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U.S. Doubles Down On Ethanol Despite Glut

October 27, 2018

U.S. Doubles Down On Ethanol Despite Glut

Ethanol plant

Despite finding itself the midst of a massive glut, the United States ethanol industry is set to see three new plants come online over the next year, adding a combined annual production of 270 million gallons to the nation’s already ballooning ethanol oversupply. The industry has been plagued by overproduction and low demand since 2015.

Over the past 5 years, ethanol production has increased by 10.5 percent, rising from 14.3 billion gallons in 2014 to 15.8 billion gallons in 2017. This is despite the fact that only one new ethanol plant began production in the years between 2015 and 2018. The increase is in large part due to more efficient means of production, allowing producers to get more fuel out of each kernel of corn, and the expansion of existing plants in lieu of building new plants from the ground up.

Now there will be three new plants coming online all within a span of mere months. Atlantic, Iowa will be home to 120-million-gallon-a-year dry mill ethanol plant Elite Octane, LLC before the end of 2018. Ring-Neck Energy & Feed, LLC will go online in Onida, South Dakota in early 2019, and ELEMENT, Inc., a 70-million-gallon-a-year ethanol plant, is currently under construction in Colwich, Kansas.

In an effort to reduce the U.S. ethanol glut, which is undeniably about to skyrocket even higher, the industry has been strategizing aggressive campaigns to boost demand. It has become abundantly clear that in order to return to its strong profit margins of 2013-2014, the U.S. ethanol industry will need to look overseas. Part of the ethanol industry’s auto-resuscitation plan involves increasing its market share of liquid fuel in the U.S. by promoting higher ethanol blends like E15 (15 percent ethanol to a gallon of gas), E30 (30 percent), and E85 (85 percent), but this angle alone will not produce nearly enough demand to contend with supply.

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The Great Biofuel Swindle

October 24, 2018

The Great Biofuel Swindle

swindle

Over the past decade, “biofuel” has been a major buzz word in the world of clean energy and environmental science. As the topic of advanced biofuels continued to trend over the years, investments and studies ballooned accordingly. Now, however, with a bit of hindsight it has become clear that the vast majority of chatter and speculation about the “next big biofuel” set to change the energy landscape was just hot air.

Many claims made by energy startups, blogs, and think tanks were a bit short of credible, to put it lightly. A laundry list of companies over time claimed that they would be able to efficiently convert biomass like straw, wood chips, algae, and other organics into biofuel in an economically viable way. Some of these hopefuls even claimed to be able to do so for as little as a dollar per gallon.

Investors and taxpayers alike funneled money into ventures that had little to no chance of success. Investment went to technologies that had been abandoned decades before, due to economic impracticality. The most striking example can be found in the case of cellulosic ethanol. Converting straw into ethanol is a prohibitively expensive venture, but companies continued–and still continue–to try. What’s more, despite the fact that “commercial” cellulosic ethanol is only being produced at a very small fraction of the projected volumes, it’s currently being sold into the fuel supply, in large part thanks to heavy subsidization from the Renewable Fuel Standard.

Coming in second, only behind cellulosic ethanol, as the most overhyped biofuel is biomass sourced from algae. The concept is not nearly as far-fetched as producing fuel from straw. Some species of algae do produce oils that can be converted into fuel, and crude oil itself is essentially prehistoric algae and plankton.

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Ethanol Is Terrible for Health and the Environment, but Government Keeps Backing It

August 20, 2018

Ethanol Is Terrible for Health and the Environment, but Government Keeps Backing It

The US federal government still strongly pushes corn- and soy-based ethanol despite the EPA’s new study showing its harmful effects.
When the elected officials and bureaucrats who run a government want to stack the deck in favor of a politically connected special interest, they have three main ways that they can go about it:
  1. They can subsidize the special interest, often using taxpayer cash.
  2. They can penalize the competition of the special interest, often through tariffs.
  3. They can mandate that people do business with the special interest.

Each of these actions is economically harmful as government-backed subsidies, penalties, and mandates all impose unnecessary costs on regular people. Worse, they often lead to predictable, if often unintended, consequences that do serious damage beyond what they do to personal finances.

In the case of ethanol in the United States, the federal government has employed all three measures over the years, frequently with bipartisan political support. Its subsidies keep afloat politically connected businesses that wouldn’t otherwise be able to keep themselves in business. Its tariffs have kept consumers from being able to buy cheaper sources of ethanol on the global market. And its mandate to put an increasing amount of corn-based ethanol into fuel makes food more expensive.

As an example of an unintended-yet-predictable consequence, it turns out that those actions by the U.S. government to push ethanol production and use in the United States are doing serious damage to the environment. The Daily Caller‘s Jason Hopkins reports on a new study from the Environmental Protection Agency:

In a study titled “Biofuels and the Environment: The Second Triennial Report to Congress,” the Environmental Protection Agency (EPA) determined that ethanol derived from corn and soybeans is causing serious harm to the environment. Water, soil and air quality were all found to be adversely affected by biofuel mandates.

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The Billion Dollar Fuel Mandate Gone Wrong

February 22, 2018

The Billion Dollar Fuel Mandate Gone Wrong

Gas

This year begins the ninth year of cellulosic ethanol mandates in the U.S. Today I want to give a brief review of cellulosic ethanol, review the original targets, and examine the current status of the industry.

What is Cellulosic Ethanol?

Conventional ethanol production utilizes a fermentation process to convert starches or simple sugars to ethanol. The vast majority of the world’s ethanol is produced from either corn or sugarcane.

Cellulose is an important structural material for plants, and it is made up of many repeating sugar units. These repeating sugar units can be broken down by various processes into the component sugars, which can then be fermented into ethanol.

The process of breaking down cellulose into sugars was discovered in France in the 1800’s, and cellulosic ethanol production was first commercialized in Germany in 1898. Commercialization in the U.S. followed in 1910, but the process was ultimately abandoned almost everywhere for economic reasons.

Ethanol Mandates Begin

The Energy Policy Act of 2005 created a Renewable Fuel Standard (RFS) for the U.S. that required 7.5 billion gallons of renewable fuel — primarily corn ethanol — to be blended into the fuel supply by 2012.

The act created mandates requiring that increasing volumes of biofuel be blended into the U.S. fuel supply. Corn ethanol production soared and quickly outstripped the mandates. The 2007 Energy Independence and Security Act (EISA) increased and accelerated the schedule for the mandates. But it also created a mandate to begin blending cellulosic biofuel (which was primarily envisioned as ethanol) into the nation’s fuel supply.

Interestingly, there was no commercial cellulosic ethanol production when the mandates were established, but proponents of the technology were certain that commercialization would come in response to the mandates. The cellulosic ethanol mandate went into effect in 2010 when 100 million gallons of cellulosic ethanol was required to be blended into the fuel supply.

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The Renewable Fuels Con

May 7, 2017

The Renewable Fuels Con

You can’t just sell gas anymore.

Most people don’t realize it, but what they’re pumping into their car’s tank isn’t actually gasoline, properly speaking. It’s gasoline mixed with ethanol alcohol – the ratio currently set at 10 percent ethanol and 90 percent gas (E10).

“Diesel” often isn’t exactly diesel, either.   

The real stuff – the petroleum-based stuff – is mixed with bio-diesel, which is derived (like ethanol) from non-petroleum sources, usually vegetable matter.

The market isn’t demanding this – but the government is.

There is a law called the Renewable Fuel Standard. It  requires the “blending” of oceans of corn con ethanol and biodiesel boondoggle into the general fuel supply – ostensibly, to reduce America’s dependence on foreign (and non-renewable) oil.

Like so much that government does, it sounds good – but what it actually doesisn’t so good.

The RFS has raised refining and distribution costs as well as the cost to motorists, who not only pay more for the Uncle-adulterated fuel but also for the fuel systems in their vehicles, which have had to be modified to be compatible with the not-quite-gas (and sort-of diesel) fuels the government is pushing.

These adulterated fuels are also – ironically – less efficient. A gallon of pure gas will take you farther than a gallon of 90 percent gas and 10 percent ethanol because the gallon of gas contains more energy than a gallon of E10.

As is almost reflexively true of everything the government mandates, we get less – and pay more for it.

But that doesn’t mean someone’s not making a buck – as is also usually true when government intervenes in the market.

In addition to the Usual Suspects – the ethanol lobby, for instance – there is a another group of crony capitalists making hay off the RFS mandate. These are the large refiners and chain gas stations, who can leverage – in the lingo of the federal bureaucracy – Renewable Volume Obligation (RVO) credits to gain an unfair competitive advantage over smaller refiners and independent gas stations.

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Point-Counterpoint: Ethanol

May 29, 2016

The Case for More Ethanol: Why Green Critics Are Wrong

The criticism of ethanol by environmentalists is misguided and just plain wrong. In fact, thanks to improvements in farming techniques, increasing the amount of corn ethanol in U.S. gasoline would reduce air pollution, provide significant health benefits, and lower greenhouse gas emissions. 

For almost as long as there have been cars, gasoline has been the dominant fuel in transportation. But for a host of reasons — environmental, climate change, public health, and economic — the time has come to consider mixing higher blends of biofuels with gasoline. And in the United States, the best source for that biofuel today, surprisingly, is corn.

Such a suggestion will surely elicit cries of protest from the environmental community: A few years ago there was a flood of articles and reports about the allegedly disastrous ecological impacts of growing crops for biofuels. But we believe that ethanol has been unfairly stigmatized in the conventional wisdom and that the reasons for concern about corn ethanol deserve reexamination.

COUNTERPOINT
The Case Against More Ethanol: It’s Simply Bad for Environment

The Case Against More Ethanol: It’s Simply Bad for Environment

The revisionist effort to increase the percentage of ethanol blended with U.S. gasoline continues to ignore the major environmental impacts of growing corn for fuel and how it inevitably leads to higher corn prices, writes economist C. Ford Runge. It remains a bad idea whose time has passed. 
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In the U.S., now is the time for that second look. In June, the Environmental Protection Agency will begin a mid-course evaluation of President Obama’s ambitious fuel economy target, established in 2012, to have cars and light trucks reach 54.5 miles per gallon by 2025. Increasing the ethanol blend in gasoline from the current 10 percent to roughly 30 percent would not only help boost gas mileage, it would significantly cut U.S. carbon emissions and air pollution.

…click on the above link to read the rest of the article…

Do Biofuels Still Have A Place In The Global Energy Mix?

April 20, 2015

Do Biofuels Still Have A Place In The Global Energy Mix?

Less than a decade ago, biofuels were set to take the energy world by storm. They promised a low-carbon alternative to gasoline, while advances in algae technology were taking biofuels beyond the traditional soybeans and corn. In 2015, the contrast could not be starker.

The new frontier of biofuel technology has all but disappeared off the energy agenda, while opposition to traditional biofuels has only grown. The overarching question now is whether biofuels have a place in a sustainable energy future and what role should they play?

The debate over the negative impact of ethanol and soybean-based biodiesel is not a new one. But in an era in which environmental groups are increasingly savvy and the concerns over the economic and environmental implications of climate change are increasing, opponents have a strong case to make. Of course, as with many polemic discussions, the reality is far more nuanced than what we are often led to believe.

Related: How Much Water Does The Energy Sector Use?

In the US, the debate has centered on corn and its refined form, ethanol. According to one estimate, ethanol accounts for 40% of corn production in the United States. In 2014 this translated into over 14 billion gallons over the course of the year. This staggering figure has far reaching implications for corn prices and agricultural practices. The requirement that gasoline be blended with 10% ethanol, and the hefty subsidies the industry has received over the years have kept the sector afloat.

 

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