Interesting timing, especially when some biomass companies are switching from wood chips to corn, because they couldn’t turn a profit on wood chips. Looks like all the wheels are coming off the bus now.
To Survive, Some Biofuels Companies Give Up on Biofuels – Technology Review
Gevo, a prominent advanced-biofuels company that has received millions in U.S. government funding to develop fuels made from cellulosic sources such as grass and wood chips, is finding that it can’t use these materials if it hopes to survive. Instead, it’s going to use corn, a common source for conventional biofuels. What’s more, most of the product from its first facility will be used for chemicals rather than fuel.
As the difficulty of producing cellulosic biofuels cheaply becomes apparent, a growing number of advanced-biofuels companies are finding it necessary to take creative approaches to their business, even though that means abandoning some of their green credentials, at least temporarily, and focusing on markets that won’t have a major impact on oil imports. This is hardly the outcome the government hoped for when it announced cellulosic-biofuels mandates, R&D funding, and other incentives in recent years.
Here’s the story on the subsidy ending from the Detroit News:
Congress adjourned for the year on Friday, failing to extend the tax break that’s drawn a wide variety of critics on Capitol Hill, including Sens. Tom Coburn, R-Okla., and Dianne Feinstein, D-Calif. Critics also have included environmentalists, frozen food producers, ranchers and others.
The policies have helped shift millions of tons of corn from feedlots, dinner tables and other products into gas tanks.
Environmental group Friends of the Earth praised the move.
“The end of this giant subsidy for dirty corn ethanol is a win for taxpayers, the environment and people struggling to put food on their tables,” biofuels policy campaigner Michal Rosenoer said Friday.
Dirty Corn Ethanol? I’m all for ending taxpayer siphoning, but dirty corn ethanol?
Full story h/t to Lawrence Depenbush
MarkW @2:40: “In your opinion, everytime someone pays less than 100% of their income to the govt in taxes, they are being subsidized?”
I favor the elimination of all corporate taxes. In the meantime, no industry should get a tax advantage not available to any other industry. The oil industry gets a depletion allowance that is available only to the extracting industries that exceeds their capital costs. The depletion allowance is not a major factor in the development or lack thereof of the fossil fuels in the US.
For the record, one of the few stocks I directly own is an oil and gas stock, I have no interest in any ethanol company though I suspect one or another mutual fund I invest in has investments in both. I have also advised a municipal client to not provide tax advantages to an ethanol producer. I find your visceral hatred of the ethanol industry to be disturbing and lacking in facts and analysis. I find the critics of most renewable energy sources to be similarly lacking in analysis, ignoring how the Coal and natural gas plants of Texas proved their reliability last winter.
A. Scott says,
“If you think you knew something 2 years ago, forget it, you’re three or four years out of date, because what people in the field know now will probably not make a press release or published patent application until then.This field is rocking right now, in this economic environment too.”
Well then somebody better tell EPA because the new nitrogen limitations (TMDLs) they are trotting out are going to exact phenomenal costs related to removing the nitrogen released into aquatic environments from corn growing. The recent Chesapeake TMDLS for nitrogen are just the first – and will cost MD about $10bn to remove 10M lbs of N. Their proposed 45% N reduction for the Mississippi River basin will make corn ethanol production prohibitive when one understands that 1.5lbs of nitrogen is needed to produce a bushel of corn. Say 30% runoff or 0.5lbs N to the river. Now add in costs as high as tens of thousands of dollars to remove a single pound of nitrogen.
Looks like a short opportunity to me.
Smokey @7:06: “You’re thinking of MTBE.”
Yes. Attribute to either senility or Merlot.
I use E85 at least 75% of the time in a 2003 Tahoe. I record the majority of purchases. My mileage has never dropped more 20%, usually less.
———————————————–
It helps communication substantially if you actually read the posts before you comment. These comments are referring to two entirely different fuels.
E10 (10% ethanol in gasoline) suffers a typical mpg loss in modern cars of 1.5% to 4% as documented by the Department of Energy. A. Scott is talking about a Detroit FFV which we all agree sucks as a flexable fuel vehicle and he points out that in his experience he has never seen lower than a 20% decrease in fuel mileage when switching from gasoline to E85 (70%-85% ethanol in gasoline).
I was talking about (peak fuel mileage while driving for economy) of 92% of long term gasoline fuel mileage running E85 in a home conversion properly tuned for E85 (not the close enough it runs conversions Detroit turns out).
You are mixing apples and oranges, so please be consistent, or at least qualify your statements so they are at least referring to a specific fuel blend. Otherwise you are just wasting bandwidth.
Larry
Those disputing my original comments at the top: I got this information directly from a fellow who owns an algae biodiesel farm in Louisiana who is a business partner of mine in another venture. The “burning up the topsoil in our gas tanks” is a direct quote from him. He recognises the realities of the biofuel business, which parts are scams. He got out of corn ethanol for this reason and went into the algae biodiesel, even tho it would be easier to make a buck given all the subsidies for corn ethanol, cause unlike some, he has principles. And yes, I was talking about the end to end costs to produce a gallon of ethanol, it DOES take a gallon of oil to produce and the ethanol has a LOWER BTU CONTENT. Ethanol scammers remind me of free energy fools who keep thinking up ‘new’ ways to photosynthesize water to get out more energy than they put in.
A. Scott wrote: “As the study I posted above showed it is because of the overall downward price pressure ethanol puts on gasoline the more it is used and competes. If it was solely the subsidies then you would see a similar price benefit across the country – commensurate with/matching the subsidies. You do not. What you do see is the more available and used ethanol is in an area the bigger price reduction – in Minnesota equaling $1.37 while on the East cost with minimal availability a small fraction of that.”
I think I can add some information on this. It’s been some years and I may be hazy on the details, especially recently, but the big problem is that it is extremely expensive to ship ethanol. It’s considered a hazardous chemical (fire) by the railroads and consequently you can’t get them to ship it as “unit” trains, i.e. those very long 100+ trains with all the cars identical. You have to pay a hazard premium and it’s hard to get enough rail cars.
A solution is to send ethanol down the petroleum pipelines, but those pipelines typically have been placed in relation to how petroleum moves around the country. And the amount of ethanol produced is so much smaller than gasoline that you can’t devote a pipeline to ethanol only. Finally, the mixing typically happens at local areas (rather than at the distillation locations) so it’s not so easy to pipe it around. Hence different parts of the country have very different experiences in ethanol pricing and availability.
The industry expects that eventually the corn ethanol plants will convert to run on a cellulose process. The conversion is not difficult; basically you need to convert cellulose to sugar (a regular plant converts starch to sugar). As far as infrastructure goes, this is a change to the front end of the process. You still use the same fermentation and distillation facility but the distiller’s grains changes.
The reason cellulose processes are not currently profitable is the cost of the enzymes. The enzyme that converts starch to sugar is cheap. The primary product of the enzyme industry is the stuff that whitens your clothes in laundry soap, (I was told this by an enzyme sales rep), and they expect that in the long run, the price of the enzyme used for cellulosic ethanol will drop to the same cheap price of the laundry enzyme. At that time cellulosic ethanol will become quite common and some of the corn plants will convert over. It’s supposed to be in the next few years.
For a celluose plant, the most important thing is arranging for a feedstock whose characteristic does not change with time. In industrial chemical processes, profitability comes from low waste which comes partly from stability.
One of the hopes of the biofuels industry is to use algae to make biodiesel. This process has a huge theoretical fuel production per acre per year but has not yet been commercialized. Recently, I was unaware of any place you could buy biodiesel made from algae even at the single gallon level. But if this does happen, then eventually you’d expect the US vehicle fleet to shift from gasoline/ethanol to diesel/biodiesel.
In the event of such a shift (which would take decades), it’s interesting to note that the production of biodiesel from a vegetable or animal oil (such as the oil from algae or corn oil), requires about 10% alcohol by volume. In the US today, they use methanol for tax /subsidy reasons, but ethanol works as well. So in the long run, having 10 to 20% of our fuel needs met by ethanol from corn is unlikely to be a complete boondoggle. The plants will run on corn until the enzyme costs bring celluose into competition, and even a transition to biodiesel will leave the industry with a guaranteed consumption.
I’ll believe that corn ethanol is viable when farmers use nothing but ethanol in their machinery and ethanol stills use ethanol to fuel their entire plant.
CommonSenseBill @6:32: “When vehicles are leaking fuel in your garage because of corroded fuel tanks/fuel lines. You can warm your family as the house burns down.”
Since I returned to Iowa from California in 1981, I have owned approximately 15 cars and have used ethanol the whole time. Of those, the only car I have had that had a fuel system problem was the Ford Granada I brought back from California. It needed three quick successive fuel filter replacements as the ethanol cleaned out the gunk from the previous non-ethanol gas. After that there were no fuel system problems. It eventually succumbed to a transmission problem. My autos all have gone over 200,000 miles, except for the one that was the victim of a suicide deer, and one I traded in to get a better financial deal after the trade in. Your assertion of corrosion problems does not ring true.
CommonSenseBill @ur momisugly 6:32: “Lets make this real simple for the people who want Ethanol in their gas tanks. When the alcohol evaporates and leaves water behind, guess what? Water causes corrosion in the fuel systems. Water in the fuel system also has a bad habit of freezing”
Lived in Iowa since 1981. Used ethanol mix the entire time. Gets Cold, Frequently below -20 F. Never had a gasoline line freeze.
Kum Dollison @ur momisugly 12/28/2012 – 2:59 Says:
“And, you have, whether you realize it or not, witnessed an unholy alliance of some “greenie” outfits, and their financiers, the oil companies. None of this is as simple as it might appear.”
It is much simpler than it appears. Big Oil, Big Business, Big Ag, Big Ethanol, etc. are merely bidders at the auctions held by Big Government. Stop the auctions and the bidders go away.
Catcracking wrote: “For those who still believe that an abundance of cellulosic ethanol can be commercially produced, below is one of many disappointments for those who believed that spending $$$ will result in the commercial viability of a fuel for which technology did not exist. The hopes for a miracle fuel, pushed by congress and the administration, was the foolish basis for mandating cellulosic ethanol. This is the reason that private investors are scared off, they have been burned! This is the direct result of a government policy to push and subsidize commercialization before the fundamental pilot plant research is completed.”
I think you are exactly correct about this, and I thought I’d add some technical comments.
The plant’s problem apparently was that they were producing methanol instead of ethanol. This makes me wonder what kind of process they were using. The natural cellulose to ethanol process is to convert the celluose to sugar. From there yeast acts on sugar to produce ethanol, not methanol. So this particular screw-up does not apply to the industry as a whole.
The fact that the government is heavily subsidizing this stuff is the real problem. Wood chips are a nice cheap homogenous feedstock for an ethanol plant. In addition wood chips are cheap and ethanol is expensive so getting this process to work is an attractive proposition. The industry would pursue this in the total absence of government intervention or subsidies. But when the government gets involved you’re going to attract a certain amount of BS.
The big chemical companies like Dupont, Dow, and the petroleum companies are not generally going to get involved in bad ideas. But for an investor, these are not attractive targets as they have many other (chemical) products. People who are looking for a “pure bio fuel” play are getting burned because the companies they are investing in are largely intended to sell fools instead of fuels. Regardless of this, the technology continues.
By the way, no one will invest in a biofuel plant before the technology has been proven, so I wonder what exactly happened in this case. One wonders if there was outright fraud involved. You certainly have a situation where there is a large incentive to report exaggerated results.
And on the other hand, it’s sad that the government hasn’t allowed methanol as well as ethanol in fuels. As far as I know, there’s no significant difference in them in terms of their engine effects.
Finally, I should mention that one of the interesting properties of biodiesel is that it dissolves rubber at an amazing rate. When you visit an amateur biodiesel plant you will see a lot of leaks because of this. I can imagine that the stuff does the same thing in a lot of older cars.
A. Scott says:
December 28, 2011 at 6:30 pm
“Ethanol here needs the same early support. It first needs users – hence the flex fuel vehicles and the subsequent mandate on use.”………….
===========
Why.
What catastrophe will it avert ?
Can you give a cost/ benefit ratio for the next 20 years ?
If I’m not mistaken, its mandate was given to avoid catastrophe ?
It would reduce CO2 emissions by how much ?
Pat Moffitt says:
December 28, 2011 at 7:25 pm
A. Scott says,
“If you think you knew something 2 years ago, forget it, you’re three or four years out of date, because what people in the field know now will probably not make a press release or published patent application until then.This field is rocking right now, in this economic environment too.”
===================
Pat, that was me who said that.
Anything I said is regarding processes that are nitrogen neutral.
Carbon dioxide plus water plus sunlight gives carbon dioxide plus water plus heat is the commonly used equation. Nitrogen, sulfur and the like stay terrestrial and catalytic.
Carl Brannen says:
December 28, 2011 at 7:36 pm
Thanks for further practical insights into biofuels and their distribution. Definitely food for thought.
cwj says:
December 28, 2011 at 7:06 pm
“Society does not need a corn ethanol subsidy, Society also does not need an oil depletion allowance, or any subsidy of any industry out of the research stage.”
One needs to stop believing the Pelosi’s and the ethanol advocates on oil subsidies.
read the following:
“In 1975, the Depletion Allowance was limited to small producers who do not
operate a refinery …. That was intended to stop the ‘tax break
for the rich.”
And for those who do not understand why there is a depletion allowance in the tax code:
http://www.mineralweb.com/owners-guide/leased-and-producing/royalty-taxes/depletion-allowance/
“Depletion is the using up of a natural resource by mining, quarrying, drilling, or felling. Depletion allowance, then, is the allowance available through the IRS code allowing an owner to account for the reduction (production) of reserves as a product is produced and sold. For purposes of this article, the depletion allowance we are concerned with is the depletion allowance associated with the production of oil and/or gas. The depletion allowance, like depreciation, is a form of cost recovery for capital investments. There are two ways of calculating depletion allowance: cost depletion and percentage depletion. Oil and gas royalty owners have the availability of using either, yet for mineral properties you must generally use the method that gives you the larger deduction”
Any other Pelosi “oil subsidies” need clarification?
The arguments above about energy inputs for the production of ethanol are a theological, rather than practical dispute. Ethanol is a manufactured product which is used for various purposes. As the poster way above who is actually in the business pointed out, the only thing that matters is whether it can be produced profitably.
Energy is not the only input to ethanol production, and looking at it in isolation makes no sense. It requires land, equipment, labour etc as well. In the case of fuel ethanol, the only relevant question is whether it can be produced at a price that is competitive with other fuels, on a level playing field.
We do not judge other manufactured products using the energy inputs alone because it is meaningless. How would batteries rate? Since most things we use do not output any energy at all, should we stop making them? It is just silly. It comes down to what we are prepared to pay for them versus the market price, full stop.
Incidentally, in the ethanol prices cited in the above discussions, it is not clear to me whether tax breaks for ethanol are included in comparisons with gasoline/petrol prices. I know that in many places gas is heavily taxed at consumer level, while ethanol is exempt. Does that apply in the US?
Finally, we should all remember that unless ethanol blends are cheaper in real terms (no subsidies or tax breaks) than 100% gasoline, it is making gas more expensive. You need to buy more to get the same mileage, which is a price hike. This is yet another level of extraction from our wallets, which is why mandating is just as pernicious as subsidies. Subsidies at least have the virtue of being transparent ways of taking taxpayers’ money and giving it to special interest groups. Mandating is like watering down your liquor and charging the same for it.
philincalifornia says:
December 28, 2011 at 7:07 pm
_____________________________
I disagree with you Sir.
The first patent I can find as to this is a British patent of 1895.
There was spate of patents, some British some American in the 1930’s. Presumably they came to nothing.
I rather miss the Womplex.
However all the current patents or applications I know of in this respect. US, EU and Japanese, are of dubious validity since they essentially try to rewrite prior knowledge to make it appear new. Which it is not.
It may be there are secret processes that can do this. I would not know. But if there are then none have become commercial to my knowledge. And if they were commercially viable we would know all about them.
Kindest Regards
Mikelorrey, No One runs an ethanol refinery on Oil. No One. Most are powered by nat gas (in the future most will be powered by lignin, left over from the cellulosic process.)
How can it require a gallon of oil to produce a gallon of ethanol when no one uses oil?
If you’re thinking about the farming/harvesting of the corn, it takes approx. 4 1/2 gallons of diesel to farm, and harvest, an acre of corn (that produces 480 gallons of ethanol (actually, once you take the co-products, DDGS, and corn oil into consideration, it comes out to more like 800 gallons/acre.)
Once you add in the transporting of the corn, and the shipping of the ethanol, you “might,” possibly get up to as high as 9, or maybe 10 gallons of diesel to produce that 800 gallons of ethanol.
You just absolutely, positively have NO idea what you’re expounding on.
CWJ, Hope you continue with your good luck. I get the impression you drive quite a few miles each year. Some owners do not. I did say water will cause problems in winter. Did you use E10 in your older vehicles. That 1981 had carburetor, surprised it ran well. My Vette did give me 18 mpg+ before E10. Now with E10 and enhanced summer fuel blends here in california, dont ask. Adding more ethanol and decreasing fuel mileage makes no sense to me.
They tried that already. When high alcohol blends were first tested they tested both M-85 (85% methanol in gasoline) and E-85 (85% ethanol in gasoline).
Power wise they are very similar, Methanol is however even more difficult to cold start than ethanol, so it was very problematic for consumer use in colder northern climates.
It also has even higher fuel flow requirements that E85 so the volumetric fuel mileage is horrible.
More importantly it is horrifically corrosive compared to ethanol. Tests show it is at least 10x more corrosive than ethanol. It also produces formic acid if it is not fully combusted (engine running rich when cold). Due to the higher fuel volumes needed total miles per tank was completely unacceptable, and the high fuel volume during cold start caused serious problems with cylinder wash down, and sludge build up in the oil if the engine did not get up to full operating temperature on a regular basis to cook the fuel and condensate out of the oil.
Over all it was a very bad choice. Methanol will literally dissolve some light metals used in some cars such as magnesium and zinc and can aggressively attack aluminum. The corrosion problems were insurmountable, where E85 is much easier to deal with and fuel systems can easily be made tolerant of ethanol (it is actually less aggressive than some of the components in normal gasoline as far as some seal and gasket materials are concerned).
It is for this reason that E85 with ethanol has very strict limits for methanol contamination and trace acid content (mostly sulfur compounds). Small amounts of methanol contamination in E85 greatly increases is potential for corrosion and can over whelm the required corrosion inhibitors it contains.
Larry
A. Scott says:
December 28, 2011 at 2:52 am
Another bash ethanol thread – goody :rollseyes:
Ethanol is a far cleaner fuel overall than oil – reducing emissions and GHG’s in virtually all meaningful areas.
GREENHOUSE GASSES ARE NOT DIRTY!!! Co2 is NOT DIRTY. I could give a wit about “GHG” as they have very little to with what the climate/weather will ultimately do. This GHG charade sickens me.
The Range Fuels, Soperton plant was a much ballyhooed “Gasification” Project. Many folks, including myself, have been very skeptical about “Gasification” to produce ethanol, pretty much from the start. Khosla drummed up a lot of support, and the government, loving BIG projects with Big Payrolls, and Big Votes blew quite a bit of taxpayer money on that particular lash-up; but, that’s just government for you.
BTW, most ethanol IS transported by “unit train.”
eyesonu says:
December 28, 2011 at 7:09 pm
@ur momisugly Hotrod, A.Scott just shot you and others out of the water with a 20% drop in mpg in his experience with ethanol( A. Scott says: December 28, 2011 at 5:57 pm)
His experience is similar to the rest of us. I’m not sure where your experience comes from. Wait, let me guess …..
If I should decide that I don’t have anything better to do, maybe I will locate some of your posts / comments from the past and present them to you. Would you like that? Would you then retire ‘hotrod larry’?
Wait, it seems that A.Scott is slipping. You better get back here ASAP. He may have made a truthful comment!
More ignorant claptrap from you.
I posted early in the thread the same information:
A. Scott @ur momisugly 2:42am:
“Ethanol does get lower mileage than gas however it also costs less. E85 blend costs me $2.55 vs $3.35 for E10 blend – almost 25% less. My average fuel economy drops appx 15-18% in a 2003 Tahoe flex fuel vehicle – for a net overall saving in fuel with E85.”
My later comment:
“I just paid $2.52 for E85 with E10 priced at $3.35, a 25% discount vs a 20% or less drop in mileage.”
I have never seen more than a 20% drop in fuel mileage – and usually see 15 – 18% – yet I pay 25% less at the pump – for a net fuel savings with E85 in my non-modified flex fuel vehicle. . Exactly in line with the science.
Larry noted purpose built vehicles specifically adapted to maximum efficiency using ethanol – a big difference.
You sir are simply a buffoon – making no meaningful, useful or intelligent contribution ot the discussion and purposely flitting about twisting others words to try and make some silly point otherwise unsupported by the facts. .
[Mods – feel free to delete last – but I think it an accurate representation of this persons actions and contribution to the topic, bother here and in past]
Kum Dollison….you keep mentioning this 2 Mbpd PRODUCTION of ethonol,but how much of that is being actually USED. I can produce 50 dozen cookies a day, but only use 10. Got a link to actual usage???.
A. Scott…relax..as somebody said,this is a real PEER-Review site,not a pal-review. If you have the facts and truth,you have nothing to worry about.
I did my first alternate fuels study in 1963. In 1969, I bought a small displacement Coventry-Climax engine with the intent of boosting the compression ratio to 14:1 and converting it to pure ethanol. Unless an engine is designed to use ethanol, it’s a wasteful substitute for gasoline. “Oil subsidies” are a greenie lie, just like “green jobs.” Depletion allowances are a carry-over from the minerals industry and are NOT subsidies. If a fuel has to be subsidized or mandated by government, it’s not a fuel, it’s a money-wasting fraud.