Ethanol Running Out of Gas

The rationale for corn-ethanol production evolved following the oil-shocks of the 1970s when politicians were looking for answers to OPEC’s stranglehold on oil prices, and fears of the end of fossil fuel supplies.
Ethanol was one pathway that took on a life of its own as Iowa emerged as the first stop for all Presidential campaigns.
The transition to EVs makes plain that ethanol is coming to the end of its run, but agricultural interests are trying to keep it alive and still sucking subsidies with schemes to build CO2 pipelines for sequestering carbon dioxide released during ethanol production.

Simple fact is that replacing an acre of corn with an acre of solar panels is a massive gain in efficiency. It’s not even close. Anyone interested in saving farmland, and more specifically, soil, can only conclude that farming the sun is the future.

Iowa Capital Dispatch:

Income for Iowa farmers might decline $1.1 billion per year if the state’s ethanol plants are unable to capture and sequester their carbon dioxide with the help of proposed pipelines to transport it, according to a study commissioned by the Iowa Renewable Fuels Association.

The study — by Decision Innovation Solutions of Urbandale — predicts that three-quarters of ethanol production in Iowa would leave the state without the pipelines and that farmers could see a reduction in the prices they get for their corn of up to 75 cents per bushel.

“The wealth that’s been generated in today’s agriculture is mostly due to the ethanol plants that have been built,” said Tim Recker, a northeast Iowa farmer, in a press call to discuss the study’s findings.

The association, which advocates for policies that benefit the ethanol industry, is releasing results of the study amid three pipeline proposals from companies that want to transport captured carbon dioxide from Iowa ethanol plants out of state for underground sequestration and other commercial uses.

Those projects are threatened by pending legislation in the Iowa House that would impose new restrictions on them that would affect the companies’ ability to use eminent domain to force land easements and would allow counties to dictate where they can’t be built, among other provisions.

“I hope that it does not become law the way it is because it will kill these projects and have a very scarily large detrimental impact on our industry,” said Monte Shaw, the association’s executive director.

The bill’s primary sponsor is optimistic it will get a vote in the House, but the outcome of that vote and the bill’s future in the Iowa Senate appears dim. There is a proposed amendment in the House that would strip the restrictions but give landowners better opportunities to recoup damages from pipeline construction.

About one-third of the ethanol plants that Summit Carbon Solutions wants to connect to its multi-state pipeline are in Iowa, and they account for most of Navigator CO2 Ventures’ project.

It’s unclear how those companies might adjust their projects if Iowa is off limits, but David Miller, an economist for the company that conducted the study, is confident that pipelines will be built in other states, with or without Iowa.

“The monetary incentives for doing carbon capture via pipeline are very dramatic,” Miller said. “And so you will see them, I think, be built up along the eastern side of Nebraska. You’re gonna see them in South Dakota. You’re gonna see them across southern Minnesota. I think you would see them go into Wisconsin.”

There are federal tax incentives that reward ethanol plants for capturing their carbon dioxide and for producing fuels in a way that reduces the amount of the greenhouse gas that is emitted into the atmosphere.

Miller has said those incentives have the potential to more than triple the profit margins of ethanol plants.

The ethanol industry is a major market for farmers — more than half of Iowa corn is used to produce the fuel. If ethanol production shifts to other states, farmers will get less money for their corn from Iowa buyers and, if they sell to buyers farther away, will incur additional expenses for transportation.

It’s unclear when the House might vote on the pipeline bill. Summit is the furthest along in obtaining a hazardous liquid pipeline permit for its project and has a final, multi-week hearing with the Iowa Utilities Board set to start in October.

Clean Wisconsin:

Ethanol is a much less efficient form of energy production compared to solar photovoltaics (PV).

Using Energy Return on Investment (EROI) as a metric, solar PV is around 8 EROI while corn- derived ethanol is approximately 1.2 EROI. Using this metric, 88% of the energy generated by solar PV goes to society, while 12% is offset by production requirements.

In contrast, 20% of the energy generated by corn ethanol goes to society, while 80% is offset by production requirements.

Assuming average EROI, net energy production per acre is 100-125x greater for solar PV than for corn-based ethanol

Looking at land-use efficiency, corn-derived ethanol used to power internal combustion engines requires about 85x (range: 63-197x) as much land to power the same number of transportation miles as solar PV powering electric vehicles.

Even if the ethanol is converted to electricity to power more efficient electric vehicles, corn ethanol still requires 32x the amount of land to power the same number of vehicle miles.

Decision Innovations Solutions:

Background: Legislation potentially impacting the ability of Iowa ethanol plants to utilize carbon capture and sequestration technology (CCS) is being discussed in the Iowa Legislature. The outcome of this debate could have a major impact on the future of Iowa ethanol production, value-added corn demand and the Iowa economy.

Scenario: The Iowa Renewable Fuels Association commissioned Decision Innovation Solutions (DIS) to conduct an all-encompassing economic impact study of the following scenario:

• Iowa ethanol plants are precluded from utilizing CCS technology via pipelines while surrounding states allow such projects to move forward.

Phase 1 Recap: Current market and policy dynamics would result in Iowa ethanol production becoming noncompetitive. As production migrates out of state by the end of the decade,Iowa ethanol production could contract by 75% with Iowa farmers losing local markets for over 1 billion bushels of corn annually.

Phase 2 Findings: Corn leaving Iowa without added value would jump from 6% to 44% by the end of the decade. Regions of the state will experience up to a 75 cent/bushel reduction in  local corn basis prices, and the typical ethanol plant premium of 16 cents/bushel would disappear.

• Lower basis would cause the profit on corn production to plummet on average by 85% compared to the status quo. 
• As a result, farm income would drop $43,000 for a typical 1000-acre farm split 50/50 between corn and soybeans.
• In total, statewide net farm cash income for corn farmers would decline by $1.1 billion per year.

DIS Key Conclusion: “Ethanol production in the state of Iowa has brought tens of billions of dollars in increased economic activity to the state and has been a significant factor in the rise in net farm cash income for Iowa’s farmers. That economic activity could be lost if Iowa’s ethanol plants are not enabled to be competitive with ethanol plants in other states that have access to carbon capture and sequestration via pipelines or direct injection into deep, underground saline formations.