southeastern regional center tennessee agricultural experiment station u.s. energy situation &...

Southeastern Regional CenterSoutheastern Regional CenterTennessee Agricultural Experiment Tennessee Agricultural Experiment StationStation

U.S. Energy U.S. Energy Situation & Situation &

OutlookOutlook

April 3-4, 2007

Jackson, TNCookeville, TN

Dr. Kelly Tiller

UT Extension Agent TrainingBioenergy Production in Agriculture

Agricultural Policy Analysis Center - The University of Tennessee - 310 Morgan Hall - Knoxville, TN 37996-4519

www.agpolicy.org - phone: (865) 974-7407 - fax: (865) 974-7298AAPP CCAA


Motivators of ChangeMotivators of Change

High and volatile energy prices– Relatively stable, but at a much

higher equilibrium– Subject to rapid spikes

Photo: iStockPhoto.com


Rate of Use

FranceS. KoreaBrazilCanadaIndiaRussiaGermanyChina

U.S.Japan

Mexico

0% 10% 15% 20%5% 25%

Oil Reserves

U.S.NigeriaLibyaRussiaVenezuelaU.A.E.KuwaitIraqIranCanadaSaudi Arabia

2%2%

3%5%

6%8%8%

9%10%

14%21%

Updated July 2005. Source: International Energy Annual 2003 (EIA), Tables 1.2 and 8.1-O&GJ. Canada’s reserves include tar sands.

The United States uses more oil than the next five highest-consuming nations combined.3%

3%3%3%3%3%3%

7%

25%7%

3%

U.S. Dependence on Foreign OilU.S. Dependence on Foreign Oil


Motivators of ChangeMotivators of Change

High and volatile energy prices– Relatively stable, but at a much higher equilibrium– Subject to rapid spikes

National security, energy independence– America accounts for 25% of global oil consumption,

holds 3% of known oil reserves– 60% of world’s oil reserves are in unstable regions

Economic well being

Environmental sustainability


Energy Use ProjectionsEnergy Use Projections

Source: 25x’25 Report, 2006

Total energy production and consumption, 1980-2030 (quadrillion Btu)


U.S. Energy ConsumptionU.S. Energy Consumption

Biomass Consumption Million dry tons/year

Forest products industry Wood residues Pulping liquorsUrban wood & food & other process residuesFuelwood (residential/commercial & electric utilitiesBiofuelsBioproducts

TOTAL

44 52 35 35 18 6

190

Source: Energy Information Administration (EIA), 2006


Increasing Foreign Oil DependenceIncreasing Foreign Oil Dependence

Source: Energy Information Administration (EIA), 2006


Transportation Fuel FocusTransportation Fuel Focus

Today, 97% of our transportation fuel

comes from petroleum sources


Current Biofuels ProductionCurrent Biofuels Production

The US consumes 385 milliongallons of gasoline per day

US produced 4.9 billion gallons of ethanol in 2006– Primarily corn-based ethanol

US produced 250 million gallons of biodiesel in 2006– Primarily from soybean oil and waste greases

Other alternative transportation fuels include natural gas, propane, electric, hybrids, hydrogen


U.S. Corn Ethanol ProductionU.S. Corn Ethanol Production

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Mill

ions

of

Gal

lons

of

Eth

anol

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

Source: Renewable Fuels Association

2012 RFS: 7.5 B gallons

Total Capacity (as of 11/27/06) = existing + under construction + under expansion


U.S. Ethanol ProductionU.S. Ethanol Production

Source: Renewable Fuels Association, 1/29/07

Currently: 5.6 bgy capacity at 114 biorefineries (purple dots)

Near Future: Additional 6.9 bgy capacity at 80 biorefineries under construction and 7 under expansion (yellow)

TOTAL: More than 12.5 bgy capacity


The Push Toward EthanolThe Push Toward Ethanol

51¢ per gallon excise tax credit– 5.1¢ per gallon up to 10% blended gasoline– In place through 2010

Several states have banned additive MTBE

Renewable fuels standard (RFS) is 7.5 billion gallons by 2012– Included in 2005 Energy Policy Act– Some efforts to push RFS higher

Oil prices higher


The (recent) Ethanol StoryThe (recent) Ethanol Story

Major oil (energy) companies stopped producing MTBE in May 2005– 3 to 3.5 billion gallons of ethanol needed to

replace MTBE as an oxygenate

54¢ per gallon tariff on imported ethanol

Summer 2006: Ethanol prices jumped sharply to $3.50 to $4.00 per gallon

Ethanol industry profit margins soared, leading to huge industry expansion


Biofuels Production in TNBiofuels Production in TN

Source: TN Dept. of Environment & Conservation Presentation, 12/06


Biodiesel: From 0 to 75 mgyBiodiesel: From 0 to 75 mgy



Biofuel Use in TennesseeBiofuel Use in Tennessee

> 60,000 flexible fuel vehicles (FFVs) in Tennessee

Only 2 public E85 fueling stations in TN– Nashville and Clarksville– Some additional fleet supply

Significant portion of gasoline blended with 10% ethanol, widely available

Biodiesel much more widely available to the public

Significant fleet use of biofuels, especially biodiesel


Proposed Biofuel CorridorProposed Biofuel Corridor



Visioning the Energy FutureVisioning the Energy Future

25x’25– By 2025, America’s farms, ranches and forests will

provide 25% of the total energy consumed in the U.S.while continuing to produce safe, abundant and affordable food, feed and fiber

20 in 10– Goal in President’s 2007 State of the Union Address to replace 20% of

our transportation fuels with renewable sources by 2017

30 by ’30– DOE’s 2002 “Vision”: goal of replacing 30% of our energy use with

renewable sources in 30 years

36 bgy RFS by 2022– New legislation proposed to increase the RFS from 7.5 bgy in 2012 to

36 bgy in 10 more years, 21 bgy from advanced ethanol sources


U.S. Corn Ethanol ProductionU.S. Corn Ethanol Production

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Mill

ions

of

Gal

lons

of

Eth

anol

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

0

3,000

6,000

9,000

12,000

15,000

Mill

ions

of

Gal

lons

of

Eth

anol

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

Source: Renewable Fuels Association

2012 RFS: 7.5 B gallonsTotal Capacity (as of 11/27/06) =

existing + under construction + under expansion

There’s a limit to the amount of corn-based

ethanol we can sustainably produce

without disrupting the ag sector

Could potentially double corn-ethanol capacityTennessee crop farmers benefit from corn-ethanol, wherever plants are locatedIncreases livestock feed prices


Energy In vs. Energy OutEnergy In vs. Energy Out

5.3

1.40.8

0.4

0

1

2

3

4

5

6

Fos

sil E

nerg

y R

atio

=

(En

erg

y D

eliv

ere

d to

Cu

sto

me

r / F

oss

il E

ne

rgy

Use

d)

Cellulosic EthanolBiorefinery

Corn Ethanol Gasoline Electricity

Source: J. Sheehan & M. Wang (2003)

The road to petroleumdisplacementis paved with

cellulosic biomass

* Some newer estimates of cellulosic FER >10

*


A Billion Tons of BiomassA Billion Tons of BiomassSustainable annual supply of 1.3 billion dry tons

932 M dry tons from agriculture

– Crop residues (446)– Perennial crops (377)– Grains to biofuels (87)– Process residues (87)

368 M dry tons from forests (forest residue only)

– Manufacturing residue (145)– Logging debris (64)– Fuel reduction treatments (60)– Fuelwood (54)– Urban wood waste (47)

Perlack, R.D., et al. 2005. Biomass as Feedstock for a Bioenergy and BioproductsIndustry: The Technical Feasibility of a Billion-Ton Annual Supply.


Complex BalanceComplex Balance

Market demands and alternative uses

Crop returns

Feed (input) prices

Impacts on land prices and rents

Global trade impacts (developing countries)

Environmental impacts

Sustainability

Risk

southeastern regional center tennessee agricultural experiment station u.s. energy situation &...

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