Proof of Improvement

FROM THE JULY ISSUE: The energy efficiency push has achieved industry-wide results that experts hope can change outdated government and consumer perceptions of ethanol’s benefits.
By Tim Albrecht | June 25, 2018

During the plant construction boom of the late ’90s and early 2000s, it was all about getting facilities up and running to make a profit. The next stage was more about boosting those profits while considering the environmental impact of production via energy efficiency, says Steffen Mueller, principal economist at the University of Illinois-Chicago Energy Resources Center.

“As we continue to convert corn into ethanol in a more efficient way, such as reducing energy costs or using certain technologies to increase yields, we are producing an ever more competitive product,” Mueller says.

Material Improvement
Efficiency, specifically energy efficiency, was an important step for the ethanol industry for two main reasons. First, producing ethanol efficiently is profitable, of course. Less money spent on energy and other resources during the production process equals more money in the profit column. The second reason is greater efficiency in the production process translates to lower impact on the environment, says Connie Lindstrom, senior biofuels analyst for Christianson PLLP.

The two areas producers focused on in the early stages of the efficiency push were natural gas usage and ethanol yield. Natural gas was a major focus because the price was relatively high. Once the natural gas price dropped, and as the industry matured, producers shifted focus to efficiency saving across the board, Lindstrom says. “Natural gas and electricity purchases have gone down 20 percent or more since 2004, so that’s a pretty significant gain.”

Scott McDermott, partner at financial advisement firm Ascendant Partners, says the traditional areas that have seen the largest gains are ethanol yields, energy efficiency and resources efficiency. But he says energy is the “most mercurial, both in the areas of value and impact.

“In the ’90s, a lot of plants were at 22,000 to 29,000 Btus. Now, a high plant is 27,000 Btus per 200-proof gallons,” McDermott says. “There are some plants that are 17,000 Btus, which is a 14 percent efficiency increase in energy per gallon. That equates to 60 trillion Btus saved per year because of the energy efficiency push over the last 10 years. It’s not small, it’s a very material improvement.”

The biggest efficiency gain has been higher ethanol yield. Yields have increased dramatically since Christianson PLLP began collecting data, from 2.66 gallons per bushel in 2004 to 2.82 gallons per bushel in 2017. Christianson collects and calculates denatured gallons and a denaturant rate to ensure the undenatured yield is undistorted. It also collects an average moisture percentage for feedstock, and then adjusts all feedstock to an average of 15 percent moisture to derive a consistent ethanol yield per bushel over time.

Leaders average more than 2.89 gallons per bushel of feedstock. Some individual plants are now consistently approaching the 3 gallons-per-bushel mark, Lindstrom says. “We anticipate this number to increase even further as plants continue to invest in technologies that will improve their yields.”

McDermott says coproduct improvement is getting a lot of attention, too. “They’ve kind of done as much as they can with tweaking the plant and producers are looking for efficiency that is of higher value. Plants are looking toward biotechnologies, such as enzymes and yeast. It’s not efficiency in the traditional sense of throughput, ethanol yield, or energy yield, but rather coproduct innovation.”

And yields will continue to rise as more plants adopt technologies, Lindstrom says. The industry will also see increased automation in plants to continue improving on electricity usage, she says. “One other area that we’ll see continuing improvement is in further adoption of technologies that allow plants to generate their own energy, rather than using natural gas and purchasing electricity.”

By the Numbers
Adoption of new technologies has already benefited producers’ energy efficiency, according to a 2017 report by the USDA that studied the life-cycle greenhouse gas (GHG) balance of corn ethanol. The study found that GHG emissions associated with corn-based ethanol in the U.S. were about 43 percent lower than that of gasoline.

The report found greater GHG benefits from corn ethanol than a number of earlier studies, driven by a variety of improvements in ethanol production, from the cornfield to the ethanol plant. Farmers are producing corn more efficiently and using conservation practices that reduce GHG emissions, including reduced tillage, cover crops and improved nitrogen management. Corn yields also are improving—between 2005 and 2015, U.S. corn yields increased by more than 10 percent.

Between 2005 and 2015, ethanol production in the U.S. also increased significantly—from 3.9 billion to 14.8 billion gallons per year. At the same time, advances in ethanol production technologies, such as the use of combined heat and power, landfill gas for energy and coproducing biodiesel, helped reduce GHG emissions, according to the USDA report.

In fact, Japan recently allowed imports of Ethyl tert-butyl ether (ETBE) made from U.S. corn-based ethanol, providing a glimpse of the potential economic benefit energy efficiency can provide the U.S., Mueller says. “U.S. corn ethanol meeting the Japanese GHG reduction requirement is a direct result of efficiency gains in corn agriculture, as well as plants investing in energy efficient technologies, which reduces the total GHG emissions of U.S. ethanol. Indirectly then, investment in energy efficiency at U.S. plants was one contributing element to the Japanese opening that market.”

And, of course, the energy efficiency push lowers carbon intensity scores. “Not only do you have the direct benefit of the oxygenate in the gasoline, which cuts down on emissions, but as producers have made plants more efficient, they’ve lowered their carbon scores so the environmental impact has decreased.”

Lindstrom says, “The use of CI scores in the valuation of fuel, and in assigning tax credits and other economic incentives, is likely to increase in other areas around the country and around the world, so it’s becoming more important.”

Beyond profits and environmental benefits, the push for efficiency is beneficial for the rural economy, Lindstrom says. “We’ve got such strong ag-focused engineers and technology manufacturers right now—these are great jobs that exist because of the commitment to continued progress in efficiency by the ethanol industry and other value-added agricultural industries.”

Perception and Reality
It can be difficult to convey the ethanol industry’s efficiency gains. Lindstrom says it will come with time, as data is more quickly updated. “It does seem to take some time for the facts on efficient production to filter outside the industry. The statistics used to craft policy aren’t updated that regularly, so it makes sense that there will be some lag between what’s really going on in the industry and the information that the government has.”

The slow turnaround of data creates misinformation that is being disseminated to consumers, other ethanol markets and government officials. For example, the EPA classified starch-based ethanol as having a 20 percent reduction in GHG emissions on average, but that data is from when the Renewable Fuel Standard was first implemented, Mueller says. “That data is 10 years old and the EPA has not been able to update it, so it’s often misunderstood,” he says. “Foreign markets look at those numbers and don’t see that the benefits are much larger—for example, the 20 percent reduction in GHG emission is actually closer to 50 percent.”

Chris Bliley, vice president of regulatory affairs for Growth Energy, agrees that some data is outdated, but says more recent studies, such as the 2017 USDA report on GHG emissions, provide government officials with the best possible information. “All those new technologies referenced in the USDA report have really developed within the last 10 years. I think government data is catching up, but it depends on which report they’re looking at.

“I think everyone in the industry is constantly trying to present the most up-to-date data and using the data that we believe most encapsulates some of the things that have happened within the industry,” Bliley says. “The USDA data, since it’s the most recent, has been the best to encapsulate what has happened in the industry in the past 10 years. We’re always trying to present that both in the U.S. and across the globe.”

Lindstrom says the ethanol industry is fortunate to have trade organizations that communicate the industry’s successes and keep the producers informed about legislation that affects them. They create opportunities for producers to speak directly with legislators, provide a dialog and share data on efficiency gains. It allows them to “make a difference,” she says.

“Our biofuels benchmarking program provides detailed data about the industry to our subscribers, but those subscribers also count on us to share general facts about efficiency gains with trade organizations and directly with legislators when we’re asked,” Lindstrom says. “And we are being asked more and more, so awareness is growing that today’s producers have a story to tell about efficiency gains.”

Author: Tim Albrecht
Associate Editor, Ethanol Producer Magazine