October 10, 2024

Ethanol’s Days of Promise and Prosperity Are Fading

Backed by government subsidies and mandates, hundreds of ethanol plants rose among the golden fields of the Corn Belt, bringing jobs and business to small towns, providing farmers with a new market for their crops and generating billions of dollars in revenue for the producers of this corn-based fuel blend.

Those days of promise and prosperity are vanishing.

Nearly 10 percent of the nation’s ethanol plants have stopped production over the past year, in part because the drought that has ravaged much of the nation’s crops pushed commodity prices so high that ethanol has become too expensive to produce.

A dip in gasoline consumption has compounded the industry’s problem by reducing the demand for ethanol.

The situation has left the fate of dozens of ethanol plants hanging in the balance and has unsettled communities that once prospered from this biofuel.

“It’s a more somber mood,” said Todd Sneller, the administrator of the Nebraska Ethanol Board. “The growth opportunity that existed some years ago is still out there in theory, but the reality that it’s going to take an awful lot of time, money and political battles to realize that opportunity” is causing consternation.

Thousands of barrels of ethanol now sit in storage because there is not enough gasoline in the market to blend it with — and blends calling for a higher percentage of ethanol have yet to catch on widely in the marketplace. Advanced biofuels from waste like corn stalks and wood chips have also yet to reach commercial-level production as some had predicted they would by now.

Referring to the plants that have been idled, Eric Lee, a commodities expert at Citibank, said: “Is that going to be temporary or permanent? It’s hard to say.”

Not only do the plants employ residents of these small communities, but they also provide a market for farmers to sell their crops and buy grain to feed their livestock. They attract a steady flow of trucks whose drivers use truck stops and patronize other local businesses. Contractors visiting the plants stay in local hotels. And the plants hold large accounts with local banks.

“It’s been quite an ordeal, honestly,” Mayor Christopher Jackson of Walhalla, N.D., said of the closing of an Archer Daniels Midland ethanol plant there last April.

About a dozen families who had moved to Walhalla, a town of about 1,000, to work at the plant have left, he said. Many of the 61 people who worked there have since found new jobs, but the salary and benefits are not nearly as good, he said. Mr. Jackson manages his family’s bar in town, and he said Friday end-of-week gatherings did not happen as much because people had less to spend.

“It’s been hard on every business up and down Main Street,” he said. “I don’t know that people realized how big of an impact that plant closing had on the community. Now we’re a year into it; everybody’s feeling the pinch.”

Congress set out to create an ethanol industry that would produce enough to make up 10 percent of every gallon of gas pumped into a car, but the lawmakers assumed that demand for fuel would grow. Instead, it has shrunk to 8.7 million barrels a day from 9.7 million in 2007, said Larry Goldstein, an economist and a director of the Energy Policy Research Foundation. And with corporate average fuel economy rules now in place to double the number of miles that the average car gets per gallon by 2025, “you know we’re on a trend,” he added.

As the gasoline market got smaller, so did the amount of ethanol it could absorb, because most service stations are set up to sell fuel with an ethanol content of only up to 10 percent. Owners’ manuals of most cars call for fuel blends of no more than 10 percent ethanol. The industry calls this the “blend wall,” and it has won Environmental Protection Agency approval for some cars to run on blends of up to 15 percent, but thus far that fuel has not caught on with consumers.

Millions of cars are “flex-fuel vehicles” and can run on blends of up to 85 percent, known as e85, but that fuel is not popular and is not even widely offered outside a few corn-producing states.

But the ethanol producers were encouraged to build because the federal government had mandated that refiners use their product, and it established a tax credit of 45 cents per gallon of ethanol. The tax credit was allowed to expire on Dec. 31, 2011, but not before it had stimulated construction of ethanol plants.

The value of ethanol has also sagged. Its price is created in part by the price of the gasoline it displaces, and gasoline prices have been relatively modest for the past few months.

Mr. Sneller and others in the industry remain optimistic that technological innovations and sound public policy will keep the industry afloat.

Article source: http://www.nytimes.com/2013/03/17/us/17ethanol.html?partner=rss&emc=rss

Companies Face Fines for Not Using Unavailable Biofuel

But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.

In 2012, the oil companies expect to pay even higher penalties for failing to blend in the fuel, which is made from wood chips or the inedible parts of plants like corncobs. Refiners were required to blend 6.6 million gallons into gasoline and diesel in 2011 and face a quota of 8.65 million gallons this year.

“It belies logic,” Charles T. Drevna, the president of the National Petrochemicals and Refiners Association, said of the 2011 quota. And raising the quota for 2012 when there is no production makes even less sense, he said.

Penalizing the fuel suppliers demonstrates what happens when the federal government really, really wants something that technology is not ready to provide. In fact, while it may seem harsh that the Environmental Protection Agency is penalizing them for failing to do the impossible, the agency is being lenient by the standards of the law, the 2007 Energy Independence and Security Act.

The law, aimed at reducing the nation’s greenhouse gas emissions, its reliance on oil imported from hostile places and the export of dollars to pay for it, includes provisions to increase the efficiency of vehicles as well as incorporate renewable energy sources into gasoline and diesel.

It requires the use of three alternative fuels: car and truck fuel made from cellulose, diesel fuel made from biomass and fuel made from biological materials but with a 50 percent reduction in greenhouse gases. Only the cellulosic fuel is commercially unavailable. As for meeting the quotas in the other categories, the refiners will not close their books until February and are not sure what will happen.

The goal set by the law for vehicle fuel from cellulose was 250 million gallons for 2011 and 500 million gallons for 2012. (These are small numbers relative to the American fuel market; the E.P.A. estimates that gasoline sales in 2012 will amount to about 135 billion gallons, and highway diesel, about 51 billion gallons.)

Even advocates of renewable fuel acknowledge that the refiners are at least partly correct in complaining about the penalties.

“From a taxpayer/consumer standpoint, it doesn’t seem to make a lot of sense that we would require blenders to pay fines or fees or whatever for stuff that literally isn’t available,” said Dennis V. McGinn, a retired vice admiral who serves on the American Council on Renewable Energy.

The standards for cellulosic fuel are part of an overall goal of having 36 billion gallons of biofuels incorporated annually by 2022. But substantial technical progress would be needed to meet that — and lately it has been hard to come by.

Michael J. McAdams, executive director of the Advanced Biofuels Association, said the state of the technology for turning biological material like wood chips or nonfood plants straight into hydrocarbons — instead of relying on conversion by nature over millions of years, which is how crude oil originates — was advancing but was not yet ready for commercial introduction.

Of the technologies that are being tried out, he added, “There are some that are closer to the beaker and some that are closer to the barrel.”

The Texas renewable fuels company KiOR, for example, has broken ground on a plant in Columbus, Miss., that is supposed to start turning Southern yellow pine chips into 11 million gallons a year of gasoline and diesel components in the fourth quarter of 2012, although Matthew Hargarten, a spokesman, said, “Obviously, timelines change.”

Mr. McGinn of the council on renewable energy, defends the overall energy statute. Even if the standards for 2011 and 2012 are not met, he said, “I am absolutely convinced from a national security perspective and an economic perspective that the renewable fuel standard, writ large, is the right thing to do.” With oil insecurity and climate change related to greenhouse gas emissions as worrisome as ever, advocates say, there is strong reason to press forward.

The oil industry does not agree.

Mr. Drevna of the refiners association argued that in contrast to 2007, when Congress passed the law, “all of a sudden we’re starting to find tremendous resources of our own, oil and natural gas, here in the United States, because of fracking,” referring to a drilling process that involves injecting chemicals and water into underground rock to release gas and oil.

What is more, the industry expects the 1,700-mile Keystone Pipeline, which would run from oil sands deposits in Canada to the Gulf Coast, to provide more fuel for refineries, he said.

But Cathy Milbourn, an E.P.A. spokeswoman, said that her agency still believed that the 8.65-million-gallon quota for cellulosic ethanol for 2012 was “reasonably attainable.” By setting a quota, she added, “we avoid a situation where real cellulosic biofuel production exceeds the mandated volume,” which would weaken demand.

The underlying problem is that Congress legislated changes that laboratories and factories have not succeeded in producing. This is not for want of trying, and efforts continue.

One possible early source is the energy company Poet, a large producer of ethanol from corn kernels. The company is doing early work now on a site in Emmetsburg, Iowa, that is supposed to produce up to 25 million gallons a year of fuel alcohol beginning in 2013 from corn cobs.

And Mascoma, a company partly owned by General Motors, announced last month that it would get up to $80 million from the Energy Department to help build a plant in Kinross, Mich., that is supposed to make fuel alcohol from wood waste. Valero Energy, the oil company, and the State of Michigan are also providing funds.

Yet other cellulosic fuel efforts have faltered. A year ago, after it was offered more than $150 million in government grants, Range Fuels closed a commercial factory in Soperton, Ga., where pine chips were to be turned into fuel alcohols, because it ran into technological problems.

Airlines have had marginally more success with renewable fuels, but mostly because they have been willing to pay huge sums for sample quantities. Alaska Airlines said recently it had paid $17 a gallon. Lufthansa plans to fly a Boeing 747 from Frankfurt to Dulles International Airport near Washington using 40 tons of a biofuel mix.

Article source: http://feeds.nytimes.com/click.phdo?i=9ba3803305333e83062f3a7919535fb2

A Way to Make Motor Fuel Out of Wood? Add Water

The company, Renmatix, plans to cut the ribbon on a research and development center on Tuesday in King of Prussia, Pa., near the heart of the nation’s chemical and refining industry, to complete development of the process. The goal is to accomplish something that has eluded a dozen companies in recent years despite big government inducements: to commercialize a technology for making use of cellulosic biomass, or wood chips, switchgrass and the nonedible parts of crops.

If it works, the technology could reduce the nation’s reliance on oil imports for gasoline in favor of a cleaner-burning and less expensive source of energy. A company with a workable technology would have a guaranteed market, given that Congress has set quotas for the consumption of cellulosic fuel but so far, hardly any is being produced.

What is more, the supply of cellulosic biomass is far larger than the amount of corn available for making ethanol, and it does not involve diverting many resources from food production.

Cellulose is made up mostly of sugars that can be fed to microorganisms to make ethanol or be chemically processed into other fuels or chemical feedstocks. Yet those sugars are locked up in a form that makes them mostly useless to anything but grazing cows and termites.

The process developed by Renmatix involves putting hardwoods into a small pressurized chamber. One class of sugars, the type with five carbon atoms, is broken off and harvested. The remaining material is pumped into a second pressurized vessel for a longer period to release the remaining sugars.

A solid component of woody biomass called lignin remains and is burned to provide energy for the process.

In both phases, the cellulosic material is treated by water at a pressure and temperature that is so high that the water is neither steam or an ordinary liquid but in a form known as “supercritical.”

Competitors use various combinations of steam, acid and enzymes to convert the woody waste into fuel. But the enzymes are far more expensive than water, and the acid residue must be removed from the resulting product. Some companies have tried to blast the cellulose into very small molecules and then recombine them as alcohols or other chemicals, but they have had trouble controlling the mix that results.

Renmatix uses only pressurized water. When the water is in the so-called supercritical phase, the company says, its pH level can be adjusted to turn it into an acid. When it is depressurized, it reverts to pure water with a neutral pH level.

Renmatix began its lab-scale process in late 2008. A year later, it began operating a pilot-scale plant in Kennesaw, Ga., that processes three tons a day of mixed wood chips.

“We use no significant consumables, like enzymes or acids,” said Fred Moesler, a company engineer who is in charge of scaling up the process.

But scaling up and reaching competitive prices have tripped up several competitors in the field.

“It’s not unimaginable that it would work,” said Thomas L. Richard, a professor of agricultural and biological engineering at Penn State University and the director of its Institutes for Energy and the Environment. Yet he cautioned, “I’m quite confident that they will face some challenges moving from a lab success to a tens-of-millions-of-gallons commercial refinery.”

Renmatix’s process stops at the point that the wood waste is transformed into useful sugars. Other companies would convert the sugars into feedstock chemicals or motor fuels.

Article source: http://feeds.nytimes.com/click.phdo?i=ece8e648ca20157359a0848a2a4a8fc3