Our previous post dealt with an assertion from a radio program on money management that our food cost is increasing due to the increase in cost of corn, largely a result of increased demand for use in production of fuel ethanol. My response was that I think that this statement is only partly accurate. I would assert that a number of factors are at work here. One thing I have found out for sure is that there is no shortage of stated opinions here. Understanding the whole issue requires that you sort out who is saying what, and figure out where the motive lies for the statement.
I worked for a while in the research center of a large agricultural genetics company where we used to estimate that 80% of corn seed is grown for inclusion into livestock rations. Considering this, can we assume that the price increase in the broad category of food is completely due to increases in just this one input, largely used for meat production? I don’t think so. I think a main contributing factor is the cost of fuel, both as a cost of transport and as other additional costs in food production and delivery.
Enter the renewable fuels industry, tasked with creating an American-style innovative revolution both here and around the world in how we turn raw materials into usable energy. Think about this and what that statement really means: we want to totally change the model for energy production. Why?
Currently our energy production is almost wholly unsustainable. We import a finite natural resource, crude oil from a politically unstable part of the world at a fairly high transportation cost and a potentially catastrophic political cost. Crude oil usually requires much processing in large refineries located mainly around the gulf of Mexico. This creates byproducts that are useful, as well as several byproducts which are poisonous, and of course the main product which then must be transported via pipeline, rail car, and truck to various points throughout the country. We extract coal from deposits deep within the earth leaving unsightly and poisonous landscapes in our wake. Coal is similarly destructive in its production and use.
We are moving towards using a diverse set of renewable resources, some based on biological inputs, some based on geophysical inputs. Frequently these can be turned into fuel more efficiently with much less processing, can be produced locally with much less pollution than oil import/refining, frequently producing companion industries based on other useful co-products, and can be made again and again while leaving the sources intact.
So what’s the catch? In the case of corn, critics point out that it is an inefficient substrate for alcohol production. Depending on whose scientist you talk to, you can find people who say that you only get 1.1x efficiency (it takes 1 unit to produce 1.1 units) up to 1.3x efficiency. When we think about building plants to make fuel at a 10% to 30% advantage, it almost seems pointless doesn’t it?
The typical ethanol plant currently consists of three main parts: a milling operation to separate the starchy part of the corn kernel from the germ, a mashing and fermentation operation to convert the starch first to sugars then turn this into an alcohol / water mixture known as “liquor”, and a distillation and purification operation to separate the bulk alcohol from the liquor, with purification to remove the last bit of water from the alcohol.
As Jeff Bruck, an associate in the ethanol industry, points out in his comment on Part 1 of 2: Squanto Would Be Proud (LINK),
“Biofuels use corn and other grains which right now are logistically and economically the best source. This won’t always be true. Cellulostic technology is improving every day and will someday be the standard.” Bruck also made good points about the need for greater support of flex fuel technology (both cars and distribution points).
The good news is that there is a much larger advantage in cellulosic ethanol production (utilizing fibrous plant biomass as a carbohydrate source). However, this leads to another criticism (LINK) of biofuels, which is that we are essentially mining the nutrients out of our land by growing intensive monoculture to support an almost endless appetite for more corn. Although somewhat dated, Bloomberg News published a piece that examined many of these issues in more detail.
I don’t argue with the idea that we are diminishing our soil tilth, but I do think that corn for ethanol is a strictly “now” situation. Today we use corn as a feedstock because of its abundance and the easy conversion of the energy portion of the grain. We have perfected the milling and mashing process already, so this involves little to no learning curve, allowing us to instead focus our innovation on the remainder of the energy conversion and fuel delivery process.
Is this the end of the story? No, certainly not if you compare an ethanol plant to an oil refinery. Unlike oil refineries, which are concentrated around importation points (especially the Gulf Coast area), we are building these modern and technologically superior plants in this country at a rapid pace, among geographically diverse locations. This is creating a source of economic diversification for thousands of small communities. This diversification will hopefully outlast the ethanol boom. They are far too numerous and geographically separated to become easy infrastructure targets for terrorists. They can be considered a local source of energy, requiring fewer transportation miles for either the feedstocks or the finished product.
Additionally, today’s ethanol plants are potentially useful beyond just fuel production, so that when and if we find the “next big thing”and move away from ethanol, there will be entrepreneurs lined up to occupy and use these very functional facilities. Combining fermentation, distillation and purification under one roof presents numerous value added manufacturing opportunities, both within and beyond the agricultural realm. No white elephants here. Possibilities exist from food and beverage production to pharmaceutical preparative processes, low tech to high tech, these facilities will serve well and should be easily expandable to accommodate a wide variety of uses and any needed growth.
Compare these features to those of an oil refinery, often old and decrepit and rarely found far from the Gulf of Mexico, offering very little alternate use and situated in a concentrated area of production, which concentrates the ill effects.
Finally, are we demanding too much of a single source of alternative fuel? We want diverse choices for our energy, so let’s use a diverse array of fuel sources. Why try to get it all in ethanol? People want ethanol to be a green fuel, a renewable fuel, a domestic fuel, a cheap fuel, a fuel whose manufacture doesn’t affect market prices for any of the inputs, and the list of wants goes on. No energy source can do all of this, no energy source is the be-all, end-all. But we’ve treated Middle Eastern Oil as the one source for all these years, basing whole industries, even entire economies, on its use.
Creating diverse and reliable energy sources should be our priority. This is like product development on a world scale. To change our entire model of energy production, we will have to progress through several stages. On that path, we may need to accept ethanol production from corn as one stage due to the rapid availability of corn, our mastery of its production, and its status as the current “low hanging fruit”. It is almost certain, though, that development of the next stage will be quicker than the corn ethanol stage. Additionally, we need to consider corn ethanol only one part of a large set of energy production tools to free us from dependence on one or two main energy sources (currently oil and coal). We need to look to the future and say “What next?”. I’d suggest continuing with ethanol and biodiesel, and beyond that, pursuing solar energy, nuclear power, cellulose based fuels, waste derived fuels, wind generated electricity, biomass replacement for coal, and hydroelectric generation just to start.
Thanks to the many people who have patiently given me input for this post, I appreciate and respect each of you, and I owe you all a favor. It is a big topic, so there may be more…
