ANALYSIS - US Looks Beyond Corn for Ethanol's Future
Date: 14-Mar-07
Country: US
Author: Euan Rocha
"I would be surprised if it took more than six or seven years for this technology to be commercially viable, with current subsidies and price structures," said Alex Farrell professor of Energy and Resources at UC Berkeley.
Ethanol produced from plant cellulose has the same chemical properties as ethanol made from corn or sugar cane, but it can be produced from a variety of nonedible materials like cereal straw, sawdust and switchgrass.
In the United States, corn is the dominant feedstock used to make ethanol. With a mushrooming in the number of corn-fed ethanol plants, the price of the cereal has risen sharply over the last few months.
This has led small players like BlueFire Ethanol Inc. and Broin Cos. joining forces with big companies like DuPont Co., Waste Management Inc. and Goldman Sachs Group Inc., in a bid to develop the technology required to make cellulosic ethanol a viable option.
Energy experts say that cellulosic ethanol could help stem the spiraling demand for corn and free more land for agricultural and other uses.
"If we really want to be energy independent, we are going to have to make more ethanol; and if we are going to make more ethanol in that large a quantity, we've got to find something in addition to corn," said Ron Lamberty, director of market development at the American Coalition for Ethanol, a trade group.
"And that's the thing: It's not an instead of; it's an in addition to," he said.
Moreover, it is possible to produce cellulosic-based ethanol with lower greenhouse gas emissions than corn-based ethanol, as corn farming requires fertilizers and heavy machinery, which utilize natural gas and gasoline that are harmful to the environment.
But it is easier to extract ethanol from sugar or corn starch, than it is to extract ethanol from plant cellulose.
Moreover, the technology to produce ethanol from cellulose is still in its early stages and cellulosic ethanol is more costly to produce than corn-based ethanol. But this could change as the technology develops and production ramps up.
"We hope to be competitive with grain-based ethanol within six to 10 years," said Jeff Broin, chief executive of ethanol producer Broin Cos.
Broin is one six companies to recently benefit from a US Department of Energy grant of US$385 million to fund new cellulosic ethanol plants over the next four years.
"Today, to produce cellulosic ethanol, it costs US$2.25 to $2.50 per gallon." said Broin, about US$1 more than it costs to produce a gallon of ethanol from corn.
But he hopes that the cost of producing cellulosic ethanol will be below US$2 a gallon by 2010.
President George W. Bush has made it a goal to raise production of alternative fuels to 35 billion gallons a year by 2017.
This goal bets heavily on the development of such crude oil alternatives as cellulosic ethanol, biodiesel, bio-butanol and coal-to-liquid fuel.
It is unfeasible to expect that Bush's alternative fuel production targets could be achieved through corn-based ethanol production alone. Last year, about 2.15 billion bushels of corn, or 20 percent of the crop's domestic production, was used for ethanol.
However, industry experts say that a frenzy of biofuel plant construction means domestic ethanol supply will actually outpace demand and dampen prices for ethanol this year.
The US Department of Agriculture currently estimates that domestic farmers will harvest about 12.2 billion bushels of corn this year, and almost 25 percent or 3.2 billion bushels will be used for ethanol production.
More than 70 corn-based ethanol plants are expected to become operational by 2009, with an overall capacity of about 5.6 billion gallons a year, according to the American Coalition for Ethanol.
This will only serve to drive demand for corn, pushing prices higher and in turn leading to higher costs for ethanol makers and smaller profit margins.
Corn futures on the Chicago
