Friday, April 20, 2007

More on Ethanol

This article from is interesting (at least to those of us who seem to be obsessed with Ethanol)....

The Efficiency of Ethanol Production

The efficiency of ethanol productionhas long been questioned. Critics would argue that the industry could not survive without government subsidies and that it takes more energy to produce a unit of ethanol than the energy derived from the ethanol. There might have been some merit to these arguments, given the technology that existed at the time, both in terms of agronomic practices and the processes for turning feedstocks into fuel ethanol.
However, a study published in July 2006 by the University of Minnesota concluded that there is a net energy gain with the production of ethanol from corn. Researchers tracked the amount of energy used to grow corn and to turn it into ethanol, and they factored in the cost of transporting the raw product to the plant.
Researchers also factored in the cost of how much fertilizer and pesticides were required to grow the corn, and the greenhouse gases, nitrogen, phosphorus, and pesticide pollutants that were released into the environment. They concluded that corn-based ethanol yielded 25% more energy than was expended in producing that unit of ethanol.
The cost of producing ethanol varies with the feedstock being used and its availability. In the U.S. and Canada, corn is the most widely used feedstock because it is generally the cheapest, both in terms of the cost of feedstock and the processing costs. In Brazil, sugar cane is the most cost effective feedstock, despite the relatively low ethanol conversion factor. The low cost of sugar cane and the associated processing costs make Brazil’s ethanol producers very competitive in the world ethanol market.
Processing costs, for corn-based ethanol production, depend on the type of milling process. For very large plants, the economics of production favour the wet milling process, despite a lower conversion rate than the dry milling process and higher processing costs per gallon.
The value of by-products derived from wet milling more than offsets the lower conversion rate and higher processing costs, resulting in the lower cost per gallon of ethanol. The by-products of the wet milling process are normally corn oil, corn gluten meal, corn gluten feed, and carbon dioxide, but some larger plants have developed the ability to also produce vitamins, food and feed additives from the same feedstock, by-products which help to reduce the cost per gallon of ethanol.
Dry milling accounts for most of the ethanol produced in the U.S., and the main by-products of this process are distillers dried grain with soluble (DDGS), condensed syrup, and carbon dioxide. DDGS is a high-protein feed ingredient, but it is low in amino acids, including lysine.
The low levels of lysine limit the usefulness of DDGS in hog and poultry rations. However, the abundance of DDGS in the U.S Midwest, where ethanol plants are concentrated, allows nutritionists to incorporate this relatively low cost feed ingredient into feed rations, provided that the customers for the DDGS are within a certain radius of the ethanol plants.
Currently, the U.S. ethanol industry appears to be less dependent on government subsidies than in the past. That move to self-sufficiency can be attributed to several factors, including record high prices for crude oil. High crude oil prices and the market price of ethanol have made its production much more profitable.
In fact, ethanol production might be profitable enough to allow producers to operate without the US$0.50/gal subsidy they currently receive from the U.S. government.


Obviously the profitability of ethanol is dependent on the relative price of gasoline. The subsidy for production probably is just an offset against reduced farm subsidy payments due to increased corn prices in the market so it isn't a real loss to the taxpayer, however, I'd like to see our "all wise and powerful government" end this subsidy for ethanol and let the market take its course.

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