I’ve recently said that the best way to invest in both Advanced Biofuels and Cellulosic Ethanol, and Biochar (aka terra preta) is to invest in Biomass. Here is one way to go about it: buying Forestry ETFs or Stocks.
Archive for Ethanol
Last week, I attended the 2009 Fuel Ethanol Workshop and the Advanced Biofuels Workshop, writing two articles. The first is a commentary on what the corn ethanol industry needs to do to rehabilitate its image, and the second looks into how the stock investor can benefit from emerging advanced biofuel, cellulosic ethanol, and
I’ve been obsessing about the best way to replace petroleum for transit fuels. Unlike venture capitalist Vinod Khosla, I think electricity will win the day over biofuels.. the cellulosic material can be put to better use.
This has lead to a series of articles over the last few months, and I thought I’d gather them all in one place, here:
E85, but no biodiesel. That’s Parker for you. And I was just talking about an ethanol glut!
Last year my wife and I read Michael Pollan’s The Omnivore’s
Dilemma, and it changed we eat. My wife was greatly affected by how animals are mistreated in production farming, while I was attracted by the health
benefits of eating grass fed beef and other foods grown in the manner to which they are evolutionarily adapted, as well as by the lower degree of harm to the environment. We haven’t become all-natural, all-organic, all-the-time at the Konrad household, but we’re now much more willing to pay more when we have the opportunity to do so for food which we consider healthier and more environmentally and morally sound. For a world-class tightwad like myself, being willing to pay more is a considerable step.
In any case, the book also got me thinking more sympathetically about the ethanol industry, because it serves as a relatively benign outlet for the mountain of corn produced by America’s insane farm policies. I find rising price of corn and other grains is more a cause for celebration than despair, because I see current prices more as a return to sanity rather than a likely cause for starvation. Even in the third world, low agricultural productivity is (in part) due to a lack of incentive to compete with subsidized first world production, rather than an inability to grow enough food. The market for corn has been massively distorted by oversupply caused by too many subsidies. Ethanol represents a new source of practically inexhaustible demand which is restoring balance to a market too long out of kilter.
One practice which the massive flood of cheap grain begat was feeding corn to cattle. In my AltEnergyStocks
column this week, I look at one way I think the market may be starting to find its equilibrium again. As corn prices rise, there will be less incentive to fatten cattle in feedlots (or Concentrated Agricultural Feeding Operations, CAFOs ad Michael Pollan calls them), and more to feed them grass. I believe that long before we can perfect the art of using energy crops such as switchgrass to make cellulosic ethanol on a commercial basis, the rising price of corn will make it economic to feed those same energy crops (i.e. grass) directly to cattle, more than doubling the amount of corn currently available to the ethanol industry.
I have a sequel to my article on the competitive landscape of the corn ethanol industry up today on Alt Energy Stocks. In it, I discuss insights I gained from a talk by Mark Wong, President and CEO of Renwable Agricultural Energy, a private corn ethanol producer.
My weekly column for AltEnergyStocks again doubles as part of my study for the second CFA(R) exam. The Equity valuation part of the curriculum contains a chapter by Michael Porter on analyzing competitive pressures in an industry. I decided to apply it to the corn based Ethanol industry, and, as often is the case, it changed my way of thinking about the industry. I’ve never been bullish, because I worry about a classic commodity squeeze: both ethanol and the main feedstock (corn) are commodities, and are subject to forces outside the industry which effect their prices. For instance, if corn harvests were to be poor because of drought or pests, at the same time that oil prices fell, many ethanol producers would be forced out of business because their costs exceed their selling prices.
I also went on a little rant about the typical measures of Energy Payback and Energy Return on Energy Investment (ERoEI) often used in the industry. These measures are often used to criticize ethanol, but it is a weak criticism, because they do not take into account the time value of energy: namely that a kWh of electricity today is a lot more useful than a kWh produced 30 years from now. We should instead be thinking in terms not only of how much energy we have to use to get energy out, but also in terms of how soon we get that energy.
I propose a couple measures, of Energy Net Present Value (ENPV) and Energy Internal Rate of Return (EIRR) which I think would give us a clearer view of the undying energy economics (and hence the potential economic profitability) of various energy production technologies. But that is a column for another week.
This week, here are my thoughts on competition in the corn Ethanol industry, and how it might affect your investments.
I follow several forestry products companies because I beleive that investing in these companies is one of the safest ways to invest incellulosic ethanol: you’re investing in the feedstock, not the technology, so you do not need to pick the winning technology in a developing field (always a risky proposition.) We are starting to see the advantages of owning the feedstock over the means of processing today with corn ethanol. (also see VentureBeat; thanks for the link, Gav)
The forestry/paper I follow are the ones who are the most devoted to getting their forests certified by the Forest Stewardship Council (which I see as a good proxy for environmental responsibility in forestry. ) I’ve written about this before in Peak Oil Review.
One of the companies I follow, Domtar has just launched an antimicrobial office paper. A great gift for the germ-phobe writer in your life. Or, more practically, for use in hospitals. I thought it was worth blogging, even if it’s a bit off topic. Anything that can reduce hospital infections is a wonderful idea, since microbes in hospitals are often immune to antibiotics.
A study in Science (see article in Renewable Energy Access) from David Tilman, an ecologist at the University of Minnesota shows what we should have known all along: When energy crops are grown sustainably in poor soil (i.e. most of our available land) without fertiliser, a diverse mix of native prairie plants yeilds more than twice (238%) as much harvestable energy than any monoculture (including the much-hyped switchgrass) grown on the same land.
At some point, humans are going to have to realize that our production-line mentality, which seems so efficient to us, is not really the best way to do things. We like farming just one species in neat rows because it’s easier for us to comprehend. But easier to comprehend is not the same as more effective. In money management, we know that there is no one perfect security for an investor: diversification allows higher returns with lower risk. Farmers have yet to (re)learn that lesson: growing just one crop puts strains on the particular resources that crop needs most, and allows specialized pests an environment of limitless growth.
Monocultures are sub-optimal, both in your fields and your portfolio. Enron employees with their retirement fund in 100% Enron stock learned that the hard way. As we transition to a new energy economy, I hope that David Tillman, and researchers like him will help us realize that the places we grow out energy crops don’t have to be like an Enron employee’s 401(k).
A few months ago I blogged about Wal-Mart‘s energy efficiency push. I predicted that Wal-Mart would be one of the first mass distributors of E85 ethanol, and I have since noted that compact fluorescent lightbulbs (CFLs) have been given increasingly prominent displays in their stores, and that they have an excellent selection of styles. (When I moved into an new office a couple months ago, one of the first things I did was tell my landlord about how much money he could save by switching to CFLs (about $25 a month for a $70 investment in this case.) He later asked me where he could find the candelabra bulbs (the ones with the tiny bases shaped like a flame,) and I immediately told him: Wal-Mart. He’s an employment lawyer, and does not shop at Wal-Mart as a matter of principle… He still has not replaced the candelabra bulbs, so I’m going to give him a pack for Christmas (bought somewhere else.)
Since I wrote the blog, Wal-Mart has announced that they’re exploring selling E85 (admittedly not the greenest renewable fuel, when made from corn, but rolling out distribution for E85 will make cellulosic ethanol easier to introduce.)
Now they’ve annouced that they are going to try to sell 100 Million CFLs in 2007. Considering that replacing wasteful incandescent lightbulbs with CFLs is the best financial investment I know (the money saved on electricity pays for the bulbs many (as much as 25) times over), as well as being the most effective way most people can reduce pollution and greenhouse gas emissions (#2 is using energy efficient transport), I sincerely hope they beat their goal.
I’m particularly pleased by the fact that they will be introducing interactive displays and educating employees about how to choose. The number of types and wattages (as well as color temperatures) of CFLs can be baffling to the unitiated, and people should be guided towards buying Energy Star bulbs for their greater reliability (If you have ever had anyone tell you that they tried CFLs but then switched them out because they stopped working, you can be almost certain that they weren’t using Energy Star bulbs.)
So it sounds like great news. How great? It’s hard to know because they’re not saying how many CFLs they were selling before.
I’ve been meaning to write an article outlining a vision of a sustainable energy future, where biomass is converted into fuel and electricity through pyrolysis and the waste product, carbon is used as a fertilizer a-la terra preta to produce more biomass. The good news is I don’t have to. The Engineer Poet did, and it’s just part of a much broader vision you’ll find here. He also goes into a great discussion of transportation technologies and efficiency which would never have made it into the article I’d write. I like it when other people crunch numbers, so I don’t have to.
Give yourself a half hour to read the whole article. It’s worth it.
( Terra Preta: I got a comment from Erich J Knight on terra preta here that went into a lot of depth, but I deleted it by mistake. Forturnately, he says pretty much the same thing in his blog. I first heard about terra preta from Ron Larson, chair of the American Solar Energy Society, who is very active in the local (Denver) renewable energy scene. If you haven’t heard about terra preta, and are concerned about globabl warming or soil fertility without fertilizers from fossil fuels, it’s worth looking into.)
I wrote a blog a couple months back talking about how environmentalists should avoid lumping all ethanol together as “bad” renewable energy because the Energy Return on Energy Investment (EROEI) is very low. First of all, new ethanol plants being built today do have a net energy gain on a well-to-wheels basis (the critics are using decade old data), and so long as the energy inputs come from renewable sources, ethanol looks like a decent way to turn other forms of renewable heat energy into something we can put into our tank and drive around with.
E3 Biofuels is doing just that with a 25 million gallon “closed loop” ethanol plant in Mead Nebraska. The distiller’s grain byproduct of the ethanol production is fed to cattle at an adjacent feedlot. This saves energy by avoiding having to dry the grain and transport it to where the cattle are. The manure from the feedlot is passed into an anaerobic digester which not only produces 100% of the energy necessary for the ethanol distillation process in the form of methane, but it also helps solve the nasty environmental problems caused by the massive supply of manure feedlots produce. It was runoff from cattle manure that caused the problems with our spinach supply recently.
Other benefits are that by running the manure through the digester, odor is reduced, and methane from the manure decomposition does not escape into the atmosphere. Methane is a much more potent greenhouse gas than is CO2.
If you believe the promoters that “This plant will make ethanol more than twice as energy-efficient as any other method of producing ethanol or gasoline,” I estimate that the well-to-wheels EROEI is between 2 and 4 (probably closer to 2.) It’s not the great EROEI’s we get from Wind and geothermal, but it’s a liquid fuel we can use in our existing vehicle fleet (either as E85 in Flex-Fuel vehicles, or as E10 or E20 in standard gasoline engines.)
Without liquid fuel, we’re in great danger of economic disruption due to peak oil, but unless we get that liquid fuel in a manner less carbon intensive than conventional corn ethanol, we’ll be up to our ears in melted icecaps.
Obviously, what we really need is much more energy-efficient cellulosic ethanol which does not compete with our food supply for feedstock, and it will be great if that process is powered by renewable heat (methane form digesters, or solar thermal) but given that we’re unlikely to stop eating beef anytime soon, this is an elegant, closed process.
Apparently, the consensus of the 25x’25 biofuels working goup I spoke of over the weekend was an illusion based on the fact that the opponents had not spoken up and we had moved on to other subjects. We’re currently discussing the subject over email, and I thought my rationale for opposing a tariff was worth posting here:
1. Why a tariff on foreign biofuel would not be effective at raising the price for domestic biofuel:
The primary competition for domestic biofuels is not foreign biofuels: it is petroleum. Petroleum will remain the primary competitor in a 25x’25 world (after all, it will have around a 75% market share.) The price of both foreign and domestic biofuels will be set in competition with gas and diesel, the most commonly available substitutes. To raise the price of domestic biofuels, a tariff would have to be placed on foreign oil, not just foreign biofuels.
2. Why a tariff on foreign biofuel would be counter to the 25x’25 goal:
Potential builders of distribution infrastructure for biofuels (pipelines, retail pumps, Flex Fuel Vehicles, etc) want to know that there will be a reliable supply before they build distribution. While some might argue that a tariff would not impact supply (an argument which, if true, would re-enforce point #1), it is very difficult to argue that it would not negatively impact the perception of the availability of reliable supply. It is the perception of reliable supply that will help get the distribution infrastructure we need built.
I spent much of the last week at the 25x’25 “Twenty-Five by Twenty-Five” second implementation planning meeting. 25x’25 is a coalition advocating the vision that “By 2025,
America’s farms, forests and ranches will provide 25 percent of the total energy consumed in the
United States, while continuing to produce safe, abundant, and affordable food, feed and fiber.” That’s at least 25% of our energy from renewable sources.
25x’25 is an open alliance; the participants are the organizations who have endorsedthe 25x’25 vision outlined above. These include 18
US Senators, 91 Congressmen, 18 state governors, 4 state Legislatures (including
Colorado). I attended the conference as the representative of the Colorado Renewable Energy Society.
I highly encourage my readers to endorse 25x’25 (you can endorse as an individual, or as an organization, or both.) Your endorsement helps them demonstrate that a broad swath of Americans support the 25x’25 vision, and will help convince the US House and Senate to pass the concurrent resolutions for 25% of the nation’s energy supply to come from renewable sources.
We are currently in the process of coming up with our vision of how
America can achieve 25x’25. Any endorsing individual or organization can participate. The goal is agree on a series of recommendations (the Implementation Plan) as to how we can achieve the 25x’25 vision. When the Implementation Plan is complete, which we plan to achieve by January, in time for the next congressional session, all partners will have a chance to endorse the plan.
Since the whole process is by consensus, and the 25x’25 goal is an ambitious one, it would be easy to believe that the Implementation Plan will turn out to either be watered down to the point where it does not say anything, or end up endorsing so many points of view that it would be ludicrous to call it a plan at all.
Having now participated in two conference calls and two days of face-to-face meetings, I’m happy (and somewhat surprised) to report that we’re actually managing to form a consensus among a large group of people and organizations you would not expect to get along under ordinary circumstances. For this, I can only shake my head in wonder at the diplomacy and perseverance of the Steering Committee. They managed, though two days of what could have turned into a verbal free-for-all, to keep us all focused on the need to work together to reach the very ambitious goal we’ve all agreed upon. (In that same spirit, and understanding that many of the participants have been willing to voice their true opinions and step away from the party line, I will not name any names here. This also has the advantage of covering for my lousy memory for names.)
How do they do it? By keeping us focused on the fact that we all agree on the goal: 25% of our nation’s energy from renewable sources by 2025, and reminding us that we’re never going to get there by half measures. The second thing they did was keeping the discussion focused on “Yes, if…”: continually reminding people to stay in the mode of working together, and instead of thinking about all the reasons that something was impossible to accept, to instead say “I could accept that if it were this were also to happen.”
So my kudos to the people I met on the steering committee. I was impressed.
In the renewable energy community, Ethanol has a bad rap, due to some often-quoted, seldom checked studies on energy payback.
It’s received wisdom that ethanol from corn has an energy return on energy invested (EROEI) of somewhere between 0.8 and 1.0; i.e. you get less out than you put in. The persistence of this idea is possibly due to some great cartoons. I’m probably going to undermine my whole argument here, by including this one…
Then again, I expect that my audience is highly intelligent, and not easily distracted. If you weren’t, you probably wouldn’t still be reading my extremely dense and often-tortured prose. You deserve a good cartoon every now and then…
Back in the world of ethanol, times have changed.
Even though cellulosic ethanol is still very much in its technological infancy, a lot of companies and people are doing a lot of interesting things with corn ethanol to make the process more efficient, and, get those energy inputs in the form of “free” waste heat from some other process, or from renewable sources such as cow manure or landfill gas.
I’ve been educating myself a lot about this reading C. Scott Miller’s Bioconversion blog. I admit I’m having to do a lot of catch up on this, because I was one of those people who believed ethanol was a total government subsidized boondoggle until recently.
All that said, even at an EROEI of 1.25 to 1.8, ethanol is not much of an energy “source.” Sure, we’re getting a little energy out of the process, but one way to think about EROEI is how much effort it takes to get our energy.
As a rough illustration, at an EREOI of 2, there has to be one person working to get energy for every person doing something else. So if civilization were to exist one out of every 2 people would have to be employed in the energy sector… the other 50% would then have the energy they needed to do other useful things, like be doctors, politicians, soldiers, engineers, builders, investment advisers, bloggers, artists, manufacturers, scientists, psychologists, food farmers (as opposed to energy farmers), talk show hosts, etc.
You might argue that some of those professions aren’t very useful (investment advisors and politicians perhaps), but even if we eliminate all those “useless” professions, I think the more useful professions like talk show hosts and artists might start finding themselves a little squeezed.
There is a reason that the human race was 95%+ farmers or hunter gatherers for most of of our history: the energy sources we were using were not powerful enough, with too low EROEI to sustain higher forms of civilization, such as talk show hosts.
If you don’t believe me, read this great article on “Peak Wood,” the cause of the iron age.
Back to ethanol: it’s not going to solve our world energy problem. It’s a useful way to turn non-liquid fuels (manure, biogas, or coal) into something you can put in your car, but if we in the U.S. are looking for a domestic source of energy that will wean us off the Middle Eastern oil teat, we can do it, only if we want to be a nation of farmers, witha much smaller population and lower standard of living than we have now.
Ethanol is big business these days, and it will make a tiny dent in our oil addiction, so all the investment is probably doing some good. I predict that the biggest beneficiaries will be the farmers, and considering how hard farming is, that’s not a bad thing. It’s probably better than out-and-out farming subsidies.
Basically, I’m no longer worked up about ethanol subsidies and mandates. There are a ton of better ways we could be spending the money, but it’s hardly the stupidest thing our government does with our money. I’d even be happy about it if they’d simply replace the money spent on all farm subsidies with subsidies for farm based energy.
I just don’t want it to distract from the important work we have to do to deal with the twin probems of peak oil and global warming:
- Improve energy efficiency (especially of our vehicle fleet.)
- Develop high ERoEI energy technologies: Wind, Solar concentrating, Geothermal. PV will probably make it on this list as the technology improves.
- Displace some of that oil in transport with renewable electricity, via plug-in hybrids. (Economic fuel cells are still too far away to make hydrogen a viable transportation fuel in the next 20 years)
If you’re wondering about how the US should deal with the looming oil crisis, Paul Notari wrote an excellent overview on RE Insider this week. His prescription for the US is exactly what we need.
High oil prices are starting to move us in the right direction, but not nearly fast enough. We need to take action before Adam Smith’s invisible hand forces action on us, through demand destruction. Demand destruction is a nice way of saying that when gas hits $20 a gallon, people will start taking their bikes to work because they can’t afford to do otherwise.
Economists who pooh-pooh peak oil becase “demand destruction will take care of the problem” are forgetting the human element: demand destruction is incredibly painful. We need to take proactive steps to solve the problem, such as those outlined in Paul’s article, or the problem will be solved for us… and it will hurt. A lot.
What are the limits on ethanol production?
According to NREL’s John Sheehan, at this months Energy Analysis Brown Bag, ethanol production from corn is set to reach 4 billion gallons this year, and 7.4 billion gallons per year by 2011, based on current and planned production capacity. (As an aside, on August 10, the Douglas County News-Press published a very pointed editorial from him on the travesty of IREA funding disinformation about global warming.) Given that a bushel of corn will produce 2.8 gallons of ethanol, that will make ethanol demand for corn in the
US 1.4 billion bushels in 2006, and 2.6 billion bushels in 2011. Since the annual corn production in the
US is around 11 billion bushels, ethanol production is already having a significant impact on the price of corn for food.
As Lester Brown, President of the Earth Policy Institute pointed out in the Aug 21 issue of Fortune(the particular article I’m referring to does not seem to be available online), the market is already setting the price of agricultural commodities at their oil equivalent value.
Unlike Lester Brown and John Sheehan, I think this will be a good thing for the world’s poor. Yes, food prices will go up, but the poor are not only consumers of food; they are also producers and potential producers. In the
US, the percentage of poor rural residents has been consistently higher than the percentage of poor urban residents throughout the last 50 years. In
Africa, the world’s poorest continent, farmers can often not make a living because they cannot compete with subsidized first-world farmers.
If world food prices rise because of demand for biofuels, this may at last reverse a great injustice, where subsidies for first world farmers have prevented third world development. Allowing myself to get wildly optimistic for a moment, if fuel demand permanently boosts agricultural commodity prices (which seems very likely), that might even open the way to removing subsidies for European and North American farmers. The Doha round of world trade talks failed in large part because of rich world unwillingness to cut agricultural subsidies, which is a great shame, because cutting subsidies would be a great boon to first world taxpayers, as well as third world farmers.
I think the best way to play the biofuels boom as an investor is by betting on the trend of rising agricultural prices. While large agricultural companies like ADM have already seen the benefits of this trend, the currencies of third world agricultural based economies should benefit, as well as the price of agricultural land in the US. Much US farmland may benefit twice from renewable energy, since land in windy areas also has the opportunity to gain income from wind leases. This was a large part of the theme of the Intermontain Harvesting Energy Summit I attended this spring.
On the downside, stimulating agricultural production can lead to deforestation. Greenpeace can push for all the moratoriums it wants on soy from deforested areas, but that won’t keep soy oil or ethanol from deforested areas going into our tree-hugging gas tanks. Global commodities, such as soy, corn, soy oil, and ethanol will just go to countries and companies who don’t participate in the boycott, removing their demand from the world market, and lowering the world price for everyone else. This is the same principle we use in our favor when we buy Green Power: the actual electrons running my laptop are probably from a coal fired plant, no matter if I pay for green power or not. What I’m actually purchasing with green power (in theory… may green power markets still have kinks that need to be worked out) is the fact that I’m stimulating green power production as much as I would if all my power actually did come from green sources.
Another worry about the rapidly rising biofuels capacity is distribution. John Sheehan’s estimate of 7.4 billion gallons of ethanol in 2011, and 700 million gallons per year of biodiesel would amount to a around 5% of gasoline consumption and less than 2% of diesel consumption. Since the current fleet of engines can run with no problem on 10% ethanol (in
Brazil “gas” typically contains 25% ethanol.), we would not need to use any E85 to use all the planned ethanol production. Similarly, B20 can be used in all but the coldest parts of the country year round, so converting just 2% of diesel consumption to biodiesel could also be accomplished through existing distribution.
I find it likely that the constraints on biofuel production will come in the form of the price of the feedstock, which will be driven by oil prices.
While ethanol and biodiesel will be necessary parts of weaning us off our dependence on oil, current technologies cannot go very far to getting us there without a much greater push towards more efficient automobiles. Raising average fuel economy by just 10% would reduce fuel use and greenhouse gas emissions over twice the amount the flat-out biofuels production we’re seeing will.
We can easily double the fuel efficiency of our current fleet with a combination of plug in hybrids (powered by cheap wind) and more efficient engines. Only when we’ve done that can we hope that cellulostic ethanol and biodiesel can start to supply our remaining fuel needs.
The best thing to happen to renewable energy and energy efficiency this century is without a doubt the relentless rise in all forms of energy. Gasoline going from $1 to $3 in just a couple years, higher utility bills, and worries about terrorism have defense hawks worried about “energy security” and environmentalists together for the first time.
Having a Republican president talking about renewable energy has certainly been nice for investors in renewables, but I know I’m not the only long term clean energy advocate whom this makes more than a little nervous.
I’m happy to have Bush, et al on board and paddling, but I’m worried that they’re also grabbing for the rudder with their emphasis on energy security rather than environmental degradation and efficient use of resources.
Here are the directions the energy security types are pursuing I think are misguided:
- Coal. Because of rising energy prices, and the threat of future caps on carbon emissions, utilities all over the country are rushing to build coal plants (read the excellent press release from Environment Colorado) while they still can: they justify this because coal is a domestic resource, and it is “cheaper” than other sources of electricity (this is not true, when compared to wind, but it was true so recently that most people still believe it.) Energy efficiency measures are much cheaper than any type of new generation.
- Nuclear. Energy security hawks tend to be big fans for nuclear energy. How having more sources of plutonium and hazardous waste around that could be attacked or used by terrorists increases our security, I don’t know. Not to mention the fact that nuclear power is quite expensive. I can only attribute the energy security hawk’s attachment to nuclear to their love of big solutions to big problems.
- Ethanol. Cellulostic Ethanol will be a wonderful thing, when it emerges from the lab and becomes a commercially viable technology, but all the subsidies for corn Ethanol do very little to improve our energy security or reduce the amount of carbon we emit. I see them mainly as a subsidy for farmers, cloaked as a move for energy security. I do like the push for more flex-fuel vehicles, because it only costs $150 to make a vehicle flex fuel in the factory, over the cost of the gasoline version, and when and if cellulostic technology comes of age, the vehicle fleet will be ready for it.
In short, I’m glad to have the energy security hawks on board, but I’m hoping we can get them to listen a little more carefully to those of us who have been rowing this boat all along.
A new study from the university of Minnesota comparing the lifecycle energy costs and emissions of corn ethanol to soy biodiesel is all over the press this morning.
The results are no surprise to any of us who follow the industry: corn ethanol yields 25% more energy than it takes to produce it; while soy biodiesel yields 93% more.
The numbers for ethanol ar not new: people have been arguing about the EROEI (Energy Return on Energy Invested) for ethanol for years, and the numbers have slowly risen with improving technology from about -10% to today’s 25%. What are new, are the EREOI numbers for soy biodiesel. I had only heard one number for the EREOI of “biodiesel” before – and no mention of the feedstock was made, nor was I able to trace it back to a reputable source… I suspect it was a back of the envelope calculation by a biodiesel advocate. That number was a 220% return, quoted to me twice, once by management at Blue Sun Biodiesel, and once by the person manning the booth for the International Center for Appropriate and Sustainable Technology, both of whom do good work, but who have an incentive to believe this highest number they hear. Disclaimer: I too have an incentive to believe the highest number I hear because I have a Jeep that I use biodiesel in to minimize my carbon emissions. Using the new numbers, my Jeep Liberty has about the same carbon footprint as my 2002 Prius, when running on B100. On B20, which I use in the winter, the Prius still looks much better. I’m pining for a plug-in hybrid diesel.
But I’m very happy to see reality injected into the whole biofuels debate. Neither ethanol not biodiesel (nor both together) is going to save the US from having to import petroleum: if our entire corn and soybean output were shifted to these biofuels, that would only replace about 12% of gasoline demand, and 6% of diesel demand… are we ready to start talking about massively investing in increasing the efficiency of our vehicles yet?
One other new note in the article, which I like given my affection for biodiesel, is that soy is a much less fertiliser intensive crop than corn, and so growing it has fewer local environmental impacts. I hope these authors continue their work, and expand the study to include other feedstocks for both ethanol (sugarcane, cellulostic) and biodiesel (canola, algae, recycled oil).