tims ethanolportstoplains
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Biofuels:Biofuels:From Ports-To-PlainsFrom Ports-To-Plains
Presented by
Tim Lust
National Sorghum Producers
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Blue RevolutionBlue Revolution
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Today’s Transportation FuelsToday’s Transportation Fuels Today’s Transportation FuelsToday’s Transportation Fuels
Gasoline – 140 billion gallons Diesel – 45 billion gallons E85 – 10 million gallons
Ethanol as an additive (E-10) – 4.8 billion gallons – Extends gasoline – blended in 40% of gasoline– Adds 300,000 barrels of supply
– Biodiesel is important as well
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Energy Security BenefitsEnergy Security Benefits
Two-thirds of known oil reserves in the Mideast
Today, 97% of transportation energy comes from petroleum, of which 65% is imported
U.S. energy imports to grow to more than 71% in 2025 according to EIA
EIA estimates oil prices at near or above $50/barrel through 2030
Under the RFS, use of renewable fuels will reduce oil imports by 2 billion barrels
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Ethanol’s Environmental BenefitsEthanol’s Environmental Benefits
Reduces emissions of CO, exhaust VOCs and NOx, particulates, hydrocarbons
Displaces toxics – benzene, toluene Renewable – reduces greenhouse gas
emissions Displaces fossil energy use Reduces CO and ozone through oxyfuel
and RFG programs
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U.S. Ethanol Industry TodayU.S. Ethanol Industry Today
Annual production record in 2005 of 4 bgy 105 plants in 19 states with over 4.8 bgy
capacity today (September 2006) 44 plants under construction, combined w/
7 expansions, will increase industry capacity an additional 3 bgy (August 2006)
Dozens of additional plants in various stages of development
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Farmers Leading the Fight for Farmers Leading the Fight for Energy IndependenceEnergy Independence
Rural Revitalization! 47% of the 101 current ethanol plants are
owned by farmers Majority of ethanol plants under
development are farmer-driven projects
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Historic U.S. Ethanol ProductionHistoric U.S. Ethanol Production
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Ethanol Production Will Nearly Triple Ethanol Production Will Nearly Triple Over the Next DecadeOver the Next Decade
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4,000
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Actual Forecast
LECG
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Renewable Fuels Standard (RFS)Renewable Fuels Standard (RFS)(Energy Policy Act of 2005)(Energy Policy Act of 2005)
RFS (bgy)4.0 in 20064.7 in 20075.4 in 20086.1 in 20096.8 in 20107.4 in 20117.5 in 201241.9 = Total
2013+ Proportional to
renewable fuels/gasoline ratio
Includes 250 mgy cellulose ethanol requirement
4.7% of National Fuel Supply by 2012
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RFS vs. RFA ProjectionsRFS vs. RFA Projections
RFAYear RFS Projections 2006 4.0 5.12007 4.7 6.62008 5.4 7.92009 6.1 8.62010 6.8 9.32011 7.4 9.92012 7.5 10.3
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Agriculture as Energy ProducersAgriculture as Energy Producers
In 2005, 1.43 billion bushels of corn (13% U.S. crop) and 15% of the nation’s grain sorghum crop used for ethanol
Ethanol is the 3rd largest market for corn and 2nd largest market for sorghum
Ethanol dry mills produced record 9 million metric tons of distillers grain livestock feed in 2005
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Politics and Politics and EthanolEthanol
Are LOCAL Are LOCAL
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EXCEPT WHEN THE PRESIDENT MAKES THEM NATIONAL
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Site Evaluation Matrix– Class 1 rail– Class A highway access– Available water– Available land– Accessible animal feeding units– Proximity to local starch source– Energy access– Local synergies
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Community Leaders on a MissionCommunity Leaders on a Mission
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Annual Local Economic Impact of a Annual Local Economic Impact of a 100 mgy Facility100 mgy Facility
Spend an estimated $88.2 million for goods and services
Use 36.4 million bushels of sorghum/corn Operational spending will generate $406 million
for the local economy Increase the size of the state economy by $223
million Generate nearly 1,600 new jobs Increase household income by more than $50
millionSource: “Contribution of the Ethanol Industry to the Economy of the United States,” LECG, LLC, February 2006
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Industry Responds to Industry Responds to Rising DemandRising Demand
2005 Production represents a 17% increase from 2004 production and a 126% increase from 2001 – mostly in new coastal markets
Once just a niche fuel, today 40% of all gasoline sold in the U.S. contains ethanol!
Increasing production activity outside corn belt, including CA, CO, OR, NM, TX, AZ
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Courtesy RFA
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Importance of the IndustryImportance of the Industry
A recent study concluded gasoline prices would increase 14.6% in the short term (36.5 cents/gallon if gas is $2.50/gallon), and 3.7% in the long term (9.3 cents/gallon if gas is $2.50/gallon) even after refiners build new capacity or secure alternative sources of supply.
According to the Consumer Federation of America, consumers could pay as much as 8 cents per gallon less if oil companies blended ethanol rather than higher-priced petroleum products (May 2005).
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Grain to Ethanol ProductionGrain to Ethanol Production
What does it look like today??
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Sweet Sweet SorghumSorghum
Source: William Rooney, Soil and Crop Sciences, Texas A&M University
Grows in 35 U.S. States
Yield = 20–25 Dry Ton / (Acre·Yr)
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What about Cellulosic ethanol?What about Cellulosic ethanol?
Technology and cost are limiting factors. Current technology for cellulosic ethanol is
the acid hydrolysis process. – Capital costs are almost 4X that of dry mill
ethanol.– Operating costs are 50% above corn dry mill
costs. Enzymatic process holds promise for lower
costs, but is not yet commercialized. Cellulose ethanol will happen, but large
scale production not likely before 2015.
LECG
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CONCLUSIONCONCLUSION
Good and not so good
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BenefitsBenefits
Rural America– Builds infrastructure to support bioenergy– Creates new tax base to support rural
America– Encourages job development in rural
America
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BenefitsBenefits
National Security– Reduce dependency on Foreign Energy– Creates job security in rural America– Investment into rural America– Less dependence on Foreign export for our
Agricultural communities– Development of new energy technologies
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Challenges to ConsiderChallenges to Consider
Water Laws (state/local level)Transportation Issues
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Capacity (MGPY) 30 50 100
Grain In (Trucks/yr) 11,080 18,467 36,934
Grain In (Trucks/day) 30 51 101
DDGS Out (Trucks/yr) 8,733 14,555 29,110
DDGS Out (Trucks/day) 24 40 80
TRUCK TRAFFICTRUCK TRAFFIC
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The Future’s BrightThe Future’s Bright
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Thank YouThank You