What’s the current status of ethanol production?

In 1979, shortly after the ethanol industry was reborn to address uncertain oil supplies, the US produced a mere 10 million gallons of fuel ethanol. Production has been growing about 12% annually ever since. In 2004, the industry produced a record 3.41 billion gallons worth $4.4 billion, supporting creation of more than 147,000 jobs in all sectors of the US economy.

Ethanol plants are located in 20 states across the country. Since 1990, farmer-owned cooperatives are responsible for the majority of new ethanol production capacity. Ethanol industry operations and spending for new construction added $1.3 billion of tax revenue for the Federal government and $1.2 billion for state and local governments during 2004.

Manufacture and demand are concentrated in the Midwest, with 88% of production in the five Corn Belt states of Illinois, Iowa, Nebraska, Minnesota and Indiana. About 6% of the US corn crop becomes ethanol, and around 90% of US ethanol is produced from corn. According to the US Department of Agriculture, ethanol production adds 25-50¢ to the value of a bushel of corn, or as much as $5.5 billion over the entire corn crop. Grain sorghum provides feedstock for most of the remainder, while barley, wheat, cheese whey and potatoes are also employed.

How is ethanol being used?

Over 99% of fuel ethanol in the US is consumed as E10, a 10% blend with gasoline. But E85, an 85% blend, is beginning to emerge. The big three US automakers annually sell around 250,000 flexible fuel vehicles capable of running on E85 at no added cost to buyers. But public access to E85 stations is limited primarily to the Midwest, including 50 public recently opened in Minnesota with construction funding provided by Ford.

Imports from the Midwest supply most Northwest ethanol consumption. According to Federal Highway Administration figures, 33 million gallons are blended into Washington’s 2.6 billion gallon per year gasoline consumption. Oregon blends 14 million gallons of ethanol into its annual gasoline consumption of 1.5 billion gallons. Surveys of fuel marketers show actual ethanol use may be up to double the federal figures.

What other benefits does ethanol production offer?

The process of making ethanol generates a series of valuable co-products including corn oil, protein feed, gluten meal, germ, refined starches, corn sweeteners and commercial carbon dioxide. The value of the final products is roughly double that of the raw corn.

Some of the strongest arguments for ethanol come in its potential to provide cleaner burning fuels. Its oxygen content helps gasoline burn more efficiently, cutting tailpipe pollutants including carbon monoxide and benzene. E10 can cut carbon monoxide emissions by 20%, benzene emissions by 25% and overall gasoline toxicity by 30%.

Where is ethanol headed in the years ahead?

Today’s starch-based ethanol industry is a transition phase to a much larger industry based on cellulose, the stuff of which most of the plant world is made. The future industry will be fed by cellulosic materials including agricultural, forest and mill residue, urban wood and yard waste and fast-growing energy crops. The energy and environmental gains from cellulosic ethanol, also known as bioethanol, will be substantial. Bioethanol represents a net energy gain of 60,000 Btu per gallon, up to three times more than starch ethanol.

Technological breakthroughs will likely make ethanol cheaper than gasoline in the near future. Ultimately, large-scale cellulosic ethanol production will require production of dedicated crops such as switchgrass or fast-growing poplar trees. CO2 will cycle in and out of the atmosphere as ethanol is burned and new crop rotations are planted.

What is the production potential in the Northwest?

The Northwest has significant potential for bioethanol production. A study by the WSU Energy Extension Program found Washington feedstocks could provide up to 1.2 BGY of ethanol. When economic and environmental constraints are considered, the figure is more like 200 MGY.

A similar study by the Oregon Office of Energy found that state’s potential bioethanol production is 500 MGY, or 170 MGY after constraints are taken into account. Overall, 49% of Oregon cellulosic feedstocks are agricultural residue, 35% forest residues and 15% municipal solid waste. The study identified wheat straw now burned in fields and forest thinnings as having the greatest ethanol production potential.

Bioethanol production could make a major contribution to solving the air quality headache of burning wheat and grass seed fields in the region. After leaving adequate residue to renew the soil, around 90 MGY could be produced just from Oregon wheatstraw.

Ethanol can also be produced from brush and small trees below pulping grade that are removed during thinning. Though such forest debris has little or no current market, whether ethanol production represents a feasible use has yet to be demonstrated. Northwest wood products mills generate a large amount of waste, but much is already burned to generate electricity and heat used in the plants.

As for municipal solid waste, many believe the better environmental path is separation and recycling of waste streams. The Oregon study affirmed this, and found that waste papers draw a higher price when remanufactured into paper products. However, urban greenwaste such as grass clippings could find a good market in ethanol production.

One other source of feedstocks, dedicated energy crops, probably will not play a major role in the Northwest. Though the region is fertile ground for fast-growing trees, under current economics the pulp and paper market pays roughly twice what energy producers could bear. Grass crops are also outcompeted by higher value uses, so other than switchgrass in Eastern Montana there appears to be little potential for regional energy crops dedicated to ethanol production.