical sugar cane output ready to go like Brazil, otherwise fuggedaboudit.  There are initiatives already in place to extract lignin from woody tissue and ferment the cellulose at much higher value.  Ethanol is one of those products that will be recorded as a bandwagon-boondoggle.  Even the farmers should have known better. Sawgrass, anyone? Rate this comment: (Reply)

  • Re: Ethanol already obsolete Boilerman on 06/29/2007 at 3:45 PM

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    Ethanol is not the total cause for the increase in food prices as stated as proof in the following. Note: this is not the complete report with charts, however it will give you the true picture. For more information and the full report, Contact: Kristin Brekke, Communications Director kbrekke@ethanol.org / (605) 334-3381 Evidence indicates corn for ethanol not to blame for food prices Today’s USDA report shows large corn crop in the ground, ample supply for food, feed and fuel Sioux Falls, SD (June 29, 2007) – With the summer season beginning amid reports of price increases in the grocery store aisle, the American Coalition for Ethanol (ACE) urges consumers and the media to examine the role that energy prices play in food costs before joining the chorus of ethanol critics conveniently blaming higher grocery prices on corn. New research, conducted recently by economist John Urbanchuk of LECG, LLC, found that rising energy prices have twice the impact on the Consumer Price Index (CPI) for food than does the price of corn.  The full report, “The Relative Impact of Corn and Energy Prices in the Grocery Aisle,” is available at this link or on the ACE website, www.ethanol.org. The study finds that “a 33 percent increase in crude oil prices results in a 0.6 percent to 0.9 percent increase in the CPI for food, while an equivalent increase in corn prices would cause the CPI for food to increase only 0.3 percent.” This shows that increasing petroleum prices have at least twice the impact on consumer food prices as an equivalent increase in corn prices.  Consumers might pay an additional $10 for groceries due to corn prices, but at the same time they pay an additional $20 to $30 due to escalating fuel prices. “Critics of ethanol are stirring controversy where none exists, because higher food prices have more to do with $3.50 per gallon fuel than with $3.50 per bushel corn,” said Brian Jennings, ACE Executive Vice President.  “While corn prices might add $10 per year to a person’s grocery bill, skyrocketing gasoline prices are taking an additional $10 a week out of peoples’ pocketbooks.” While corn is an ingredient in only some grocery items – mainly livestock, dairy, and poultry – all grocery items are dependent upon energy for production, processing, packaging, and shipping. These non-farm costs make up the majority of the real cost of food; according to the USDA, 81 cents of every food-cost dollar pays for expenses such as labor, packaging, advertising, transportation, and energy costs. “If corn prices due to ethanol demand do indeed add a couple of cents per day to Americans’ food bills, this is a great value for creating thousands of new American jobs, breathing cleaner air, saving billions in farm program costs, and lessening our dependence upon expensive imported oil and gasoline,” Jennings said. Since January of this year, the retail price of gasoline has gone up by more than a dollar.  These record or near-record gas prices cost Americans an additional $500 a year just to fuel up their vehicles, not to mention the increased prices paid for all manner of consumer goods dependent upon transportation. “Record high oil and gasoline costs are cutting deeply into American consumers, and the only way to shake off the heavy burden of fuel costs is to find alternatives,” Jennings said.  “Ethanol is the most real, meaningful alternative fuel available today – a true bright spot in an otherwise bleak energy supply picture.  Ethanol is part of the solution, and the farmers and entrepreneurs of the U.S. ethanol industry are taking action to help America get its energy situation in order.” USDA reports largest corn crop in the ground since 1944 The U.S. ethanol industry’s brisk rate of growth has helped contribute to corn prices climbing from chronic below-two-dollar levels.  U.S. corn producers are responding to these market signals and to the higher demand for corn, reporting in this springs USDA Prospective Plantings Report their intention to plant 15 percent more acres to corn than last year, the highest level since 1944.  This morning’s USDA acreage report shows that this corn crop planting did indeed materialize, with U.S. farmers today reporting an even larger 92.9 million acres planted to corn in 2007. “Farmers base planting decisions upon market signals, and these 92 million acres planted to corn show that the supply and demand of the marketplace is functioning as intended.  There will be an ample supply of corn this year to meet all important needs – food, feed, and fuel,” Jennings said.  “Despite a clearly coordinated public relations attack by special interest groups trying to pin food price increases on the ethanol industry, the evidence doesn’t support the accusations.  Recent votes on the pending Energy Bill, HR 6, adopted by the U.S. Senate by a margin of 65 to 27, reinforce this fact.” The American Coalition for Ethanol (ACE) is the grassroots voice of the U.S. ethanol industry, a national trade association for the ethanol industry with nearly 2000 members nationwide, including farmers, ethanol producers, commodity organizations, businesses supplying goods and services to the ethanol industry, rural electric cooperatives, and individuals supportive of increased production and use of ethanol. For more information about ethanol or ACE, visit www.ethanol.org or call (605) 334-3381. The Relative Impact of Corn and Energy Prices in the Grocery Aisle By: John M. Urbanchuk     Director, LECG LLC June 14, 2007 Retail food prices measured by the Consumer Price Index (CPI) for food have begun to accelerate and are beginning to approach rates of increase last seen in mid2004. Critics of renewable fuels are blaming the recent increases on high prices for corn caused by increasing ethanol production. They fail to point out that corn prices are only one of many factors that determine the CPI for food, and in fact, directly affect a small share of retail food prices. Increases in energy prices for example exert a greater impact on food prices than does the price of corn. A 33 percent increase in crude oil prices – which translates into a $1.00 per gallon increase in the price of conventional regular gasoline – results in a 0.6 percent to 0.9 percent increase in the CPI for food while an equivalent increase in corn prices ($1.00 per bushel) would cause the CPI for food to increase only 0.3 percent. The purpose of this study is to examine and compare the impact on consumer food prices resulting from increases in petroleum and corn prices. The ethanol and corn industries are under attack by a wide range of critics for causing everything from sharply higher food prices for American consumers to shortages of and high prices for Mexican tortillas and even potentially higher tequila prices. Expansion of the ethanol industry to meet clean air standards and reduce dependence on imported petroleum has boosted demand for corn, the primary feedstock for U.S. ethanol. This increased demand has caused corn prices to rise to their highest levels since the drought of 1995. Critics contend that the recent increase in retail food prices measured by the CPI for food is the direct result of higher corn prices caused by ethanol demand and that an even larger increase in food prices is in store for American consumers. The actual record on the relationship between ethanol, corn, and retail food prices is less clear. Over the past five years, ethanol production has more than doubled, increasing from 2.14 billion gallons in 2002 to 4.86 billion gallons in 2006.    Over this same period, the demand for corn to produce ethanol has grown from 996 million bushels to 2.2 billion bushels. Over most of this period, cash market 2 corn prices were relatively stable. From January 2002 through September 2006, corn prices averaged $2.18 per bushel. However, between September 2006 and May 2007, corn prices jumped 61 percent to $3.56 per bushel in May 2007. During this same period, the CPI for food averaged a year over year increase of 2.4 percent. In fact, the inflation rate for food declined from a five year peak of 4.1 percent in May 2004 to a 2.5 percent year over year rate in September 2006. However, since September 2006 the CPI for food has accelerated to a yearoveryear rate of 3.7 percent in April 2007, an increase of 1.2 percent. During this same period, cash market corn prices increased $1.15 per bushel. While it is tempting to blame the entire increase in food price inflation over the past eight months on higher corn prices, most of the increase in food prices was the result of foods not impacted by corn such as fish, fruits and vegetables, sugar and sweeteners, and food away from home. Meat, poultry, eggs, and dairy products – the foods where corn is a major input and are most affected by rising corn prices – accounted for about 0.2 percent of the 1.2 percent acceleration in food price inflation between September 2006 and April 2007. Rising energy prices had a more significant impact on food prices than did corn. The shift in corn prices that occurred in late 2006 is 3 clearly evident and has been mirrored by soybean meal and Distiller’s grains. During this same period energy price also accelerated rapidly. For example, the national average price of conventional regular gasoline increased 89 cents per gallon (39 percent) between October 2006 and May 2007. Livestock and poultry producers are beginning to respond to higher feed costs by slowing the growth in animal numbers and market prices are reflecting these changes. However, corn prices are only one of several factors that impact livestock and meat production. Heavy cow and calf slaughter and early placement of feeder cattle in feedlots have combined with poor fall and winter pasture conditions and higher grain prices to set the stage for slower growth in cattle numbers through early 2008. This will in turn slow growth in beef production in 2008 and support higher beef prices. Growth in hog inventories are expected to be constrained by higher feed costs. However, this will be offset by growth in domestic demand supported by a stronger consumer economy and increases in exports as China turns to the U.S. to offset sharply reduced domestic pork production. Higher feed costs will dampen broiler producer’s zest to sharply expand production. However, producers will respond to higher prices for red meat and growth in real disposable income that will support demand growth. This will moderate any potential sharp increases in broiler prices in 2008. Analysis: Retail food prices are not likely to accelerate significantly in 2008 and beyond, even as ethanol production continues to expand. In fact, consumers will be more severely affected by rising gasoline and energy prices than by increases in corn prices. Increasing petroleum prices have about twice the impact on consumer food prices as equivalent increases in corn prices. A 33 percent increase in crude oil prices – the equivalent of $1.00 per gallon over current levels of retail gasoline prices – would increase retail food prices measured by the CPI for food by 0.6 to 0.9 percent. An equivalent increase in corn prices – about $1.00 per bushel over current levels – would increase consumer food prices only 0.3 percent. The reason for the larger impact on food prices from petroleum and energy prices stems from the relative importance of energy in food production, packaging, and distribution compared to that of a single ingredient. While petroleum and energy prices affect virtually all aspects of agricultural raw material transportation, processing, and distribution of all finished consumer food products, corn prices affect only a segment of consumer foods – livestock, poultry and dairy. Corn is an important feed ingredient for livestock and poultry producers and changes in corn prices can have significant impacts on profitability and production. However, meat, poultry, fish, eggs and dairy products account for only a fifth of the CPI for food which, in turn, is only 15 percent of the overall CPI. Crude oil and refined petroleum prices have increased sharply over the past several years and have put considerable pressure on consumers. Energy plays a significant role in the production of raw agricultural commodities, transportation and processing, and distribution of finished consumer food products. Several studies have looked at the impact of increased energy prices on food prices. Reed, Hanson, Elitzak and Schluter utilized three different model structures to examine the impact of a doubling of crude oil prices on the CPI for food. They conclude that the short run impact of a doubling (e.g. 100 percent increase) in crude oil prices would cause a 1.82 percent rise in average food prices in the short run and 0.27 percent in the long run. A more recent analysis published by Chinkook Lee examined the impact of energy price increases as an intermediate input for food processing and concluded that a 10 percent increase in energy prices results in a 0.2709 percent increase in the purchase (consumer) price of food and kindred products prices. As pointed out, earlier corn prices also have increased significantly over the past year as the markets have recognized the impact of increasing ethanol production on corn demand. The price of No. 2 Yellow corn at Central Illinois averaged $3.56 per bushel in May 2007, nearly 60 percent higher than year ago levels. The USDA and many private sector forecasters project ethanol production to 1 A.J. Reed, Kenneth Hanson, Howard Elitzak, and Gerald Schluter. “Changing Consumer Food Prices: A User's Guide to ERS Analyses”. USDA Economic Research Service. Technical Bulletin 1862. June 1997. Lee, Chinkook. “The Impact of Intermediate Input Price Changes on Food Prices: An Analysis of “From the Ground Up” Effects.” Journal of Agribusiness 20, 1 (Spring 2002). Exceed 15 billion gallons by 2017, utilizing more than 4 billion bushels of corn and maintaining corn prices well above $3.00 per bushel for most of the decade. We evaluated the impact of an increase in petroleum prices on consumer prices food prices by applying the impact elasticities summarized above to an assumed 33 percent increase in crude oil (the equivalent of a $1.00 increase in retail gasoline prices from current levels). To determine the impact of an increase in corn prices on livestock, poultry, dairy and consumer food prices we imposed a 33 percent increase in corn prices (about $1.00 per bushel from current levels) on the current LECG agricultural sector baseline forecast over the five year period 2007 through 2012. This is consistent with the increase in corn prices that has occurred over the past year. The analyses by Reed and Lee indicate that a 33 percent increase in oil/energy prices would increase retail food prices by 0.6 percent and 0.9 percent. Reed indicates that a 100 percent increase in crude oil prices results in a short term increase of 1.82 percent in consumer food prices while Lee reports that a 10 percent increase in energy prices provides a 0.2709 percent increase in retail food prices. Restating these on an equivalent 33 percent basis (1.82 percent times .33 and 0.2709 times 3.3) provides the 0.6 to 0.9 percent range. The equivalent 33 percent increase in corn prices over the five year period is expected to reduce beef, pork, and broiler production by 2.6 percent between 2008 and 2012 and increase prices by 2.4 percent. Combined with higher turkey, egg, and dairy prices, the CPI for food is projected to increase an additional 0.3 percent. This result is consistent with the 0.2 percent contribution to food price inflation between September 2006 and April 2007 from meat, poultry, fish and dairy and the $1.15 per bushel increase in cash market corn prices. The days of cheap corn are more likely than not over. Livestock and poultry producers who enjoyed low and relatively stable corn (and other feed) prices over most of the past decade are now faced with the challenge of adjusting to an environment of higher feed prices. The new reality is that corn prices are likely to remain nearer to the $3.00 per bushel than the $2.00 per bushel mark for an extended period. The good news is that prices may be more stable as corn production expands to meet ethanol requirements and new ethanol feed stocks and technologies emerge. Livestock and poultry producers also will have an incentive to increase use of the ethanol co-product Distiller’s grains in order to control feed costs. This medium protein feed component can be used in place of corn in a substantial portion of the feed ration. As ethanol production expands, so will production of Distiller’s grains and thus putting downward pressure on prices. Corn and energy prices both affect consumer food prices. However, since increases in corn prices are limited to a relatively small portion of the overall CPI for food, an increase in corn prices resulting from higher ethanol demand or a supply disruption such as a major drought is expected to have about half the impact of the same percentage increase in petroleum and energy prices. Rate this comment: (Reply)

• Making hydrocarbons Snake Oil Baron on 06/06/2007 at 10:27 PM

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  This sounds like interesting work so I am sure that it will quickly be dismissed as unworkable and not novel. It is too bad that a way can not be found to use electrical energy to power the making of hydrocarbons of any desired length - maybe using mechanically mounted artificial enzymes - in the far future of course. If I ever get three wishes I will use that as my second one. Rate this comment: (Reply)

• Ethanol is not obsolete fredricw5 on 11/03/2007 at 9:37 AM

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  There are several advantages to ethanol, although it probably does have a limited role in the future.  The main advantage is that it is low-tech and a fuel that farmers can produce for on-farm use or to sell.  Anhydrous ethanol is much less efficient than fuel alcohol, which is what Brazil uses.  Fuel ethanol is practical here as a summertime fuel, especially, and also as an agricultural machinery fuel.  It also have considerable potentials as a hybrid vehicle fuel, and as a cogenerator fuel for homes to use to generate electricity to sell to utility companies at peak load demand rates. The main advantage and disadvantage of fuel ethanol is that it produces very little heat on combustion.  The other main disadvantages are that it evaporates and is hygroscopic.  It is likely that there will be catalytically converted variations that overcome some of these problems.  Dimethylfuran is very exciting, but at the moment, dimethylfuran is an industrial fuel. Fuel alcohol, biogas and possibly bio-butanol are exciting because they can be produced as low-tech rural fuels, which means income and fuel for family farmers, and also fuels that are essentially produced for free from wastes that can either be used to make fuels or are thrown away. Home brew fuel ethanol produced lazily with a solar still is an easy vehicle fuel, especially for warm weather.  It has 30% less energy density than gasoline, but higher octane.  It’s a clean fuel, which means an engine will last at least twice as long or longer, and a really simple air-cooled or not-cooled engine will work, like a motorcycle engine or VW bug engine without pollution controls, cooling, and other paraphernalia that gasoline engines need. There are major advantages to having low-tech fuels that can be on farms, ranches and Third World refugee settlements. The advantage of the rush into ethanol production facilities is that they can be converted.  The main biofuel future, will be in designer bacteria, and probably also in bio-butanol (a bacterial fermentation alcohol that blends with gasoline and can be transported with gasoline) and cellulosic bioconversion.  Once a farmer can comfortably live on 20 acres, the face of rural America will dramatically change. Rate this comment: (Reply)

• Prospects for the Bioiesel Industry jimmiller5417 on 09/23/2008 at 6:21 PM

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  PROSPECTS FOR THE BIODIESEL INDUSTRY Where we've been. The biodiesel industry has reached a crisis point. The demand for biodiesel has promoted the construction of a large number of biodiesel plants. These refineries use the oils from many plants, but especially soy. The cost of seed oil has risen dramatically because of the rise in petrodiesel costs to farm and the demand for ethanol as an additive to gasoline. Ethanol is used in the processing of biodiesel. In Europe, many of the biodiesel plants have been moth-balled because of the high cost of oil seed oil. Imperim Renewables, Gray's Harbor WA, is finishing a 100,000 million gallon per year plant, with no assured source of vegetable oil. They are reluctant to import palm oil because of the adverse ecological impact of the palm plantations. Other refineries are facing the same supply issues. The favored source of oil, algal oil, has been touted as the liquid fuel source of the future – and indeed it is. Most early investors put their money up to fund the construction of algae farms. Guess what? They proved they could grow algae using a wide variety of technologies. Where we're at. Slowly, it dawned on these producers and their investors, that while they could successfully grow algae, they had only very inefficient means of extracting the oil from the algae cells. The universities were of no help since most of their funding was to discover ways of growing algae and tweaking the DNA. None have developed any new technologies to extract the oil in a continuous, large volume process. There are ways of fracturing the algae cell to get at the lipids floating around in the cytoplasm. Heat, pressure drop, impingement, solvents, crushing, grinding with small ceramic bebees – all have been tried. Yet much of the technology, derived from the lab bench was not scalable to commercial standards, except at great cost and poor results. AlgalOilDiesel to the rescue. We have found the technological “sweet spot” for harvesting Chlorella vulgaris cells and extracting the algal oil. The process of harvesting the mature “parent” cells and returning the “daughter” cells to the head of the growing system has been solved. The opening of the Chlorella cell is done by negative pressure leaving the cell wall intact, looking like an opened flower. The cytoplasm and the cell walls are separated and then the lipids (oil) removed, returning the balance of the cytoplasm to the algae production system to add to the nutrient. The cell walls can be dehydrated and sold as a health food supplement or fermented into ethanol. The wash water used to clean the raw biodiesel is laced with Potassium and serves as a nutrient. The remaining mechanical issues are: how big do we make the system to handle what quantity of algae? If our clients will tell the quantity, we can build the machinery to handle the clients' request. We are not dealing in rocket science. We are not interested in doing study after study like the universities and think tanks. We want to build the machine the client wants and get it into operation fast. We will stand behind our work and tweak the equipment when necessary. We are constantly on the look-out for new ideas. The technology in this field is a moving target, and we move with it. In terms of scale, our designs will serve two primary markets: The small farmer cooperative of fifteen to fifty members, using at least 100,000 gallons of biodiesel a year, and the larger farm which is producing algae which converts to 10 million gallons of biodiesel a year. While the equipment we build (the cell harvester and the cell rupture machine) are fully scalable, some of the equipment we buy from others has not been scalable, except by installing a bank of units. These units include filters, separators, polishers, and solvent recovery devices. We are working with many of these vendors and encouraging them to scale up their equipment. We have encountered the age old problem of “why invent, develop and make a much larger machine, since no one has demanded such machine”. Before Xerox was invented, no one demand a Xerox copier. We have the science and engineering talent in our firm and the advanced knowledge of where technology should be driven to solve the “Xerox” conundrum. We will not likely be on the front page of the WSJ any time soon. We are not interested in selling out to an oil company, merely to see our patents and technology suppressed. We know that Chlorella divides 2.5 times per hour. The growth/harvest cycle is about ten days as against annually for oil seed crops. We can grow the algae in cover ponds in the middle of winter in Montana on non-crop soils. We can grow it on dry desert lands. We can make our own distilled water. The wash water can be used to grow algae and other crops. The co-product, glycerol, has many profitable uses, despite what you may have read about the glut of raw glycerine on the market. We want to use the “free” energy of geothermal wells, the Sun and wind energy. We want to be as green as we can get with the smallest carbon footprint. Contact information: AlgalOilDiesel, LLP 530 NW 13th St., Corvallis, OR 97330 Landline: 541-757-9797; cell: 541-971-0403; Skype: jimmiller5417 or 541-359- 3676. Attention: James E. Miller Website: http://algaloildiesel.wetpaint.com Rate this comment: (Reply)