The U.S. corn ethanol industry is at a crossroads. According to the U.S. Department of Agriculture, ethanol production has largely flattened since 2017. The industry is no longer experiencing rapid growth like it did between 2000 to 2009. This is due in part to the so-called “blend wall,” which has historically limited ethanol content in gasoline to approximately 10%. The use of higher ethanol blends, namely E85 and E15, is growing, but perhaps not at the pace or scale necessary to sustain the U.S. ethanol industry’s current size amidst projected electric vehicle (EV) sales.Gasoline production in the U.S. has also been flat since 2005. This is more the result of increases in fuel efficiency and driving behaviors than the nation’s still nascent transition to electric vehicles. Nonetheless, for the ethanol industry to maintain long-term profitability, it must pursue other growth opportunities.The ethanol lobby is promoting 15% ethanol-gasoline blends (E15) as a primary growth/hold solution. While this is a logical step and consistent with the 20%-25% ethanol-gasoline blends in Brazil, it doesn’t address the elephant in the room: the automotive market is expected to steadily move away from internal combustion engines (ICE). Gasoline, the carrier for ethanol, is widely viewed as a gradually shrinking market. Therefore, even with the growth of E15 and E85, the ethanol industry may be chasing a larger share of a smaller overall market.Sustainable aviation fuel (SAF), on the other hand, may be the most promising growth opportunity for corn ethanol in years. The airline industry consumes 18 billion gallons of jet fuel per year. Incentive programs like the 2022 Inflation Reduction Act, or IRA, are also incentivizing SAF blending with a $1.25 per gallon tax credit for fuels that meet a 50% greenhouse gas reduction threshold.For U.S. corn ethanol producers, this could be a much-needed lifeline as the industry faces headwinds from emerging technologies and policies.A Need to Adapt&nbsp; The U.S. corn ethanol industry needs to prepare for change. In January, BloombergNEF published an aggressive forecast of gasoline decline, which would have a dramatic negative impact the viability U.S. corn ethanol production over the next 20 to 30 years.Even with widespread E15 sales, ethanol blending in gasoline would be far less than it is today. Although the ethanol industry should keep chasing E15, it may not be an adequate solution in the face of a steep decline in gasoline usage.So, what is behind this anticipated decline?A Reduction in Government Incentives&nbsp; For a long time, the U.S. corn ethanol industry was a recipient of government incentives to support agriculture and reduce transportation related emissions. However, the ethanol blender’s tax credit expired in 2012. The latest Renewable Volume Obligations (RVOs) of the Renewable Fuel Standard maintain the conventional ethanol blending mandate to 15 billion gallons, while advanced biofuels blending obligations have increased.This update implies that the U.S. Environmental Protection Agency is more focused on the growth of renewable natural gas, renewable diesel and other fuels that have lower carbon intensity (CI) than corn ethanol. Corn ethanol also faces challenges from the Low Carbon Fuel Standard (LCFS) credit generation due to its higher CI.The Emergence of Electric Vehicles&nbsp; In contrast to corn ethanol, EVs have experienced tremendous support from federal and some state governments. The IRA offers up to $7,500 in tax credits per vehicle, while the Infrastructure Investment and Jobs Act of 2022 is investing up to $7.5 billion in EV charging infrastructure.Additionally, California intends to phase out ICE vehicles by 2035. Other states such as New York and Massachusetts plan to follow suit. Furthermore, the EPA anticipates that the market share for EVs will reach 67% by 2032 as compared to 7.6% in 2023. These predictions may be ambitious, but there is momentum in government support and the EV market.The continued growth of EVs is relevant to the ethanol industry because it reduces gasoline demand, which in turn reduces ethanol demand. The consistent support of EVs at the federal, state and local levels suggests that this trend will continue. &nbsp;SAF Offers A Long-Term Opportunity&nbsp;&nbsp; SAF production may offer long-term and sustainable growth prospects for U.S. corn ethanol producers. Apart from incentive programs spurring growth, such as the Inflation Reduction Act, global SAF mandates are also pressuring the airline industry to adopt more SAF. By 2050, the U.S. aims to scale up SAF production to 35 billion gallons through its SAF Grand Challenge. In the E.U., airlines are expected to adopt a 20% SAF blend by 2035. These factors are each likely to increase SAF demand.There are several SAF pathways, including hydrotreated esters and fatty acids (HEFA), alcohol-to-jet, Fischer-Tropsch and e-SAF. The HEFA process has proven to be the most readily available technology to produce SAF from fats and oils. While the HEFA process is an effective technology, it won’t be sufficient to meet the anticipated demand of SAF due to lack of feedstock availability. So, the ATJ pathway may help the SAF industry achieve its ambitions.An advantage that ethanol has over fats and oils is its availability at a lower cost and in much larger volumes. By utilizing the ATJ pathway, ethanol can be converted to ethylene and then oligomerized into longer-chain molecules in the jet fuel boiling point range.While there are other pathways besides ATJ that can support the growth of SAF beyond the capabilities of HEFA, Worley Consulting’s analysis suggests ATJ is one of the most viable and economical. Other potential pathways are arguably more constrained by their level of technical readiness, product yield or feedstock energy density.Assessing the Viability of ATJ to Meet SAF Ambitions &nbsp;&nbsp; When considering producing SAF from corn ethanol, there are several factors to consider. These factors include CI, carbon capture potential, crop yields, ATJ yields, feedstock cost, technology maturity, HEFA outlook and potential volume of SAF produced.Corn ethanol’s high CI can hinder producers from qualifying for IRA-related tax credits. To qualify, corn ethanol needs to have a CI that is less than 50% of the oil industry. ATJ may fall short as a result, but various pathways can help reduce its CI. Figure 3 illustrates several pathways of improving the carbon footprint of ethanol-based jet fuel.Implementing carbon capture on the CO2 stream from the ethanol plant can have the largest impact on CI. This pathway reduces ATJ’s CI from approximately 72 g CO2e/MJ to 38 g/CO2e MJ. According to Figure 3, this improvement alone is enough to drop corn ethanol to below the 50% greenhouse gas (GHG) reduction threshold.Therefore, integrating carbon capture with ethanol production is critical to help corn ethanol-based SAF qualify for IRA tax credits.To reduce ATJ’s CI even further, ethanol producers can introduce additional technological pathways. This can involve fuel switching, supplying renewable energy, gasification of biomass and changing agricultural practices.Carbon Capture for ATJ is Economically Challenging&nbsp; While carbon capture can significantly reduce corn ethanol’s CI, its adoption has been slow. Recent Midwest carbon capture projects have also faced challenges.For example, the Navigator CO2 pipeline was cancelled after several years of campaigning for support in the Midwest. Separately, the Summit and Wolf pipelines have both faced permitting challenges. However, there are some promising developments, including Tallgrass Energy’s Trailblazer pipeline. It has Federal Energy Regulatory Commission (FERC) approval to convert its natural gas pipeline to transport CO2 instead.Yields of ATJ Process Are Low&nbsp;&nbsp; One challenge for corn ethanol is product yield. While corn ethanol is more abundant than soybean oil, ethanol only yields about 52% jet fuel in the ATJ process. In comparison, soybean oil yields about 80% jet fuel in the HEFA process.This would seem like a clear victory for the HEFA process over ATJ. However, corn yields about 9,800 pounds per acre producing 507 gallons of ethanol. On the other hand, soybean yields 3,000 pounds per acre to produce 76 gallons of soybean oil.The result is that an acre of corn can produce 4.4 times as much jet fuel per acre than an acre of soybeans.&nbsp;Ethanol Has a Feedstock Cost Advantage&nbsp;&nbsp; Another advantage for corn ethanol over fats and oils is feedstock cost.Soybean oil has a history of being more costly than corn ethanol, presumably because corn yields 175 bushels/acre vs. 50 bushels/acre for soybeans. Corn ethanol is also available in greater quantities, producing 2.9 gal/bushel whereas soybean oil produces 1.5 gal/bushel.At the time of authoring this paper, the price of ethanol was $1.60/gal. In contrast, the price of soybean oil was $3.70/gal. Looking back at the history of corn ethanol and soybean oil prices, soybean oil is regularly almost double the price in our review of long-term trends.HEFA Technology Is More Mature&nbsp;&nbsp; When it comes to commercial experience, the HEFA process has a significant advantage compared to ATJ. In the past few years, there has been rapid growth in the production of renewable diesel from fats and oils. Some SAF can be fractionated from renewable diesel, and the renewable diesel process can be modified to produce even more SAF via established hydrocracking technology.The HEFA process involves pretreating the feed using technologies by Alfa Laval, ARA and Crown. Hydrotreatment is the next step, using technology from Axens, Haldor Topsoe, Sulzer, UOP and others. The end product is either renewable diesel or SAF.ATJ technology is a work in progress. However, the technology is the sum of existing mature technologies as described below:• Dehydration to ethanol for the purpose of ethylene production has been commercialized by Braskem.• The oligomerization process is well understood and has been widely commercialized in the oil refining industry. It’s used for converting propylene and butylenes into naphtha molecules. Ethylene is not typically the reactant and naphtha molecules are typically the product, but the technology is similar and, therefore, could be expanded to jet fuel production. In April, Next Wave Energy Partners announced the completion of an ethylene-to-alkylate plant that employs this technology.• The oligomerization product is 100% olefinic and must be saturated via well-understood hydrogenation technology.Licensors working on the development of this technology have a long history of successful technology commercialization. They include Axens, LanzaJet, Lummus and UOP.LanzaJet has recently commissioned its 10 MMgy commercial demonstration plant in Soperton, Georgia, using sugarcane ethanol as feedstock. This is a step towards wider commercialization of the technology.Although ATJ is trailing HEFA in terms of commercialization, it’s arguably ahead of other options under consideration, such as the Fischer-Tropsch production pathway that uses lignocellulosic feedstocks. It’s also more likely to achieve wider adoption ahead of e-fuel pathways, such as CO2-to-jet via methanol as an intermediate.Potential Future Market and Technological Trends &nbsp;&nbsp; Like corn ethanol, soybean oil faces challenges in achieving 50% greenhouse gas reduction. In the future, low-CI feedstock such as used cooking oil, animal fats and distillers corn oil might be diverted from renewable diesel to SAF. Higher-CI soybean oil feedstock, in turn, may be routed to renewable diesel, which does not have a 50% GHG reduction requirement.For corn ethanol, BloombergNEF suggests most of the 15 billion gallons will be available for SAF production. If 85% of ethanol production is available for SAF by 2050, it would be an additional 6.6 billion gallons of SAF, or 2.6 times the potential contribution of soybean oil.Combined, the growth of soybean oil from new crushing facilities—and the displacement of corn ethanol from gasoline to SAF—could contribute to as much as 9.2 billion gallons of SAF. However, this is well below the SAF Grand Challenge laid out by the DOE, the Department of Transportation and the USDA, which targets 35 billion gallons by 2050.Other sources such as imports, Fischer-Tropsch, or e-fuels would have to come into play to meet the 2050 target.However, the technical maturity of these technologies and the cost of production of these pathways exceeds HEFA and ETJ (ethanol-to-jet).Growth Opportunity&nbsp; Corn ethanol producers need to consider sustainable aviation fuel as a growth opportunity. The corn ethanol industry has had to confront several challenges, such as disappearing tax credits, volatile RINS prices, the pandemic, and competition from the oil industry over E15 and small refinery exemptions.Through it faces uncertainty, the industry has proven its resilience. As it faces new challenges from factors like the emerging EV market, steps the industry takes today will determine its growth trajectory in the coming decades.ATJ is emerging as a compelling growth opportunity for the corn ethanol market, especially because existing ethanol plants can remain productive, reducing the capital cost associated with ethanol production. Compared to HEFA, it has the advantages of low feedstock cost, higher crop yields and high feedstock availability. Although corn ethanol on its own is not enough to meet the SAF Grand Challenge, it can contribute more than double what HEFA can.ATJ technology may not be as mature as HEFA, and it has challenges to overcome. But several industries have commercially demonstrated the components of the technology.As more production plants like LanzaJet’s come online, the case for ATJ will strengthen. Alongside ongoing incentive programs and policy support, ATJ may provide a stronger future for corn ethanol and overcome its uncertainties today. Author: Dave Collings&nbsp; Group Manager, Fuels and Chemicals, Worley&nbsp; Contact: Dave.Collings@Worley.com

2024-06-04 - Alcohol to Jet: A Lifeline for Corn Ethanol (Ethanol Producer Magazine)

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ATJ has the potential to provide more than a fourth of the U.S. government’s total SAF target, eventually eclipsing HEFA-based SAF.     

Alcohol to Jet: A Lifeline for Corn Ethanol

Alcohol to Jet: A Lifeline for Corn Ethanol

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