Ethanol Opportunities and Questions

1. Ethanol Opportunities
ATTRA and Questions
A Publication of ATTRA - National Sustainable Agriculture Information Service • 1-800-346-9140 • www.attra.ncat.org
By Mike Morris and Ethanol is a valuable alternative to petroleum-based transportation fuels. This publication offers a brief
Amanda Hill and non-technical description of how ethanol is made, explains some of its uses and advantages, dis-
NCAT Energy cusses several common questions about ethanol, and offers suggestions for further reading. Ethanol
Specialists can provide significant environmental benefits, can be produced sustainably from renewable sources,
© 2006 NCAT and lends itself to local and regional production. Emerging technologies that produce ethanol from
cellulosic feedstocks are discussed, as well as economic opportunities for American farmers and rural
communities. References and resource listings follow the narrative.
Contents Introduction
Introduction .................... 1 Despite the recent rapid growth of the U.S.
Ethanol Basics .................. 2 ethanol industry, farmers and the general
What is Cellulosic public hear the same recurring questions.
Ethanol? ............................. 3 For example:
Uses and Advantages of • Can ethanol be produced cost-effec-
Ethanol ............................... 4
tively, or does its viability in the
Air Quality ......................... 5
marketplace depend on subsidies?
Ethanol Incentives ........ 6
• Does etha nol ma nufactur i ng Photo by Warren Gretz, DOE/NREL.
The Energy Balance of
Ethanol ............................... 7
consume more energy than it
produces?
Genetic Engineering ..... 8 Sound bytes from the ethanol debate
Soil and Water • Do air quality and other environ- You hear all kinds of opinions about ethanol.
Impacts .............................. 9 mental benefits of ethanol come at For example:
Using Food Crops to the expense of depleted soils and “Ethanol provides a tremendous economic
Produce Fuel .................. 10 polluted waterways? boost to the U.S. economy and is a prime source
of value-added income for American farmers.”
Local vs. Corporate • In a world of hungry people and (Renewable Fuels Association)
Ownership ...................... 11
growing populations, is it appro-
Conclusion ...................... 12 “Ethanol moves our nation toward energy inde-
priate to “burn food”—using food pendence. Its use cleans America’s air and offers
References ...................... 13 crops to fuel vehicles? consumers a cost-effective choice at the pump.”
Further Resources ........ 14 (American Coalition for Ethanol)
• Is it realistic to expect local owner-
“The huge ethanol subsidies given out year after
ship of ethanol production facilities,
year have benefited few besides corn growers and
or will ownership inevitably become ethanol producers, who are often just different
concentrated into the hands of a few units of the same large company.” (Taxpayers for
large corporations? Common Sense)
“Ethanol is actually an environmental nuisance
This publication sheds light on these when all aspects of its production are taken into
ATTRA—National Sustainable and some other common questions about account.” (Grewell, 2003)
Agriculture Information Service
is managed by the National Cen-
ethanol. As much as possible, the dis- “Ethanol production is a highly speculative, danger-
ter for Appropriate Technology cussion avoids details about ethanol ous business. This year has witnessed ethanol plant
(NCAT) and is funded under a
grant from the United States
manufacturing processes, organic chemis- closures, explosions, tanker sinkings, and an unprec-
Department of Agriculture’s try, toxicology, and other technical issues. edented rise of community activism, lawsuits, and peti-
tions reflecting growing concerns over ethanol. New
Rural Business-Cooperative Ser-
vice. Visit the NCAT Web site
Many publications about ethanol are ethanol facility construction is facing rising opposition
(www.ncat.org/agri. written for engineers and chemists; this and spooked investors around the country.” (The Agri-
html) for more informa-
tion on our sustainable one is written for farmers and interested business Examiner, 2004)
agriculture projects. members of the general public.

2. Ethanol Basics
Ethanol, also known as grain alcohol or
ethyl alcohol, is the kind of alcohol pro-
duced by fermenting and distilling simple
sugars from biological sources. It is the
same kind of alcohol found in all alcoholic
beverages, although commercial ethanol
plants add a poison (two to five percent) to
make it unfit for human consumption.
Over 90 percent of U.S. ethanol is made
from corn, but in Brazil, the world’s
largest producer, most ethanol is made Photo by Warren Gretz, DOE/NREL.
from sugar cane. Ethanol can also be
made from wheat, barley, sorghum,
beets, cheese whey, potatoes, and many ethanol and then distilled, while the fi ber,
other feedstocks. gluten, and germ are made into corn oil,
Related ATTRA corn gluten, and corn gluten meal. Some
Like making bread, wine, or beer, etha-
Publications wet mills also capture and sell the carbon
nol production depends on fermentation, dioxide produced during fermentation.
Anaerobic Digestion the process by which certain species of Compared to dry milling, the wet mill
of Animal Wastes: yeast or bacteria metabolize simple sug- process can produce a much wider vari-
Factors to Consider ars and convert them into alcohol and ety of valuable co-products. In fact, most
Biodiesel—a Primer carbon dioxide. Although there are many wet mills were built in the 1970s and 80s,
Biodiesel: The Sustain-
ways to make ethanol, most methods mainly for the purpose of making high
ability Dimensions require sugar and yeast. There are basi- fructose corn sweeter.
cally three steps in the ethanol manufac-
Energy-Saving Tips for turing process: fi rst, converting feedstocks Although wet mills produced more than
Irrigators 80 percent of all U.S. ethanol in 1990,
into simple sugars; second, fermentation;
Solar-Powered and finally, recovering ethanol and dry milling has become the primary
Livestock Watering useful co-products. method of ethanol production, with over
Systems 90 percent of all new production coming
Corn ethanol in America today is made by from dry mills. (Morris, 2005) A modern
Wind-Powered
Electric Systems for
either dry milling or wet milling. During dry mill makes 2.6 to 2.8 gallons of etha-
Homes, Farms, and conventional dry milling, the whole corn nol and 18 pounds of distiller’s grain from
Ranches: Resources kernel is ground into a powder, mixed with a bushel of corn. (Eidman, 2004) Among
water to form a mash, and then cooked other advantages, dry mills are consider-
with added enzymes that turn the starch ably more energy-efficient than wet mills.
to glucose. After cooling, the mash is fer-
mented with yeast and fi nally distilled to Ethanol production capacity has increased
separate alcohol from the solids and water. dramatically since the late 1990s, leap-
Valuable co-products of the dry milling ing from 1.6 billion gallons in 2000 to
process are distiller’s grain used for ani- more than 4 billion gallons in 2005. More
mal feed (also known as distiller’s dried than 100 ethanol production facilities
grain with solubles or DDGS) and carbon were operating in 20 U.S. states in mid
dioxide. About one third of the corn kernel 2006. The vast majority of this production
mass ends up in DDGS. (Wang, 2005) is centered in the Midwest, where corn
feedstocks are plentiful. Illinois and Iowa
During conventional wet milling, corn is together have 45 percent of the nation’s
steeped in water and sulfur dioxide before ethanol capacity. Another 30 plants are
grinding. This soaking allows the sepa- under construction, with a combined
ration of germ, fi ber, gluten, and starch capacity of 1.8 billion gallons. (American
components. The starch is fermented into Coalition for Ethanol)
Page 2 ATTRA Ethanol Opportunities and Questions

3. What Is Cellulosic Ethanol? Besides being potentially less expensive than
corn ethanol, cellulosic ethanol has many
Newer manufacturing processes allow eth-
anol to be made from cellulosic feedstocks, other advantages:
also sometimes called biomass feedstocks. • While corn ethanol production is
Cellulosic ethanol is currently the subject focused heavily in the Midwest, cel-
of intensive scientific research and specu- lulosic feedstocks are available in
lation. While not yet widely commercial- almost all parts of the country.
ized, cellulosic ethanol has some great • The same plant materials that are
advantages compared to corn-based etha- being used for feedstocks can often
nol, and is often viewed as the future of be burned to fuel the ethanol plant,
the U.S. ethanol industry. avoiding the fuel expenses (usually
Cellulose is the main component in the cell natural gas) and the consumption of
walls of plants, and is the main structural fossil fuels required by conventional
or stiffening material in plants. Cellulosic grain ethanol plants.
materials that can be made into ethanol • A 1999 study by Argonne National
are generally classified under four head- Laboratory found that substituting
ings: agricultural waste, forest residue, cellulosic ethanol for gasoline would
municipal solid waste, and energy crops. result in a net greenhouse gas reduc-
Agricultural waste includes wheat straw, tion of 86-128 percent, compared to
corn stover (leaves, stalks and cobs), rice a 35 percent reduction in greenhouse
straw, and bagasse (sugar cane waste). gases by substituting corn ethanol for
Forestry residue includes wood and log- gasoline. (Wang et al., 1999)
ging residues, rotten and dead wood, and
small trees. Municipal solid waste contains • Cellulosic feedstock prices should
paper, wood, and other organic materials be more stable and less volatile than
that can be converted into ethanol. Energy corn prices.
crops, grown specifically for fuel, include • Cellulosic ethanol plants can dispose
fast-growing trees and shrubs, such as of a wide variety of organic wastes.
hybrid poplars, willows, and grasses such A few small-scale cellulosic ethanol plants
as switchgrass. are under construction or operating in the
U.S. and Canada, using sugar cane resi-
due, municipal solid wastes, rice straw, and
timber residue as feedstocks. The wide-
spread commercialization of cellulosic eth-
anol would greatly increase U.S. ethanol
production, but hardly anyone expects
ethanol to replace petroleum completely.
One recent study found that “bioenergy
from agriculture could displace 25 to 30
percent of U.S. petroleum imports with
fully developed biomass ethanol technol-
ogy.” (Gallagher et. al, 2003) The Natural
Resources Defense Council predicts that a
combination of biofuels, “better vehicle effi-
ciency, and smart-growth urban planning,
could virtually eliminate our demand for
gasoline by 2050.”(NRDC) Annual produc-
tion of biodiesel, the second-largest U.S.
biofuel, is currently less than two percent
of ethanol production, but (like ethanol) has
Corn stover. Photo by Warren Gretz, DOE/NREL. the potential to become much greater.
www.attra.ncat.org ATTRA Page 3

4. Cel lulosic materi- of ethanol from corn is a mature technology
a ls a re genera l ly that is not likely to see significant reduc-
less expensive than tions in production costs.” (DiPardo, 2004)
corn but also harder On the other hand, many are optimistic that
to convert to sugar. the cost of producing cellulosic ethanol will
Chemically, cellulose eventually drop far below the cost of pro-
is a long chain of ducing corn-based ethanol. Until recently,
tightly bound sugar the cellulase enzymes used for enzymatic
molecules. The con- hydrolysis were prohibitively expensive,
version of cellulose costing five or six dollars per gallon of eth-
to sugar is generally anol. In 2005, though, two companies—
a c compl i shed by Novozymes Biotech and Genencor Inter-
using sulfuric acid, national—reported achieving costs as low
Sugar cane bagasse. Photo by Warren Gretz, DOE/NREL.
through either dilute as 10 to 20 cents per gallon of ethanol, in
acid hydrolysis or concentrated acid hydro- laboratory trials funded by USDOE and the
lysis. Many researchers today are most National Renewable Energy Laboratory.
enthusiastic about a process called enzy-
matic hydrolysis, where an enzyme called
cellulase is used, instead of sulfuric acid,
Uses and Advantages
to convert cellulose to sugar. In processes of Ethanol
known as thermal gasification and pyrolysis, In the U.S. today, ethanol has two main
cellulosic material is heated to extremely uses. It is often used as an “extender,”
high temperatures (up to 2200° F), creat- adding volume to conventional gasoline.
ing a gas or oil that can be converted into Since ethanol contains 35 percent oxygen,
ethanol using microorganisms or a cata- it is also used as an oxygenate or octane-
lytic reactor. Ethanol has also been made enhancer, an oxygen-boosting fuel additive
from methane, which can be captured from that is blended with gasoline to ensure more
landfi lls or anaerobic digesters. complete burning, reduce air emissions,
According to a 2004 U.S. Department of and enable high-compression engines to
Energy (USDOE) report, “The production run more smoothly, without “knocking.”
In the future, three other uses of ethanol
may become important.
• Ethanol can be blended with diesel
fuel, creating an experimental fuel
called E-diesel.
• Ethanol can be used in the man-
ufacturing of biodiesel, serving
as a more environmentally benign
alternative to methanol (com-
monly known as methyl alcohol or
wood alcohol).
• Ethanol is currently the most cost-
effective renewable source of hydro-
gen, making it a strong candidate
for use in fuel cells.
Ethanol has been used as a transportation
fuel in the U.S. since about 1908. Henry
Ford designed the Model T to run on either
gasoline or ethanol, and ethanol continued
Wood chips. Photo by Warren Gretz, DOE/NREL. to be widely available as an automobile fuel
Page 4 ATTRA Ethanol Opportunities and Questions

5. through the 1930s. (DiPardo, 2004) The reduction in greenhouse gases, although
U.S. ethanol industry has had a lively and there is an ongoing and highly technical
frustrating history, with repeated setbacks debate about the overall impact that an
when the industry seemed on the verge of expanded ethanol industry might have on
success. One setback was caused by Pro- greenhouse gases.
hibition. Another was caused by the petro-
Ethanol has great potential to replace the
leum industry’s choice of lead instead of eth-
only other common oxygen-boosting fuel
anol as a gasoline octane-enhancer. A third
additive, methyl tertiary-butyl ether or
setback was caused by the petroleum indus-
MTBE. MTBE is a volatile organic com-
try’s choice of MTBE (see below) instead of
pound derived from methanol. Methanol,
ethanol as a fuel oxygenate. Ethanol’s sup-
in turn, is usually derived from natural gas
porters often—and plausibly—blame Big
but can also be made from other fossil fuels
Oil for their historically small share of the
such as coal. MTBE has been used as an
transportation fuel market.
octane-enhancing fuel additive at low levels
Over 30 percent of all gasoline sold in the in the U.S. since 1979 and at higher lev-
U.S. is blended with ethanol, and ethanol els since the early 1990s, when the 1990
O
comprises about two percent of the gasoline Clean Air Act Amendments began requir-
consumed in the U.S. (Renewable Fuels ing gasoline to be reformulated in parts of ver 30
Association) Many states require gasoline the country with poor air quality. Reformu- percent of
to contain ethanol. Minnesota, New York, lated gasoline was required to have high all gaso-
and Connecticut currently require gaso- oxygen content and low levels of smog-form- line sold in the U.S.
line to include a 10 percent ethanol blend, ing compounds and other air pollutants. is blended with eth-
known as E10. (The term gasohol generally
MTBE is easily dissolved in water, has anol, and ethanol
refers to a blend of gasoline with at least
proven difficult to contain in underground comprises about
10 percent ethanol.)
storage tanks, and is classified as a poten- two percent of the
Flexible fuel vehicles can accept a range of tial human carcinogen by the U.S. Environ-
gasoline consumed
fuel mixtures including gasoline and E85, mental Protection Agency (EPA). Since it
a blend of 85 percent ethanol and 15 per- started being used widely, MTBE has been in the U.S.
cent gasoline. Flexible fuel vehicles cost at found in many water sources across the
most a few hundred dollars more to man- U.S. In 1999, an EPA panel recommended
ufacture than standard vehicles. A sensor that MTBE usage be reduced, with some
automatically detects the fuel mixture and members of the panel recommending that
adjusts the timing of spark plugs and fuel it be phased out entirely. As of early 2006,
injectors so the fuel burns cleanly. General MTBE has been banned in 17 states. The
Motors, Ford, Chrysler, and other major elimination of MTBE has created a large
automobile manufacturers are actively pro- market opportunity for ethanol, since etha-
moting the use of ethanol and introducing nol is far less toxic than MTBE and poses
flexible fuel vehicle models. General Motors no known water quality threat.
unveiled its fi rst ethanol commercial dur-
ing the 2006 Super Bowl, urging viewers to Air Quality
“Live Green—Go Yellow.”
The use of ethanol as a transportation fuel
Ethanol has many attractive features. It has many undisputed air quality benefits.
is biodegradable, made from renewable Adding ethanol to gasoline has been shown
sources, and offers a home-grown alterna- to reduce tailpipe emissions of many toxic
tive to the imported oil that now accounts air pollutants, including particulate mat-
for about 60 percent of U.S. gasoline ter, benzene, and carbon monoxide. Many
and diesel fuel consumption. (USDOE, studies show, however, that ethanol slightly
2004) Substituting ethanol for fossil fuels raises the volatility of gasoline, caus-
also reduces tailpipe emissions of carbon ing increased emissions of hydrocarbons
dioxide, and many studies have shown a and nitrogen oxide (NOx), which can
www.attra.ncat.org ATTRA Page 5

6. contribute to smog formation. Other studies imported oil. Critics reply, however, that
have shown that mixing ethanol with gaso- ethanol is expensive in relation to other
line increases emissions of a few other toxic fuels and cannot compete in the market-
air pollutants. place without heavy subsidies.
In a decision widely seen as a setback to Since 1978, a federal ethanol production
the ethanol industry, the federal Energy tax credit of between 40 and 60 cents per
Policy Act of 2005 eliminated the oxygen- gallon has been in place. Through 2010
ate requirement for reformulated fuel in this credit is expected to be 51 cents per
the state of California (by far the nation’s gallon. Certain ethanol producers and
largest consumer of ethanol). The state had developers are also eligible for various
argued that reformulated gasoline without other federal tax credits, incentive pay-
ethanol was better for California’s air qual- ments, grants, and loans.
ity than reformulated gasoline containing
ethanol. In February 2006, the EPA elimi- The federal Energy Policy Act of 2005
nated the oxygenate requirement entirely, promotes ethanol by requiring the use of
for all parts of the country. These deci- 7.5 billion gallons of renewable fuels by
sions mean that reformulated gasoline in 2012, a target that would nearly double
the U.S. will no longer need to contain ethanol production compared to 2005 lev-
either MTBE or ethanol, raising many els. The Energy Policy Act also creates a
uncertainties about ethanol’s future as a wide range of other new incentives, adds
fuel oxygenate. funding for various research and demon-
stration projects, and defi nes a Renewable
Besides the debate about emissions from Fuel Program to be created by EPA.
the tailpipe, concerns have also been
raised about emissions from ethanol Over and above the federal incentives and
plants. In 2002, the U.S. Department of funding, many states add their own incen-
Justice, EPA, and the Minnesota Pollution tives, generally in the form of fuel excise
Control Agency reached a civil settlement tax exemptions and producer credits. Other
with 12 ethanol plants that were alleged state incentives include requiring a blend
to be violating Clean Air Act standards. of ethanol in all gasoline, requiring fleet
These plants agreed to pay civil penalties vehicles to use ethanol-blended gasoline,
and install equipment reducing emissions and offering an assortment of tax credits,
of volatile organic grants, rebates, and low-interest loans.
c om p ou nd s a nd For many observers, the reliance of the
carbon monoxide. ethanol industry on government incentives
is a cause for concern because the future
Ethanol of the industry is subject to changes in the
political climate. A reduction in incentives
Incentives would certainly harm the industry, and
Advocates cla i m many still recall the wave of bankruptcies
that the production that swept through the ethanol industry in
and use of ethanol the 1980s, when oil prices dropped.
have a strongly pos-
itive impact on the On the other hand, federal ethanol incen-
U.S. economy: cre- tives have now been in place since 1978,
ating jobs, generat- and recent fluctuations in oil prices have
ing tax revenues for proven that ethanol prices can some-
local communities, times drop below those of gasoline. Etha-
raising corn prices, nol prices tend to track corn prices, since
reducing trade defi- higher corn prices generally increase
cits, and decreas- the cost or reduce the supply of etha-
Photo by Warren Gretz, DOE/NREL. ing dependence on nol. Between 1982 and 2004, wholesale
Page 6 ATTRA Ethanol Opportunities and Questions

7. ethanol prices were generally 30 to 50 than two-and-a-half times as much energy
cents per gallon higher than unleaded gas- comes out of the ethanol fuel as was used
oline prices. In the spring of 2005, though, to produce it. Most published studies
wholesale ethanol prices dropped as low as since 1990 come up with a ratio between
$1.20 per gallon, compared to $1.60 for 1.2 and 1.8. Nonetheless, Pimentel and
unleaded gasoline. (Hart, 2005) a small number of other authors continue
to argue that ethanol production is an
Some have argued that heavy govern-
energy-loser.
ment investments in ethanol would be bet-
ter spent promoting fuel-efficient vehicles, Energy balance calculations are impor-
public transportation, wind or solar energy, tant in deciding among energy options and
or other clean energy industries. in making manufacturing processes of all
kinds more energy-efficient. Nonetheless,
Of course, any fair comparison between
David Morris of the Institute for Local Self-
ethanol and petroleum-based fuel must
Reliance offers several compelling reasons
consider the enormous federal subsi-
to believe that the energy balance contro-
dies that have been paid to the oil indus-
versy has gotten far more attention than it
try, too—more than $130 billion in tax
deserves. (Morris, 2005) To recap three of
benefi ts from 1968 to 2000, according
Morris’s main points:
to the U.S. General Accounting Offi ce.
(USGAO, 2000) 1. If state-of-the-art and next-genera-
tion technologies are considered, the
The Energy Balance energy balance criticism of ethanol looks
very weak. The energy balance of etha-
of Ethanol nol has improved and will likely continue
Ethanol’s energy balance is sometimes to improve. Since 1980, ethanol plants
defined as the difference between the have reduced energy inputs per gallon by
amount of energy stored in a gallon of eth- about 50 percent, while U.S. corn farmers
anol and the amount of energy needed to have increased their yields by 40 percent
grow, produce, and distribute that gallon and reduced their fertilizer usage by 20 to
of ethanol. While the topic has been hotly 25 percent. (Morris, 2005) (Nitrogen fer-
debated for years, the current prevailing tilizer accounts for around 40 percent of
opinion is that ethanol has a net positive all energy inputs in corn farming.) Cellu-
energy balance. losic manufacturing
Since 1979, David Pimentel, PhD, of Cor- processes are also
nell University has consistently argued— rapidly improving.
in more than 20 published articles—that Whether the feed-
the amount of fossil fuel energy needed to stocks are agricul-
tural wastes (e.g.,
produce ethanol is greater than the energy
corn stover, wheat
contained in the ethanol. According to
straw), forest resi-
Pimentel and his colleague Tad Patzek
due (e.g., underuti-
of the University of California, Berkeley,
lized wood and small
“There is just no energy benefit to using
trees), or energy
plant biomass for liquid fuel.” (Pimentel
crops (e.g., fast
and Patzek, 2005)
growing trees and
Numerous recent studies have found that switchgrass), almost
ethanol has a positive energy balance. all studies agree that
(In fact, ethanol advocates sometimes say a mature cellulosic
that all other credible studies since 1992 ethanol technology
have calculated a positive energy bal- will require much
ance.) Some studies calculate an energy smaller energy inputs
balance as high as 2.62, meaning more than corn ethanol. Harvesting switchgrass. Photo by Warren Gretz, DOE/NREL.
www.attra.ncat.org ATTRA Page 7

8. 2. Ethanol is a high quality fuel, and qual- forms of air pollution, and offsets U.S.
ity counts in the energy balance debate. Some oil consumption.
forms of energy are higher quality than oth-
ers, i.e., more useful to humans. For exam- Genetic Engineering
ple, it often makes perfectly good sense to While the energy balance controversy
cook food (making it edible) or dry food has received a lot of attention, the role of
(retarding spoilage), even if these processes genetic engineering in ethanol production
take more energy than is contained in the has received very little. Genetic engineer-
product. A small amount of energy contained ing is being used and tested in virtually all
in cooked or dried food is far more useful aspects of the ethanol production process.
to humans than a larger amount of energy For example:
contained in inedible or highly perishable
foods. As Morris points out, ethanol com- • In 2005, 52 percent of the
bines energy and storage. In this respect, U.S. corn crop was grown from
ethanol is more useful than wind or solar genet ica l ly eng ineered seed.
energy, which must be stored in batteries or (USDA, 2005)
some other system. Even if we suppose that it • As of 2002, genetic engineering
G
enetic engi- takes more energy to create a gallon of etha- was the single largest expenditure
neering is nol than is contained in the fuel, this might in the federal research and develop-
being used be a reasonable tradeoff in order to turn the ment budget for biomass research.
solar energy embodied in plant feedstocks (Morris, 2002)
and tested in virtu-
into a high quality liquid fuel. • A University of Florida researcher
ally all aspects of
3. The use of ethanol unquestionably displaces has genetically engineered a strain
the ethanol produc- of E. coli bacteria that produces
large quantities of imported oil, regardless of
tion process.
the outcome of the energy balance debate. Eth- ethanol from cellulosic sources at
anol production relies heavily on non-petro- an estimated cost of $1.30 gallon.
leum fuels such as natural gas and coal, with (Woods, 2005)
diesel and gasoline making up only 8 to 17 • A Purdue University team has
percent of the fossil fuel energy used. (Mor- developed a genetically engineered
ris, 2005) If only petroleum fuel inputs are yeast that converts both glucose
considered—as opposed to all fossil fuels— and xylose into ethanol, reportedly
the energy balance of ethanol is strongly pos- increasing ethanol yields from agri-
itive. According to Morris, “the net energy cultural residues by up to 40 per-
ratio with respect to petroleum would be close cent. (Venere, 2004)
to 8 to 1.” So the use of ethanol unquestion- • Since 1997, researchers at the
ably reduces U.S. consumption of petroleum National Renewable Energy Labora-
fuels. Neither Pimentel nor any other credible tory have been trying to genetically
researcher has ever said that “It takes more engineer unique “biocatalysts” mak-
than a gallon of oil to make a gallon of etha- ing it possible to ferment the sugars
nol.” Yet this statement, based on a confusion in corn fiber. (NREL, 2006)
between fossil fuels and petroleum fuels, is
frequently repeated as a criticism of ethanol. • Other researchers are trying to
genetically engineer plants with
The three points above might be summed high sugar or starch content, or con-
up this way: Most studies show that etha- taining greater amounts of cellu-
nol contains more energy than is required lose. Genetic engineering is being
to produce it. But even if ethanol’s energy used to improve poplar and other
balance were currently negative, it offers woody biomass crops, for example,
such great benefits and future potential improving resistance to insects and
that it might very well be worthy of contin- herbicides and changing wood chem-
ued government support, since it is made istry to facilitate pulp production.
from renewable sources, reduces most (James et al., 1998)
Page 8 ATTRA Ethanol Opportunities and Questions

9. Large-scale corn pro-
duction in the U.S.
unquestionably uses
large amounts of pes-
ticides and fertilizers,
and these chemicals
are well-known to con-
tribute to water pollu-
tion. Industrial corn
production also con-
tributes to erosion and
soi l nut r ient deple-
tion. According to a
1994 USDA st udy,
approximately 12,000
pounds of topsoil were
Poplar harvest. Photo by Warren Gretz, DOE/NREL. being lost per-acre per-
year on land farmed
The genetic engineering of crops raises with large-scale techniques. (USDA,
concerns for farmers and the general public 1994) Some ethanol critics calculate and
that include food safety concerns, herbicide report pounds of topsoil lost per gallon of
resistance (the creation of “super weeds”), ethanol produced.
pesticide resistance, antibiotic resistance, Ethanol’s supporters often reply that these
harm to beneficial organisms, and loss criticisms are really complaints about
of genetic diversity. There are also mar- corn-growing techniques, not about etha-
keting and trade issues (since many coun- nol. Ethanol can be made from raw mate-
tries refuse genetically modified products), rials other than corn. Corn can also be
liability issues, and a wide variety of food grown more sustainably, using techniques
safety issues. For more discussion, see the such as “conservation tillage” to reduce
ATTRA publication Genetic Engineering erosion, as well as crop rotations, com-
of Crop Plants. post, and manures (both animal and plant)
to maintain and enhance soil quality.
There are important differences between
genetically engineered ethanol and genet-
ically engineered food crops, beginning
with the fact that ethanol is burned and
not eaten. Nonetheless, this issue will
probably attract a great deal of atten-
tion in the future, in relation to biodiesel
as well as ethanol. The major feedstocks
for U.S. biodiesel production are over-
whelmingly genetically engineered variet-
ies, including more than 80 percent of all
U.S. soy and over half of all U.S canola.
(Pew, 2004)
Soil and Water Impacts
The growth of the ethanol industry and
the prospect of increased corn production
raise serious concerns about soil depletion
and water quality. Corn planted into no-till soybean residue. Photo courtesy of NRCS.
www.attra.ncat.org ATTRA Page 9

10. Numerous ATTRA publications describe Large-scale harvesting of cellulosic feed-
techniques for more sustainable corn pro- stocks does pose environmental challenges
duction. See, for example, the following: of its own. Crop residue removal needs to
be done carefully, leaving enough residues
• Sustainable Corn and Soybean
in place to reduce erosion and returning
Production
enough residues to the soil to maintain or
• Organic Field Corn Production improve organic matter content.
• Sustainable Soil Management Besides harvesting crop residues, other
• Conservation Tillage ethanol proposals under discussion call
• Pursuing Conservation Tillage Sys- for growing energy crops on some or all
tems for Organic Crop Production of the 17 million acres of Conservation
Reserve Program (CRP) lands that have
• Overview of Cover Crops and
been withdrawn from agricultural use. Con-
Green Manures
cerns have been raised, however, about the
• Ma nu re s for O rga n ic C rop sustainability of growing energy crops on
Production these sensitive lands, including dangers of
• Fa r m S ca le Compost i ng Re - erosion, lost wildlife habitat, and depleted
source List soil nutrients.
From the standpoint of protecting soils and
water, cellulosic ethanol promises numerous Using Food Crops to
advantages in comparison to corn ethanol. Produce Fuel
Deep-rooted cellulosic crops such as switch- The U.S. ethanol industry is currently using
grass can decrease soil erosion and often between 10 and 13 percent of total U.S. corn
require no irrigation, pesticides, or fertil- production. In a world where so many people
izer. Switchgrass is native to North Amer- are hungry or malnourished, does it make
ica, has a high resistance to many pests sense to “burn food” using corn and other
and plant diseases, requires little fertilizer food crops to power vehicle engines?
or agricultural chemicals, and can tolerate
poor soils, flooding, and drought. Because According one British commentator:
it is a perennial grass, no annual tillage is Switching to green fuels requires four and
required. (Bransby, 2006) [a] half times our arable area. Even the EU’s
more modest target of 20 percent [of fuels
from ethanol and biodiesel] by 2020 would
consume almost all our cropland. If the same
thing is to happen all over Europe, the impact
on global food supply will be catastrophic:
big enough to tip the global balance from net
surplus to net deficit. If, as some environmen-
talists demand, it is to happen worldwide,
then most of the arable surface of the planet
will be deployed to produce food for cars, not
people. This prospect sounds, at fi rst, ridicu-
lous. Surely if there was unmet demand for
food, the market would ensure that crops
were used to feed people rather than vehi-
cles? There is no basis for this assumption.
The market responds to money, not need.
People who own cars have more money than
people at risk of starvation. (Monbiot, 2004)
Given the current small size of the ethanol and
biodiesel industries, worrying about carpeting
the planet with bioenergy crops may sound
Switchgrass. Photo by Warren Gretz, DOE/NREL. like worrying about becoming too muscular
Page 10 ATTRA Ethanol Opportunities and Questions

11. on a person’s first visit to the gym. Nonethe- and many developing ones, produce
less, concerns about feeding the world’s grow- far more food than they need.
ing population certainly deserve to be taken • Two thirds to three quarters of the
seriously. Bioenergy crops have already begun corn grown in the U.S. is used for
to compete with food crops and cause environ- animal feed, and ethanol is made
mental problems in some parts of the world. from “field corn,” not intended for
For example, in order to meet its goal to pro- human consumption. Most U.S.
duce 5.75 percent of its fuels from biofuels grain exports likewise feed live-
by 2010, and 20 percent by 2020, the Euro- stock, not people.
pean Union has greatly increased its acreage • Cellulosic ethanol is less susceptible
of rapeseed, a crop that provides most of the than corn ethanol to “food vs. fuel”
vegetable oil for European biodiesel. Europe criticisms, since it relies on crop resi-
now has more than three million hectares (7.4 dues, municipal wastes, grasses, and
million acres) under rapeseed cultivation, an trees that generally have no value as
area approximately the size of Belgium. The human food. Also, many of the prom-
2010 target is expected to increase industrial ising energy crops for ethanol produc-
rapeseed plantings in Europe to eight million tion can be grown in marginal areas
hectares (19.8 million acres). (USDA, 2003) unsuitable for food crop production.
Many developing countries, including South
Africa and India, promote cultivation of jat- Local vs. Corporate
ropha for biodiesel production—an oilseed Ownership
crop inedible for humans and livestock.
In the late 1980s a single company, Archer
Other countries are promoting palm oil. The
Daniels Midland (ADM) produced almost
clearing of forests to make way for palm plan-
80 percent of the nation’s ethanol. Since that
tations has been blamed for deforestation in
Malaysia, Indonesia, Borneo, and Sumatra. time, though, the industry has witnessed a
(Webster et al., 2004) remarkable growth in small and medium-
sized ethanol facilities owned by farmers.
Population growth, food availability, and Today, at least 25,000 farmers own shares
agricultural land use patterns are vitally in one or more ethanol plants, as members
important topics far beyond the scope of this of cooperatives or limited liability corpora-
publication. No doubt, the continued growth tions. (Morris, 2003) Farmer-owned coop-
of the ethanol and biodiesel industries will eratives now produce nearly half of all U.S.
cause changes in crop markets and land use ethanol. (American Coalition for Ethanol)
patterns. In the long run, these changes will Many have hailed the growth of farmer-
raise new environmental problems, and it is owned ethanol facilities as an encourag-
possible that these changes will cause higher ing trend that allows farmers to add value
food costs and related problems of scarcity to their crop, keep more of the profits, and
and distribution. Below are a few key points keep dollars in rural communities.
about using food crops to produce fuel:
• Corn ethanol is made from the starch
portion of corn, and there is cur-
rently no scarcity of starch for human
consumption. Dry milling produces
distiller’s grains, which are used for
animal feed.
• In today’s world, poverty and distri-
bution problems are far more com-
mon causes of hunger than food scar-
city. Almost all developed nations, Ethanol plant. Photo by Tom Richard, Penn State University.
www.attra.ncat.org ATTRA Page 11

12. Unlike oil or natural gas, ethanol feedstocks Energy markets are volatile and unpre-
can’t be delivered in a pipeline and must dictable. The history of Minnesota ethanol
be transported by truck, rail, or barge. For shows how quickly subsidies can change,
this reason, David Morris has argued that dramatically altering the economics of eth-
local and regional production facilities tend anol production. New technological break-
to have inherent advantages: throughs could make today’s dry mills obso-
Unlike petroleum, plant matter in its raw lete. Overproduction, caused by too many
state is bulky and expensive to transport. new plants, could reduce prices. So could
Thus most biorefi neries buy their raw mate- increased production by large corporate-
rials from within 50-75 miles of the facility owned plants. So could competition caused
(and often sell their end-products in a radius by the entry of additional large corporations
not that much wider). In part because of the
transport economics, the size of biorefi neries into the ethanol business.
is only a fraction that of petroleum refi neries Noting that several large (100 million gal-
(1-10 percent). That modest scale enables
farmers and local residents to raise sufficient lon) dry mills are under construction, David
equity investment to own the facility. Morris asks,
(Morris, 2003) Will the ethanol industry begin to look like
Minnesota has led traditional agriprocessing industries, domi-
nated by a handful of large companies? Will
the nation in promot- farmer ownership stagnate at present lev-
“In the United States, the tripling of ethanol ing locally owned els? Washington is neutral on these ques-
consumption since 2000 may have raised ethanol facilities. In tions. Federal incentives do not differentiate
the price of corn by 10-15 cents per bushel.
the late 1980s, the between a 15 million gallon ethanol facility
But the 20,000 or so U.S. farmers who own
state created a pro- owned by 500 farmers and a 150 million
a share of an ethanol plant receive far more, gallon ethanol facility (or multiple 150 mil-
in annual dividends, usually 50-75 cents per ducer payment pro-
gram of 20 cents per lion gallon facilities) owned by a single mul-
bushel.”(Morris, 2005) tinational corporation. (Morris, 2003)
gallon, limited to in-
state ethanol produc- For a summary of some state incentives for
ers and limited to a maximum of 15 million local and cooperatively-owned ethanol and
gallons per year. This law encouraged the biodiesel plants, see the New Rules Project
creation of many small and locally-owned Web site, www.newrules.org.
ethanol plants. Twelve of Minnesota’s cur-
rent 14 ethanol plants were originally orga- Conclusion
nized as farmer-owned cooperatives.
The energy problems confronting the U.S.
Since 2002, when the Minnesota Corn Pro- are so profound that they will likely require
cessors voted to sell their shares in Minne- dramatic changes in our way of life within
sota’s largest ethanol facility to ADM, the the next decade or two. It is unrealistic to
state passed additional laws limiting pro- hope that ethanol will replace petroleum or
ducer payments to farmer-owned plants and that it will allow us to continue using energy
requiring repayment of these incentives if as we have for the past seventy-five years.
the ethanol plant is sold to another corpora- The fi rst and most urgent priority of any
tion. Because of state budget problems, in sensible national energy strategy will be
2003 the state reduced producer payments efficiency and conservation, reducing our
drastically, to 13 cents per gallon and energy usage to more sustainable levels.
limited to a maximum of only 3 million gal-
lons. More recently, though, the state has Nonetheless, ethanol is probably our most
considered increasing its ethanol require- promising biofuel option right now from
ment from 10 percent ethanol to a 20 the standpoint of reducing our reliance on
percent blend. (New Rules Project, 2005) imported oil and making the transition to
a more sustainable transportation system.
Farmers who consider buying shares in an Ethanol has many clear tailpipe emission
ethanol plant should understand that it is benefits and is generally far more envi-
an investment with very substantial risks. ronmentally benign than the gasoline and
Page 12 ATTRA Ethanol Opportunities and Questions

13. MTBE it is replacing. Ethanol might also tion and a long list of new genetically
continue to play a role in rebuilding Amer- engineered organisms.
ica’s rural communities, although that out-
come is far from certain. A sustainable U.S. ethanol industry would
begin with sustainable farming practices.
Two concerns about ethanol have received Corn and other energy crops would be
T
more attention than all the others com- grown sustainably, in ways that protect soils
bined: the high cost/incentives issue and he first and
and water while reducing or eliminating
the energy balance issue. These concerns most urgent
the use of energy-intensive nitrogen fertil-
are over-emphasized. The more important priority of
questions about ethanol concern its possible izer and hazardous chemicals. Enough crop
any sensible
impacts on air, water, and soils, especially if residue would be left in the field to mini-
national energy
large-scale corn ethanol continues to domi- mize erosion and maintain or improve soil
strategy will be
nate the industry and if the U.S. pushes to nutrient levels. Agricultural lands would be
maximize ethanol production. put to their highest and most sustainable efficiency and
use, which in many locations would be food conservation.
As the cost of cellulosic ethanol continues
to drop, the ethanol industry will start to production rather than energy production.
look far different from what it is today. In Genetically modified organisms would play
many ways, cellulosic ethanol looks more a carefully limited role. The scale, design,
environmentally benign than corn etha- and ownership of ethanol production facili-
nol, but it will bring its own challenges ties would allow farmers and rural commu-
and dangers, including risks of soil deple- nities to share in the economic benefits.
References Residues: Cost and Supply Estimates. Agricultural
Economic Report No. 819. Office of the Chief Econo-
The Agribusiness Examiner, “Election Year 2004 mist, Office of Energy Policy and New Uses. U.S.
Taboo Issue—Ethanol.” Issue No. 373. Sept. 16, 2004. Department of Agriculture, Washington, D.C.
American Coalition for Ethanol Web site. www.usda.gov/oce/reports/energy/AER819.pdf
www.ethanol.org Grewell, J. Bishop. 2003. Farm Subsidies are Harm
Bransby, David. 2006. Switchgrass Profi le. Auburn Subsidies. The American Enterprise. www.taemag.
University. http://bioenergy.ornl.gov/papers/misc/ com/issues/articleid.17703/article_detail.asp
switchgrass-profile.html Hart, Chad. 2005. “Ethanol Revisited.” August/Sep-
DiPardo, Joseph. 2004. Outlook for Ethanol Produc- tember 2005. Agricultural Marketing Resource Center
tion and Demand. U.S. Department of Energy. Energy web site. www.agmrc.org
Information Administration. www.ethanol-gec.org/ James, Rosalind R., Stephen P. DiFazio, Amy M.
information/briefing/6.pdf Brunner, and Steven H. Strauss. 1998. “Environmen-
Eidman, Vernon R. 2004. Agriculture as a Producer tal Effects of Genetically Engineered Woody Biomass
of Energy. In: Proceedings of the conference Agricul- Crops.” Biomass and Bioenergy Vol. 14, No. 4,
ture as a Producer and Consumer of Energy, spon- pp. 403-414. www.forestry.oregonstate.edu/coops/tbgrc/
sored by the Farm Foundation and USDA’s Office of publications/James_1998_Biomass_Bioenergy.pdf
Energy Policy and New Uses. 39 p. Monbiot, George. November 23, 2004. “Feeding
www.farmfoundation.org
Cars, Not People.” Posted on the Monbiot.com web
Gallagher, P., M. Dikeman, J. Fritz, E. Wailes, W. site, www.monbiot.com/archives/2004/11/23/
Gauther, and H. Shapouri. 2003. Biomass from Crop feeding-cars-not-people
www.attra.ncat.org ATTRA Page 13

14. Morris, David. 2003. “The Ethanol Glass is Still Only Venere, Emil. June 28, 2004. “Purdue yeast makes
Half Full.” The Institute for Local Self-Reliance. ethanol from agricultural waste more effectively.”
www.ilsr.org/columns/2003/et0903.html Purdue News. http://news.uns.purdue.edu/UNS/
html4ever/2004/040628.Ho.ethanol.html
Morris, David. 2005. “The Carbohydrate Economy,
Biofuels and the Net Energy Debate.” Institute for Wang, M., C. Saricks, and D. Santini. 1999. “Effects
Local Self-Reliance, Minneapolis, MN. 24 pages. of Fuel Ethanol Use on Fuel-Cycle Energy and Green-
www.newrules.org/agri/netenergyresponse.pdf house Gas Emissions,” Argonne National Laboratory,
ANL/ESD-38, January 1999.
National Renewable Energy Laboratory web site.
“Biomass Research.” www.nrel.gov/biomass Wang, Michael. 2005. “The Debate on Energy and
Natural Resources Defense Council (NRDC) web site. Greenhouse Gas Emissions of Fuel Ethanol.” Argonne
www.nrdc.org National Laboratory, Energy Systems Division Semi-
nar, August 3, 2005. Sourced from
New Rules Project. 2005. “Ethanol Production: the www.transportation.anl.gov/pdfs/TA/347.pdf
Minnesota Model.” New Rules Project web site.
www.newrules.org/agri/ethanol.html Webster, Robin, Lisa Rimmer, and Craig Bennett.
2004. “Greasy Palms—Palm Oil, the Environment
Pew Initiative on Food and Biotechnology, 2004. and Big Business.” Friends of the Earth.
“Genetically Modified Crops in the United States.” www.foe.co.uk
http://pewagbiotech.org/resources/factsheets/display.
php3?FactsheetID=2 Woods, Chuck. 2005. “UF/IFAS Researcher’s Bio-
mass-To-Ethanol Technology Could Help Replace Half
Pimentel, David and Tad W. Patzek. March 2005. of Auto Fuel in U.S.” University of Florida News, May
“Ethanol Production Using Corn, Switchgrass, and 3, 2005. http://news.ufl.edu/2005/05/03/ethanol
Wood: Biodiesel Production Using Soybean and
Sunflower.” Natural Resources Research, Vol. 14,
No. 1 pp 65-76.
Further Resources
Organizations and Online Resources
Renewable Fuels Association web site.
The Agricultual Marketing Resource Center
www.ethanolrfa.org
1111 NSRIC, Iowa State University
Taxpayers for Common Sense Web site. Ames, IA 50011-3310
www.taxpayer.net/energy/ethanol.htm Phone: (866) 277-5567
www.agmrc.org
U.S. Department of Agriculture (USDA). 1994.
“Summary Report 1992 National Resources Inven- Alternative Fuels Data Center
tory.” Soil Conservation Service, Washington, D.C. www.eere.energy.gov/afdc
A comprehensive source of information about
U.S. Department of Agriculture (USDA) Foreign Agri-
alternative fuels and vehicles.
culture Service (FAS). 2003. “EU: Biodiesel Expand-
ing Use of Oilseeds.” www.fas.usda.gov/pecad2/ American Coalition for Ethanol
highlights/2003/09/biodiesel3 2500 S. Minnesota Avenue #200
U.S. Department of Agriculture (USDA) Briefing Sioux Falls, SD 57105
Room web site. 2005. “Adoption of Genetically Engi- Phone: (605) 334-3381
neered Crops in the U.S.” www.ers.usda.gov/Data/ www.ethanol.org
BiotechCrops “The grassroots voice of the ethanol industry, a
membership-based association dedicated to the use
U.S. Department of Energy (USDOE) – Energy Infor- and production of ethanol.”
mation Administration. 2004. “Official Energy Statis-
tics from the U.S. Government.” www.eia.doe.gov Ethanol Promotion and Information Council
17295 Chesterfield Airport Road, Suite 200
U.S. General Accounting Office (USGAO). 2000. Chesterfield, MO 63005
“Letter to Senator Tom Harkin.” Sourced from Phone: (636) 530-3666
www.gao.gov/new.items/rc00301r.pdf www.drivingethanol.org
Page 14 ATTRA Ethanol Opportunities and Questions

15. “An alliance of ethanol producers and industry leaders
who have come together to create a consistent, positive
message and identity for ethanol.”
Journey to Forever
www.journeytoforever.org
A wealth of information about biofuels, including links
and a discussion of the “food vs. fuel” controversy.
Minnesota Department of Agriculture’s Ethanol Page
www.mda.state.mn.us/Ethanol
Includes reports, news, and links to ethanol companies
and organizations. The Minnesota Ethanol Program
has been a national leader in promoting farmer-owned
ethanol plants.
National Renewable Energy Laboratory (NREL)
1617 Cole Boulevard
Golden, CO 80401
Phone: (303) 275-3000
www.nrel.gov
The leading center for U.S. renewable energy research.
A source of technical articles and case studies.
The New Rules Project
The Institute for Local Self-Reliance
1313 5th Street SE
Minneapolis, MN 55414
Phone: (612) 379-3815
www.newrules.org
Offers consistently excellent articles, information, and
resources, including discussions of the scale and own-
ership of ethanol facilities.
Renewable Fuels Association
One Massachusetts Avenue, NW - Suite 820
Washington, DC 20001
Phone: (202) 289-3835
www.ethanolrfa.org
“The national trade association for the U.S.
ethanol industry.”
www.attra.ncat.org ATTRA Page 15

16. Ethanol Opportunities and Questions
By Mike Morris and Amanda Hill
NCAT Energy Specialists
© 2006 NCAT
Paul Driscoll, Editor
Amy Smith, Production
This publication is available on the Web at:
www.attra.ncat.org/attra-pub/ethanol.html
or
www.attra.ncat.org/attra-pub/PDF/ethonal.pdf
IP 292
Slot 286
Version 072006
Page 16 ATTRA