Wisconsin’s ethanol and other biofuel industries have been on a roller coaster ride.

Ethanol production in this state is less than 10 years old and constantly changing, says Joshua Morby, executive director of  the Bio Industry Alliance, a Milwaukee-based nonprofit corporation that supports development of bio-based energy and power. In the boom from 2002 to 2008, he notes, the state went from no plants and no production to nine plants and 498 million gallons of capacity. Refiners invested more than $1 billion to build the nine plants. Wisconsin became the seventh largest producer of ethanol among U.S. states.

Then came the fall of 2008, when, according to consultant Brett Hulsey, president of Better Environmental Solutions of Madison, a “perfect storm” of collapsing ethanol prices linked to the fall of gasoline prices, relatively high corn prices and other factors pummeled the industry. As a result, several dozen ethanol plants across the country including Wisconsin’s largest one, the 130 million-gallon plant of Renew Energy in Jefferson, filed for bankruptcy. During the same period, a storm of criticism of corn ethanol, negatively affected the industry.

The evolution begins

Now the corn-based ethanol industry is in a more mature phase where producers are “reducing costs, becoming more energy-efficient and reducing water use,” Morby says.  “I’m cautiously optimistic about the near future,” he adds. The shuttered Renew plant has been purchased by Valero Energy of Texas.

 
“There’s a good commodity market for corn in the next two to three years, but there could be more fallout of less efficient ethanol producers and further consolidation in the industry,” says Randy Fortenberry, a University of Wisconsin professor and chairman of the Agribusiness, Agricultural and Applied Economics Department.

Improvements in technology make newer ethanol plants much more efficient than the older ones, Morby says. “Some newer plants have reduced energy use by 10 to 20 or even 30 percent,” he notes.

They also use less water. “New ethanol plants use only three gallons of water for every gallon of ethanol, compared to four or five gallons in older plants, depending on the age of the plant,” Hulsey says. He also points out that it takes 20 gallons of water to produce a gallon of gasoline.

Corn ethanol faced criticism that it limited the grain’s availability for food and caused a spike in food prices. Fortenberry says the effect of corn ethanol on food price escalation in 2008 was overstated. His research found that only one-third of skyrocketing food prices was the result of using corn for ethanol.

One answer to criticism of corn ethanol, Hulsey says, is the corn fractionation process now being used by Didion Milling Inc. of Cambria. This involves dividing the corn kernel, and saving the starch for ethanol, the protein for food supplements and the oils for corn syrup. Fractionation requires 35 percent less energy and 33 percent less water than conventional ethanol refining. The corn protein is used by organizations such as the U.S. Agency for International Development to fortify porridge and other food for the hungry in the developing world.

Another criticism that some have leveled at corn ethanol involves the so-called energy balance, the difference between the amount of energy stored in a gallon of ethanol and the amount of energy needed to grow, produce and distribute that gallon. Some earlier studies showed a negative balance for corn ethanol, Hulsey says. Now most experts agree corn ethanol has a positive balance, although not nearly as positive as the potential for some feedstocks that may be used in the future for cellulosic ethanol.

“Most studies have found the ethanol energy balance at about 1.4, meaning 1.4 gallons of ethanol can now be produced for every gallon of energy used in making it, Hulsey says. “Wisconsin’s average ethanol balance is higher, at 1.5 or 1.6,” he adds.

That’s linked to the 1.3 million dairy cows in the state. Some ethanol plants take the distiller’s grain, a byproduct of ethanol production, and feed it wet to dairy cattle. That eliminates the energy needed for the conventional process of drying the distiller’s grain.  In comparison to ethanol, he says, gasoline has a negative energy balance of .75, meaning that only three gallons of energy are stored in the fuel for every four gallons used to produce and distribute them.

Optimism about the future for corn ethanol is tempered by the need for Congress to renew a blender’s credit subsidy of 45-cents per gallon that has expired, Morby says. In addition, a tariff that protects the domestic producers from foreign competition, primarily ethanol produced from sugar cane in Brazil, expires this year and should be renewed, according to Morby.

Many ethanol advocates also cite a need to increase the percentage blend of ethanol in gasoline from 10 percent to 15 percent to spur growth of the industry. The percentage blend issue is scheduled to be decided by the U.S. Environmental Protection Agency this year.

Looking to the future

The next phase in the ethanol industry will be the much-anticipated switch to cellulosic ethanol or other second-generation biofuels, and Wisconsin researchers have a vital role in this change. The Great Lakes Bioenergy Research Center led by the University of Wisconsin-Madison in close collaboration with Michigan State University is one of three such centers in the country financed by a total investment of $375 million by the federal Department of Energy in 2007. The centers are charged with developing an economically viable technology for breaking down cellulose for use in cellulosic ethanol.

Asked about progress on cellulosic solutions, Timothy Donohue, UW-Madison professor of bacteriology and director of the Great Lakes Center, says: “I’m very pleased with our progress and we’ve made excellent advances.” The center has only been funded for two-and-one-half years and 400 people have been hired and research areas outfitted, he points out.

He is optimistic about the basic science. “We can make cellulosic ethanol for $4 a gallon,” he says, “but don’t ask me how many gallons.” He notes they do not have a cost-effective solution for producing cellulosic ethanol in sufficient volumes. Federal expectations are that 16 billion gallons of cellulosic ethanol will be produced each year in the U.S. by 2030.

The promise of cellulosic ethanol focuses on the fact that feedstocks like switchgrass have far better energy balances than corn and don’t eliminate grain for food. They also grow on marginal land not suitable for corn.    
Fortenberry downplays some of these claims.

“Land to grow feedstocks for cellulosic would compete with crops for the food market,” he says. “If the volume of biofuels is substantial enough to replace a lot of gasoline, there’s not enough marginal land to produce enough feedstocks.”

In another significant development in renewable energy, Wisconsin has now deployed the most cow manure anaerobic digesters on dairy farms of any state  — 28 — which convert the manure into methane to produce electricity as well as a fiber bedding for cattle and liquid fertilizer. Because of the millions of dollars in investment for the digesters, they’ve only been economically feasible for large dairy farms with 1,000 or more cattle up to this date.

That’s changing. The state’s first community manure digester that will serve three farms is now under construction near Waunakee and another is planned for the Middleton area in Dane County. These community digesters have been championed by Dane County Executive Kathleen Falk and the County Board, and also received state and federal subsidies for their construction. In addition to creating a revenue source, the Dane County digesters will also remove up to 85 percent of the phosphorus in manure to help keep water bodies in the county free of algae, which feasts on phosphorus.

Moreover, the state Department of Agriculture this year awarded a $200,000 grant to help Tomah manufacturer, USEMCO Inc., develop a manure digester suitable for smaller dairy farms with as few as 100 cows.

In another significant development for biofuels,  William “Butch” Johnson and his Flambeau River Biofuels LLC broke ground in April for a $250 million plant to produce green, sulfur-free diesel from wood waste at the adjoining Flambeau River paper mill in Park Falls. The plant, scheduled to be fully operational by 2013, will be the largest second-generation biofuels plant  integrated with an existing pulp and paper mill in the country.

Wisconsin’s biofuel advances come at a time when the need for biofuels becomes more and more evident. Supporters of the advances note that biofuels are:

• A cleaner burning fuel than gasoline and conventional diesel, reducing greenhouse gases

• A way to avoid catastrophic oil spills like the one in the Gulf of Mexico

• An strategy for cutting the approximately $9 billion exported from Wisconsin’s economy each year to pay for oil products, natural gas and coal, none of which is found in this state

• An aid to American security by making the country more energy independent and perhaps less reliant on military action needed to protect oil supply lines.

Most of all, biofuels provide farmers and others with more markets for their corn and other feedstocks while giving the state an outlet for turning waste such as wood scraps, cow manure and landfill gases into energy and building a base for more “green” jobs.

By John Hill

You can contact John Hill by e-mail at jhoythill@sbcglobal.net.

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