October ethanol production breaks record

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Ethanol production hit a record high in October. The latest figures from the U.S. Energy Information Administration show levels reached 741,000 barrels per day, up 94,000 barrels from October 2008. Demand for ethanol also achieved an all-time high in October, totaling 767,000 barrels per day, an increase of 75,000 barrels over last year. On top of the record ethanol production numbers, the Renewable Fuels Association points out that the USDA's January Crop Production report shows the 2009 corn harvest exceeds previous ones in yield per acre and total production. The USDA estimates farmers averaged 165.2 bushels of corn per acre, up from the previous record of 160.4 in 2004. Production totaled 13.2 billion bushels, the largest ever.

In response to the USDA report, RFA President Bob Dinneen said, "The unparalleled productivity of America's farmers continues to amaze even the most skeptical of critics. There can be no question that American farmers have both the capability and the can-do attitude to feed the world while simultaneously helping reduce our nation's reliance on imported oil."

While the record month for ethanol production and demand indicates the continued growth of U.S. biofuel consumption, the goal for the renewable fuels standard in 2022 is not expected to be met, the EIA said in its Annual Energy Outlook 2010, released in December. The RFS targets for 2035 however, are projected to be exceeded.

"Our projections show that existing policies that stress energy efficiency and alternative fuels, together with higher energy prices, curb energy consumption and growth and shift the energy mix toward renewable fuels," EIA Administrator Richard Newell said. "However, assuming no new policies, fossil fuels would still provide about 78 percent of all the energy used in 2035." The consumption of liquid fuel energy will see a growth from 19 million barrels per day in 2008 to 22 million barrels per day in 2035, but the EIA anticipates biofuels to account for all the growth in liquid fuels, with consumption of petroleum-based liquid fuel remaining flat. As a result, dependence on imported oil should decline significantly over the next 25 years.

Although ethanol production and demand has reached new records, and future growth in the industry remains probable, cellulosic ethanol numbers appear to have dropped off, according to the energy outlook. The EIA 2022 outlook published in 2009 showed cellulosic consumption at 4.92 billion gallons while the 2010 numbers show cellulosic consumption for 2022 at 2.10 billion gallons, a decrease of over half from last year's projections. According to EIA analyst Peter Gross, the reduced projections for cellulosic ethanol production and consumption in 2022 relate to the state of the industry. Many of the facilities intended for production of cellulosic biofuels are still in development, or not operating at full capacity. In forming the projections for its annual outlook, the EIA evaluated variables such as the current existence of cellulosic ethanol facilities, the technical maturity of those facilities, commercial viability and access to capital.

"Things are not looking as positive as we thought last year for the industry," Gross said. "Basically, what has happened is we are pushing out the development of this industry a few years, which is why you will see that gap in 2022. In short, we have re-assessed our assessment of the cellulosic ethanol industry [taking into account] the current economic climate and the current status of the plants that are now in operation."

EIA's projections exclude potential future policies that have not become law and the resulting effects of those policies. Technologies commercially available or those that can be reasonably expected to become commercially available over the next decade are, however, included in the projections.