Rural Business and

Cooperative

Programs

Research

Report 214

Whey to Ethanol: A

Biofuel Role for Dairy

Cooperatives?
Abstract Pertinent information regarding whey-to-fuel ethanol production is explored and

reviewed. A potential of producing up to 203 million gallons of fuel ethanol from whey

in 2006 was estimated, and dairy cooperatives could have a share of 65 million gallons. Two whey-ethanol plants are currently operated by dairy cooperatives, producing

a total of 8 million gallons a year. Successful operations of the plants since the 1980s

indicate that (1) fuel ethanol production from whey is technically feasible, (2) whey-tofuel ethanol production technologies and processes are mature and capable of being

adopted for commercial operations, and (3) producing fuel ethanol from whey is economically feasible. However, in this era of whey products' price uncertainties, a key

consideration in assessing the feasibility of a new whey-ethanol venture should be the

valuation of the opportunity cost of whey as feedstock for fermentation. A new wheyethanol plant probably should have an annual production capacity of at least 5 million

gallons of ethanol. Some historical lessons on the pitfalls to avoid are summarized.

Key Words: Whey, whey permeate, permeate mother liquor, lactose, ethanol, dairy

cooperatives.

Whey to Ethanol: A Biofuel Role for Dairy Cooperatives?

K. Charles Ling

Agricultural Economist

USDA Rural Development

Research Report 214

February 2008

Cover illustration from photograph of Dairy Farmers of America’s whey-to-ethanol plant

in Corona, California, courtesy Dairy Farmers of America.
Preface In this era of looking for alternative energy sources, the idea of fermenting lactose in

surplus whey (which traditionally has been regarded as a waste product) to produce

fuel ethanol has gained attention. This study sets out to explore issues that are pertinent to understanding the viability of producing fuel ethanol from whey:

● The volume of lactose in whey that is available for fermentation and the potential volume of fuel ethanol production.

● The current status of whey-to-fuel ethanol production.

● The technologies and processes of producing fuel ethanol from whey.

● The costs and returns of producing fuel ethanol from whey.

● The organization of the whey-ethanol enterprise and the role dairy cooperatives may

play.

Acknowledgements

The author would like to thank Mr. John Desmond of the Carbery Group and Dr. M.

Clark Dale of Bio-Process Innovation, Inc., for providing information on the wheyethanol production processes. For their cooperation in sharing information about wheyethanol plant operations, the Dairy Farmers of America and Land O'Lakes are also

gratefully acknowledged. Credits are also due to many people who were consulted

during the course of this study.

Mention of company and brand names does not signify endorsement over other companies' products and services.

i
Contents Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .iv

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Potential Volume of Ethanol from Whey Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Volume of surplus lactose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Potential ethanol volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Share of dairy cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Processes of Whey Permeate to Ethanol Conversion . . . . . . . . . . . . . . . . . . . . . . . . .7

The Basics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

The Economics of Producing Fuel Ethanol From Whey Permeate . . . . . . . . . . . . . . .9

Estimated cost of producing fuel ethanol from whey permeate . . . . . . . . . . . . .9

Cost of whey permeate as feedstock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Economic feasibility of producing fuel ethanol from whey permeate . . . . . . . .12

Economy of scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

Whey-Ethanol Plant Scenarios and Roles of Dairy Cooperatives . . . . . . . . . . . . . . .13

A cheese-whey/ethanol complex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Multi-plant coordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Roles of dairy cooperatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13

Some Specific Issues in Whey-Ethanol Production . . . . . . . . . . . . . . . . . . . . . . . . . .14

Some Historical Lessons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Appendix I. The Carbery Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

Appendix II. The Processes of Bio-Process Innovation, Inc. . . . . . . . . . . . . . . . . . . . .18

List of Tables

Table 1—Whey and modified whey products production, 2001-2006,

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

ii
Table 2—Average annual prices of whey products, carlot or trucklot quantities

in bulk packages, F.O.B., 2001-2006, and monthly prices since 2006 . . . . . . . .4 

Table 3—Estimated volume of lactose in whey products, 2006 . . . . . . . . . . . . .6

Table 4—Comparison of lactose volumes that may be used for ethanol 

production, 2003-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Table 5—Lactose input and estimated feedstock cost per gallon of ethanol at

selected yield level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Table 6—Whey products production by product and month, United States,

2006-2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

List of Figures

Figure 1—Major products and uses derived from whey . . . . . . . . . . . . . . . . . . .3

Figure 2—Basic steps of whey-ethanol production . . . . . . . . . . . . . . . . . . . . . . .8

iii
Highlights An estimated 90.5 billion pounds of whey was generated as a byproduct of cheese

production in 2006. Besides the liquid carrier, the composition of whey is approximately 0.3 percent butterfat, 0.8 percent whey proteins, 4.9 percent lactose, and 0.5 percent minerals. Cumulatively, there were 4.4 billion pounds of lactose contained in the

whey produced that year.

Whey may be made into many products with various processes and technologies.

Condensed whey, dry whey, dry modified whey, whey protein concentrate and isolates,

as well as lactose (crystallized and dried) are the often cited whey products. There are

many other secondary and tertiary products that can be derived from whey, but the volume of whey used in these products is relatively small.

Whey products produced in 2006 contained an estimated total of 1.9 billion pounds of

lactose. Therefore, about 2.5 billion pounds of surplus lactose were unaccounted for

by whey products. This vast amount of surplus lactose could be fermented to produce

an estimated 203 million gallons of ethanol, assuming complete consumption of lactose in fermentation and ethanol conversion efficiency at 100 percent of the theoretical

yield. Dairy cooperatives' share of the whey-ethanol potential could be 65 million gallons.

There are two industrial-scale whey-ethanol plants in the United States, at Corona,

Calif., and Melrose, Minn. Both began operation in the 1980s and are currently owned

and operated by dairy cooperatives. Together they produce 8 million gallons of fuel

ethanol a year.

The whey-to-ethanol plant commissioned in 1978 by Carbery Milk Products Ltd. of

Ireland is believed to be the first modern commercial operation to produce potable

(drinkable) alcohol. Starting in 1985, it has produced fuel ethanol as well. The Carbery

process developed by the company has been adopted by plants in New Zealand and

the United States. New Zealand started using fuel ethanol produced from whey in

August 2007.

All ethanol production processes share some basic principles and steps. Whey permeate from protein ultrafiltration is concentrated by reverse osmosis to attain high lactose

content. Lactose is fermented with some special strains of yeast. Once the fermentation is completed, the liquid (beer) is separated and moved to the distillation process to

extract ethanol. This ethanol is then sent through the rectifier for dehydration and then

denatured. The effluent (stillage and spent yeast) may be discharged to a treatment

system, digested for methane gas, sold as feed, or further processed into food, feed or

other products.

To be economically viable, a dehydration plant (and by inference, an ethanol plant)

needed to have a minimum daily capacity of 60,000 liters of ethanol (about 15,850 gallons a day or five million gallons a year), according to a 2005 New Zealand report. The

estimated “at-gate” cost (operating and capital service costs) of producing ethanol from

whey permeate at maximum technical potential, with a level of uncertainty of +/- 20

percent, was N.Z. $0.6-0.7 per liter. Using a currency exchange rate of N.Z. $1 = U.S.

$0.7, the estimated cost translated to U.S. $1.60-1.85 per gallon. This estimate is similar to the costs quoted by sources in the United States: about $1 per gallon of operating cost and a capital service cost that is predicated on the capital cost ranging from

$1.50 to $4 per annual gallon for a commercial operation, depending on the scale of

the plant. The estimated operating cost assumes that whey permeate used in ethanol

iv
fermentation is a free (no cost) feedstock. Capital cost is the cost of the plant construction project.

There is an opportunity cost of lactose for ethanol fermentation only if there are competing uses of the same lactose, such as manufacturing dry whey, lactose, or other

whey products. If there is no such competition, then the whey permeate somehow has

to be disposed of and the opportunity cost of lactose for ethanol fermentation is likely

to be zero or even negative.

It takes 12.29 pounds of lactose to produce a gallon of ethanol, if the lactose is completely consumed in fermentation and ethanol conversion efficiency is 100 percent of

the theoretical yield. For every $0.01 net lactose value (price of lactose net of processor's cost), the feedstock cost for fermentation would be $0.1229 per gallon of ethanol.

If lactose consumption is less than complete in fermentation and ethanol conversion

efficiency is less than 100 percent of the theoretical yield, then more than 12.29

pounds of lactose is required to produce a gallon of ethanol and the feedstock cost

would be higher.

Whether it is economically feasible to produce ethanol from whey permeate is determined by the balance of the production costs and the expected revenues. Net returns

from the ethanol enterprise should be measured against the profitability of making

other whey products or of other uses, to determine whether ethanol production is a

more worthwhile undertaking. A further consideration should be which of the whey

enterprises fit best with a cooperative's overall business strategy.

The fact that the two whey-ethanol plants have been in operation for more than 20

years is an indication that (1) fuel ethanol production from whey is technically feasible,

(2) whey-to-fuel ethanol production technologies and processes are mature and capable of being adopted for commercial operations, and (3) producing fuel ethanol from

whey is economically feasible.

In assessing the feasibility of a new whey-ethanol plant, the cost of whey permeate as

feedstock needs to be carefully evaluated in this era of whey products' price uncertainties. Other important factors to consider besides the feedstock cost are (1) an appropriate plant scale that would minimize capital cost and the cost of assembling feedstock, (2) an appropriate technology and processes that would minimize operating

cost, (3) best alternatives for using and/or disposing of the effluent, (4) ethanol price,

and (5) various government production incentives.

Dairy cooperatives are certainly well-positioned to coordinate whey assembly for

ethanol production. However, in view of the current high and unsettled dry whey products prices, there are great uncertainties concerning the long-term development of the

whey-ethanol production enterprise.

There was a very high attrition rate of fuel ethanol plants during the decade of 1980s.

Experiences of that period provide some lessons that may be relevant to future commercial whey-ethanol development. To be successful, a fuel ethanol plant should have

proper technology selection, proper engineering design, adequate research support,

credible feasibility studies, adequate financing; and personnel with technical and managerial expertise in the biochemical process.

v
Whey to Ethanol: A Biofuel Role for Dairy

Cooperatives?

K. Charles Ling

Agricultural Economist

USDA Rural Development

Introduction

A total of 90.5 billion pounds of whey was estimated to have been generated as a byproduct of cheese

production in 2006, comprising about 85.8 billion

pounds of sweet whey and 4.7 billion pounds of acid

whey (Table 1, next page). A general rule of thumb is

that the volume of sweet whey is about nine times the

volume of cheese produced and the acid whey volume

is about six times that of cottage cheese. Over the last 5

years, from 2001 to 2006, the volume of whey

increased by 15 percent, commensurate with the

increases in the production of cheeses.

The composition of whey varies with the components in milk that is used for making cheese, the variety of cheese made, and the cheese-making process

employed. Whey contains approximately 0.3 percent

butterfat, 0.8 percent whey proteins, 4.9 percent lactose, and 0.5 percent minerals (Wisconsin Center for

Dairy Research).

Butterfat is traditionally of high value, and most

plants separate it for use as an ingredient for further

processing. The remaining whey may be made into

various products by using an array of processes and

technologies, or is otherwise disposed of (Table 1 and

Figure 1, page 3).

Whey can be condensed or concentrated, dried,

fermented, delactosed, demineralized, and deproteinated. It is adaptable to ultrafiltration, reverse

osmosis, ion exchange, electrodialysis, and nanofiltration (Kosikowski, et al).

The main whey products are dry products: dry

whey, lactose, and whey protein concentrate (Table 1

and Figure 1). These whey products are storable for

later distribution over a wide area, even internationally. Condensed whey also uses a significant amount of

whey, but the market is limited due to its wet form.

There are many other secondary and tertiary

products that can be derived from whey (Kosikowski, et

al). However, the volume of whey used in these products is relatively small (Yang, et al).

While whey products have found wider uses in

recent years and of late have become valuable commodities (table 2 and sidebar, page 4), making these

products was originally considered a lower-cost, lastresort alternative to dumping surplus whey.

Most of the components of whey can quickly

deplete oxygen levels in natural water systems

(Hamilton). The biochemical oxygen demand (BOD) of

whey is about 3.5 pounds per 100 pounds of whey or

35,000 ppm, and its chemical oxygen demand (COD) is

about 68,000 ppm (Webb, et al). Such high levels of pollutants make disposing of whey problematic.

Methods of disposing of surplus whey include

animal feeding, land spreading, or discharging it after

treatment for BOD reduction. There are also some

recent cases of feeding whey to anaerobic digesters to

produce methane gas (Dairy Facts).

Animal feeding and land spreading have limitations (Cotanch, et al; Wendoff; Kosikowski, et al).

Continuous land disposal of cheese whey can endanger the physical and chemical structure of the soil,

decrease the crop yield, and lead to serious water pollution problems (Belem, et al).

Treating whey for BOD reduction before discharging it is costly. As an exercise to evaluate the

cost, cursory searches on the Internet selected 20

sewage districts in as many States (not a random sample) that posted clearly discernible sewage rates on

volume, BOD, etc., for 2006-07. Average volume

charge was $2.50 per 1,000 gallons of sewage (3 cents

1
2

per hundredweight) discharged, and average BOD surcharge was $0.27 per pound of BOD that was above a

basic level, usually 200-300 ppm. In addition, some

jurisdictions also had surcharges on COD and other

pollutants.

These various charges highlight the high cost of

surplus whey disposal. Making whey products

reduces the surplus whey volume, saves on the cost of

disposing of whey, and has the prospect of breaking

even or making profit in whey plant operations. Thus,

it is important for the industry to find new ways to use

more whey.

Advances in membrane and filtration technology

since the late 1970s enable processors to ÒharvestÓ

whey proteins, which are of high nutritional value. In

recent years, whey proteins have become popular for

use in fortifying more and more foods, beverages,

infant formulas, and nutraceuticals. The growth in

demand has pushed up whey protein concentrate production by 20 percent in 3 years since 2003 and whey

protein isolates by 37 percent (Table 1).

Harvesting whey proteins still poses the problem

of dealing with whey permeate, which retains most of

the lactose and other solids. Whey permeate may be

dried for feed or food uses, but the largest volume is

used to produce lactose. However, lactose has somewhat limited application in food products because of

its low digestibility and poor solubility: it is prone to

crystallization (Audic, et al; Alexander, et al). In addition,

producing lactose has a leftover productÑpermeate

mother liquor, which contains about 60 percent lactose

(dry basis)Ñthat still needs to be disposed of (Dale, et

al).

The issue of profitably handling the large volume

of surplus whey remains. Producing ethanol by fermenting lactose contained in whey, whey permeate,

and permeate mother liquor may be a promising alternative. In common usage, ethanol is often referred to

simply as alcohol.

The best known, first commercially operated

whey-to-ethanol plant was commissioned in April

1978 by Carbery Milk Products Ltd. of Ireland to produce potable (drinkable) alcohol (Sandbach). Since 2005,

the company has been suppling ethanol made from

whey to an oil firm for E85 and E5 blends (The Maxol

Group; Irish Examiner.com).

The Carbery process has been adopted by plants

in New Zealand and the United States.

Internationally, the most notable whey-to-ethanol

producer is Anchor Ethanol Ltd, which is wholly

owned by the New Zealand dairy cooperative

Fonterra. It operates three ethanol plants with an

annual total production of about 5 million gallons, and

claims to be the largest ethanol producer in the world

that uses whey (from casein plants in this case) as feedstock. The ethanol has been used for food, beverage

and industrial applications (Anchor Ethanol; Mackle).

Beginning on August 1, 2007, the company's fuel

Table 1—Fluid whey, and whey and modified-whey products produced, 2001-2006, United States

2001 2002 2003 2004 2005 2006

Estimated fluid whey volume1: -----Billion pounds-----

Sweet type 74.3 76.9 77.0 79.9 82.3 85.8

Acid type 4.5 4.5 4.6 4.7 4.7 4.7

Total 78.8 81.4 81.6 84.6 87.0 90.5

Whey and modified-whey products: -----1,000 pounds-----

Condensed whey, solids, sweet

type, human 81,484 108,250 114,656 91,227 79,247 106,919

Dry whey 1,045,655 1,115,321 1,085,165 1,034,898 1,040,692 1,100,346

Reduced lactose and minerals 129,245 124,670 84,110 84,893 98,371 91,596

Lactose 519,161 563,110 613,976 665,621 713,975 738,656

Whey protein concentrate 336,221 313,239 357,944 355,854 383,926 427,724

Whey protein isolates2 22,333 27,677 27,595 30,673

Whey solids in wet blends, animal3 39,851 37,656

1 Estimated at 9 times cheese production for sweet whey and 6 times cottage cheese for acid whey.

2 New data series started with the year 2003. (Dairy Products, October 4, 2005). 3 Not shown when fewer than three reported or individual plant operations could be disclosed.

Sources: Dairy Products, Annual Summary, USDA National Agricultural Statistics Service, selected years, unless otherwise specified.
3

Whey

Whey Cream

Dry Whey Condensed Whey

WPC*

Lactose

Permeate

Land Spreading,

Animal Feed

Fermentation to produce ethanol and other 

secondary and tertiary whey products

PML**

Ultrafiltration

Crystallization

*WPC: Whey protein concentrate ** PML: Permeate mother liquor, which contains 60% lactose, dry basis

Figure 1-- Major products and uses derived from whey(Audic, et al. (Figure 2); Dale, et al. (Figure B.1))
4

Table 2—Average annual prices of whey products, carlot or trucklot quantities in bulk packages, 2001-2006,

and monthly prices since 2006

Year Whey powder, edible Whey protein

nonhygroscopic Lactose, edible concentrate, edible 34%

(Central) (Central & West) protein (Central & West)

-----Dollars per pound-----

2001 0.2777 0.2090 0.7777

2002 0.1971 0.2042 0.5205

2003 0.1684 0.2094 0.4968

2004 0.2395 0.2262 0.5869

2005 0.2781 0.2012 0.8430

2006 0.3425 0.3333 0.6981

 Month 

2006

January 0.3482 0.2427 0.8004

February 0.3529 0.2492 0.7524

March 0.3193 0.2500 0.6825

April 0.2875 0.2678 0.6144

May 0.2789 0.2816 0.5990

June 0.2811 0.2873 0.5800

July 0.2901 0.3328 0.5935

August 0.3171 0.3438 0.6209

September 0.3599 0.3628 0.6703

October 0.4058 0.4139 0.7468

November 0.4308 0.4392 0.8295

December 0.4388 0.5288 0.8869

2007

January 0.5096 0.5430 1.0012

February 0.6788 0.6062 1.1784

March 0.7768 0.6681 1.3506

April 0.7807 0.9227 1.4801

May 0.7376 0.9370 1.5500

June 0.7385 0.9273 1.6210

July 0.6743 1.0353 1.6460

Source: Dairy Market News, USDA Agricultural Marketing Service.

Recent high prices of dry dairy products are due to the

following factors (USDA Economic Research Service; OECDFAO):

● European Union (EU) agricultural reforms in 2003

reduced the incentives for producing butter and

dry nonfat milk, thus shifting more milk solids into

cheese.

● Worldwide growth in both cheese consumption

and an array of milk protein concentrates (MPC)

also reduces the amount of milk protein that might

otherwise be made into nonfat dry milk.

● Weather-related problems in Australia reduce the

amount of dry dairy products available for export.

● A strong world economy spurs growth in world

demand for dairy products.

● Lower exchange rates of U.S. dollar in recent years

improve the competitiveness of U.S. dairy products.

Policy changes in the EU and worldwide growth in

cheese and MPC demand represent fundamental

changes, while weather problems, economic growth,

and exchange rates are to some extent cyclical.

High prices for dry dairy products due to diverse reasons
ethanol has become available (Farmnews for NZ

Farmers). It has been blended with gasoline and sold

commercially as E10.

In the United States, there are two industrialscale plants that produce fuel ethanol from whey. Both

are currently owned and operated by dairy cooperatives. Dairy Farmers of America (DFA) operates the

Corona, Calif., plant through its Golden Cheese

Company subsidiary. The Melrose, Minn., plant operated by Land O'Lakes is part of a cheese production

joint venture between Land O'Lakes and DFA.

The Corona plant has been in operation since

1985, except for a hiatus of more than a year from 1998

to 2000. It is located on the same premises as the

cheese plant. The ethanol plant was originally licensed

to use the Carbery process for producing ethanol from

whey permeate. It has a production capacity of 5 million gallons of ethanol per year. Proprietary yeast is

propagated at the plant, and the cells are

recycled and reused several times.

Fermentation takes place in eight batches,

and each batch requires slightly more

than 24 hours to complete. In the distillation column the ethanol is concentrated

to 190 proof. It is then dehydrated to 200

proof for fuel ethanol and is denatured

before shipping.

(DFA recently announced the closure

of the Corona facility. The plant would

operate at a reduced capacity beginning

August 31 and cease production of

American block cheese and whey products by December 31, 2007 (DFA).)

The Melrose plant began operation in

1982 and currently is producing about 3

million gallons a year. It is located a couple hundred feet away from the cheese

plant. All products and utilities are

brought to the ethanol plant via a pipe

rack from the cheese plant. The technology was originally developed by Kraft,

and yeast propagation is also proprietary. It uses a fed-batch fermentation

system that ferments seven batches a

day. Whey permeate is sent to fermentation tanks and inoculated with yeast.

After fermentation, water and ethanol are

separated from the lactose distillers

solids using an old whey evaporator. The

water and ethanol mixture is then sent to

a distillation column and a molecular

sieve for concentration and dehydration.

(Note: In a fed-batch system, substrate is fed into the

fermentation tank at constant intervals, while effluent

is removed continuously (Roehr).)

Both plants concentrate lactose in the whey permeate to more than double its natural strength before

fermentation. No other pretreatment on the feedstock

is required. Lactose is almost completely consumed in

the fermentation process. The resulting beer contains a

level of ethanol that is required for efficient distillation

and dehydration. Most effluent from ethanol production is sold for animal feed.

The ethanol production of 8 million gallons from

these two plants accounts for a minor portion (less

than 1 percent) of total U.S. annual fuel ethanol production. The total surplus lactose volume as calculated

below shows that potential exists to produce up to 203

million gallons of ethanol a year from whey. This

study attempted to ascertain the feasibility of expand5

Dairy Farmers of AmericaÕs ethanol-from-whey plant in Corona,

California. (Photograph courtesy of Dairy Farmers of America)
6

Table 4—Comparison of lactose volumes that may be used for ethanol production, 2003-2006

Item 2003 2004 2005 2006

-----Million lbs-----

Total lactose volume (estimated) 4,000 4,142 4,266 4,433

Lactose used in whey products (estimated):

Condensed whey, solids content 89 71 61 83

Dry whey products

Dry whey, Total 807 770 774 819

Reduced lactose & minerals 60 61 70 65

WPC, 25.0-49.9% protein 139 139 141 152

WPC, 50.0-89.9% protein 4 4 5 7

Whey protein isolates, 90.0% and higher 0 0 0 0

Lactose 608 659 707 731 

Total lactose used in whey products1 1,707 1,703 1,759 1,857

Lactose volume unaccounted for that could be used for

ethanol production 2,293 2,439 2,506 2,576

-----Million gallons-----

Potential volume of ethanol production (estimated) 182 195 199 203

Estimated actual production in 2006 8

1 Items may not add to total due to rounding.

Table 3—Estimated volume of lactose in whey products, 2006

Item Product Lactose

Million lbs Percent1 Million lbs

Lactose in sweet whey 85,809.0 4.9 4,205

Lactose in cottage cheese (acid) whey2 4,651.9 4.9 228

Total lactose volume (estimated) 4,433

Lactose used in whey products (estimated):

Condensed whey, solids content3 106.9 77.5 83

Dry whey products

Dry whey, Total 1,100.3 74.4 819

Reduced lactose & minerals4 91.6 71.3 65

WPC, 25.0-49.9% protein5 297.5 51.0 152

WPC, 50.0-89.9% protein6 130.3 5.0 7

Whey protein isolates, 90.0% and higher 30.7 1.0 0

Lactose7 738.7 99.0 731

Total lactose used in whey products 1,857

Lactose unaccounted for by whey products 2,576

1 Adopted from Wisconsin Center for Dairy Research, unless otherwise specified. 2 Cottage cheese whey contains 4.9% lactose (Kosikowski, et al, p. 427). Other references tend to report lower lactose content. 3 Percentages among solids in dry whey, not counting moisture. Condensed whey at 20% solids is estimated to contain 15.5% lactose.

4 Average composition of reduced-lactose whey and reduced-mineral whey.

5 Uses composition for WPC-34.

6 Uses composition for WPC-80.

7 Uses composition for food-grade lactose (Chandan).
ing whey-ethanol production by reviewing the potential volume of ethanol from whey sources, the current

processes of whey permeate to ethanol conversion, the

economics of producing fuel ethanol from whey permeate, and the organization of whey-ethanol plant

operation in which dairy cooperatives may play a role.

Potential Volume of Ethanol From Whey

Sources

Ethanol from whey is produced by fermenting

the lactose contained in whey, whey permeate, or permeate mother liquor. Therefore, the potential volume

of ethanol production from whey feedstock depends

on the available volume of surplus lactose that is not

used in whey-derived products.

Volume of surplus lactose. The 90.5 billion pounds

of whey generated by the cheese industry in 2006

contained an estimated 4,433 million pounds of lactose

(Table 3, opposite). An estimated total of 1,857 million

pounds, or 42 percent of available lactose, was used in

these main whey products: condensed whey, dry

whey, reduced lactose and minerals whey, whey

protein concentrates, whey protein isolates, and

lactose.

Hence, an estimated 2,576 million pounds of lactose was unaccounted for in 2006 by these whey products. Some of this unaccounted for volume could have

been in secondary and tertiary whey products and

other whey or lactose-derived products. Therefore, it

may be reasonable to estimate that there was about 2.5

billion pounds of surplus lactose in 2006. This is the

amount of lactose that may be available for ethanol

production.

Potential ethanol volume. Theoretically, 1 pound of

lactose would yield 0.538 pound of ethanol. Therefore,

the potential volume of ethanol production from

surplus lactose in 2006 may be estimated at about 203

million gallons.

In the same way, potential ethanol volumes from

surplus lactose were estimated for previous years: 182

million gallons in 2003, 195 million gallons in 2004,

and 199 million gallons in 2005 (Table 4, opposite). The

2006 volume was a 12-percent increase from 2003.

In 2006, the two ethanol plants operated by dairy

cooperatives together produced 8 million gallons of

ethanol. That still left 195 million gallons as untapped

potential.

Implicit in the estimation of potential ethanol volume is the premise that use of lactose in food, feed,

industrial, and other applications should take precedent, and ethanol production is the last-resort use of

whey and lactose. As will be seen later in the discussion of the economics of whey-ethanol production,

every cent of net lactose value (price of lactose net of

processorÕs cost) would increase feedstock cost of

ethanol fermentation by at least 12.29 cents per gallon

of ethanol. Last-resort use of whey and lactose in

ethanol production would keep the feedstock cost as

low as possible.

Share of dairy cooperatives. Dairy cooperatives

produced 40 percent of the Nation's natural cheese in

2002 (Ling). Presumably, they also accounted for 40

percent of the whey generated. In that same year,

dairy cooperatives produced 1.1 billion pounds of dry

whey products, or 52 percent of U.S. total volume, in

28 dry whey plants that they operated.

Using these same ratios for 2006, dairy cooperatives would account for an estimated 800 million

pounds of lactose that was not used in whey products.

Of this amount, about 100 million pounds was used to

produce 8 million gallons of ethanol by the two plants

operated by dairy cooperatives. The remaining 700

million pounds of lactose represents a potential volume of 57 million gallons of ethanol.

Processes of Whey Permeate to Ethanol

Conversion

The first patent for the use of whey in ethanol

production (U.S. Patent no. 2,183,141) was granted in

1939 (Murtagh).

The best known commercial process of producing

ethanol from fermenting whey is the Carbery process,

which was developed in Ireland for making potable

alcohol and was later adopted for industrial alcohol

and fuel ethanol as well.

In the United States, there is the proprietary

process used by the plant in Melrose, Minn. In addition, research efforts have culminated in the development of some successful processes (Dale, et al; U.S.

Department of Energy (DOE), Office of Industrial

Technologies, Energy Efficiency and Renewable Energy;

Bio-Process Innovation, Inc.). Many novel processes also

have been seen in media reports and research literature.

7
8

Whey

Whey Cream Water

Yeast

(Propagation)

WPC*

Whey Permeate

Concentrate Ultrafiltration

Separation

*WPC: Whey protein concentrate

Reverse Osmosis Substrate Fermentation

Beer Distillation (Rectification) Dehydration Ethanol

Stillage Yeast (Spent/Recyled)

Figure 2 -- Basic steps of whey-ethanol production
The Basics. Ethanol production processes may vary

between plants, but they all share some basic

principles and steps (Figure 2).

After whey protein has been harvested from

whey by ultrafiltration, the remaining permeate is concentrated by reverse osmosis to attain higher lactose

content for efficient fermentation.

Lactose in whey permeate is fermented with

some special strains of the yeast Kluyveromyces marxianus that are efficient in fermenting lactose. The yeast

is added to the fermenting substrate and pumped to

the fermentation vessels.

Once the fermentation has been completed, yeast

is separated from the fermented substrate, and the

remaining liquid (beer) is moved to the distillation

process to extract ethanol. This ethanol is then sent

through the rectifier for dehydration. If the resulting

anhydrous ethanol is intended for fuel, it is denatured

by adding gasoline to prevent misuse.

The effluentÑthe remaining liquid after ethanol

has been removed from the beer (stillage) and the biomass (spent yeast)Ñmay be discharged to a treatment

system, digested for methane gas, sold as feed, or further processed into food, feed, or other products. (For

a concise description of the manufacture of ethanol

from whey, see Hamilton.)

Beyond the basics, there are many variations of

whey-ethanol production processes. Two with available current information are the Carbery process and

the processes offered by the Bio-Process Innovation,

Inc. They are described in Appendix I and Appendix

II, respectively.

The Economics of Producing Fuel

Ethanol From Whey Permeate

Estimated cost of producing fuel ethanol from

whey permeate. With only two industrial-scale

whey-to-ethanol plants in the United States, no

publicly available production cost data exist. Costs

quoted by several sources do not have enough details

and probably represent the best ÒeducatedÓ estimates.

However, a recent comprehensive cost estimate of

producing fuel ethanol from whey is publicly available

in a June 2005 New Zealand report (Waste Solutions

Ltd.).

The New Zealand report related that the estimated Òat-gateÓ cost (operating and capital service costs)

of producing ethanol from whey permeate at maximum technical potential, with a level of uncertainty of

+/- 20 percent, was N.Z. $0.6-0.7 per liter. Using a currency exchange rate of N.Z. $1 = U.S. $0.7, the estimated cost translated to U.S. $1.60-1.85 per gallon.

The estimated cost took into consideration economy-of-scale effects, transportation costs, and competing waste uses, and included the following scenario

and assumptions:

● Fermentation at local plants.

● Distillation to 96-percent ethanol at local

plants.

● Transportation of 96-percent ethanol to a centrally located dehydration plant.

● Capital service cost per year was 20 percent of

capital cost, assuming a mixture of debt and

equity financing and a nominal interest rate of

10 percent.

● To be economically feasible, the dehydration

plant needed to have a minimum daily capacity of 60,000 liters of ethanol (about 15,850 gallons a day or 5 million gallons a year).

● For alcohol recovery (distillation and dehydration), biogas from effluent treatment was used

as fuel. (Surplus steam from the dairy plant or

cogeneration plant would also help.)

● Wet feedstock that had at least 15 percent (by

weight) fermentable sugar content could pro

duce ethanol that was 9-10 percent (by volume)

of the fermentation beer. The resulting ethanol

recovery cost could be less than N.Z. $0.2 per

liter (U.S. $0.52 per gallon). (For a beer that

contained 3-4 percent ethanol, the ethanol

recovery cost was at least N.Z. $0.54 per liter

(U.S. $1.42 per gallon).)

The cost of producing ethanol from whey permeate estimated by the New Zealand report, at U.S. $1.60-

1.85 per gallon, with a level of uncertainty of +/- 20

9

Conversion factors used in this report

● One pound of lactose consumed in fermentation yields 0.538 pound of

ethanol (theoretical yield).

● 1 liter of ethanol equals 0.7924 kilogram of ethanol.

● 1 gallon equals 3.785 liters

● 1 kilogram equals 2.2046 pounds

● 1 gallon of ethanol weighs 2.9992 kilogram or 6.6121 pounds.
percent, is similar to the costs quoted by sources in the

United States. Estimates from these U.S. sources yielded an operating cost of about $1 per gallon. In addition, there was a capital service cost of between $0.30

and $0.80 per gallon, which was calculated at an

assumed rate of 20 percent of capital cost. The capital

service cost would have been higher or lower if the

assumed rate had been different. Capital cost (cost of

the plant construction project) had quite a wide range,

from $1.50 to $4 per annual gallon for a commercial

operation, depending on the scale of the plant.

Cost of whey permeate as feedstock. The amount

of lactose needed to produce a gallon of ethanol

depends on the level at which the lactose is consumed

in fermentation and the efficiency of ethanol

conversion. It was reported in the 1990s that

commercial plants fermenting natural-strength whey

could utilize greater than 95 percent of lactose with a

conversion efficiency of 80-85 percent of the theoretical

value (Mawson).

With technology advancement over the years and

using higher concentration of lactose for fermentation,

lactose consumption in fermentation is nearly complete at the two U.S. commercial plants. Presumably,

the conversion efficiency is also higher than in the

1990s. The actual yield is proprietary information and

is therefore not available.

For reference purposes, it was reported that conversion of lactose to ethanol at 85.5 percent to 91 percent efficiency (0.46 to 0.49 gram ethanol per gram lactose) could be obtained (Dale).

It would take 12.29 pounds of lactose to produce

a gallon of ethanol, if the lactose is completely consumed in fermentation and ethanol conversion is 100

percent of the theoretical yield (Table 5).

The estimated operating cost of $1 per gallon of

ethanol assumes that whey permeate used in ethanol

fermentation is a free (no cost) feedstock. This assumption is valid when there is surplus whey to be disposed

of by any least-cost means. However, when whey

powder and lactose have found wider uses and have

increased in value, the determination of the cost of

whey permeate as feedstock for ethanol fermentation

becomes more complicated.

To illustrate the calculation, use, for example, a

May 2007 lactose price of $0.9370 per pound (Table 2).

Subtracting from this price an estimated processor cost

of $0.20 per pound for crystallizing and drying lactose,

the net value of lactose was $0.7370. For every $0.01

net lactose value, the feedstock cost for fermentation

would be $0.1229 per gallon of ethanol (Table 5).

Given that the net value of lactose was $0.7370 per

pound, the feedstock cost would amount to $9.06 per

gallon of ethanol (($0.7370/$0.01)*$0.1229). If lactose

consumption is less than complete in fermentation and

ethanol conversion is less than 100 percent of the theoretical yield, then more than 12.29 pounds of lactose is

required to produce a gallon of ethanol, and the feedstock cost would be even higher.

(No publicly available processor cost data for lactose production is available. The $0.20 per pound estimate is used, considering make-allowances of $0.1956

for dry whey in the Federal Milk Market Orders (U.S.

Department of Agriculture, Agricultural Marketing

Service) and $0.267 for skim whey powder in

California's Stabilization and Marketing Plans for

Market Milk (California Department of Food and

Agriculture)).

Another illustration could use the lactose price

prior to the run-up of whey products prices in 2006.

The 2005 annual average price of lactose was $0.2012

per pound (Table 2). The net value of lactose after

allowing for $0.20 processor cost would be $0.0012 per

pound. The opportunity cost of lactose as feedstock for

fermentation would have been $0.015 per gallon of

ethanol (($0.0012/.$0.01)*$0.1229), or almost zero.

The calculation of the opportunity cost of lactose

for ethanol fermentation is valid only if there are competing uses of the same lactose, such as manufacturing

dry whey, lactose, or other whey products. If there is

no such competition, then the whey permeate some10

Table 5—Lactose input and estimated feedstock cost per gallon of ethanol at selected yield level

Feedstock cost per gallon ethanol

Ethanol yield Lactose input (For every $0.01 net lactose

(Percent of theoretical yield) (Pounds per gallon ethanol) value per pound)

100% 12.29 $0.1229

95% 12.94 $0.1294

90% 13.66 $0.1366

85% 14.46 $0.1446
how has to be disposed of and the opportunity cost of

lactose for ethanol fermentation is likely to be zero or

even negative.

As shown in Table 3, an estimated 1,857 million

pounds of lactose were used in various whey products

in 2006, and an estimated 2,576 million pounds (58

percent of total available lactose) were unaccounted

for. Most of the unaccounted-for volume was likely to

have been disposed of as waste. Accordingly, the lactose in this surplus whey would not carry an opportunity cost had it been used as feedstock for ethanol fermentation.

Nationally, the surplus whey situation will persist for the foreseeable future. Although prices of whey

11

Table 6—Whey products production by product and month, United States, 2006-2007

By Month Cumulative

____________________________________ __________________________________

Product and month 2006 2007 Change 2006 2007 Change

-- 1,000 pounds -- Percent -- 1,000 pounds -- Percent

Dry whey, total1

Jan 88,391 96,145 8.8 88,391 96,145 8.8

Feb 89,695 90,232 0.6 178,086 186,377 4.7

Mar 100,953 98,713 -2.2 279,039 285,090 2.2

Apr 95,662 96,818 1.2 374,701 381,908 1.9

May 97,295 99,198 2.0 471,996 481,106 1.9

Jun 89,701 94,628 5.5 561,697 575,734 2.5

Jul 95,226 656,923

Aug 91,547 748,470

Sep 86,271 834,741

Oct 87,434 922,175

Nov 85,865 1,008,040

Dec 92,306 1,100,346

Lactose, human & animal

Jan 64,539 65,064 0.8 64,539 65,064 0.8

Feb 56,311 59,671 6.0 120,850 124,735 3.2

Mar 62,165 64,975 4.5 183,015 189,710 3.7

Apr 63,402 63,083 -0.5 246,417 252,793 2.6

May 66,057 67,145 1.6 312,474 319,938 2.4

Jun 60,027 62,013 3.3 372,501 381,951 2.5

Jul 60,333 432,834

Aug 64,225 497,059

Sep 58,964 556,023

Oct 62,296 618,319

Nov 60,505 678,824

Dec 59,832 738,656

Whey protein concentrate, total

Jan 37,162 33,055 -11.1 37,162 33,055 -11.1

Feb 34,436 29,432 -14.5 71,598 62,487 -12.7

Mar 37,766 35,038 -7.2 109,364 97,525 -10.8

Apr 37,525 33,188 -11.6 146,889 130,713 -11.0

May 37,373 33,436 -10.5 184,262 164,149 -10.9

Jun 36,190 33,672 -7.0 220,452 197,821 -10.3

Jul 35,704 256,156

Aug 35,024 291,180

Sep 34,581 325,761

Oct 34,581 360,342

Nov 33,116 393,458

Dec 34,266 427,724

1 Excludes all modified dry whey products.

Source: Dairy Products, September 2007, USDA National Agricultural Statistics Service.
products have more than doubled since June 2006

(Table 2), whey products production has remained

rather constant (Table 6, previous page). For the first 6

months of 2007, cumulative production of dry whey

and lactose, respectively, was 2.5 percent higher than

the amount of the same period last year, but whey protein concentrate was 10.3 percent lower. The combined

volume of the 3 products for the 6 months in 2007, at

1,156 million pounds, was only 0.9 million pounds

more than the same period in 2006.

In the short run, whey products manufacture is

limited by the available plant capacity and the production volume can increase only marginally. This is

because current whey products plants were built to

operate at or near capacity. New investment to expand

the capacity will not happen unless the industry is

convinced that the recent price hikes are a long-term

trend.

Although nationally whey is still in a surplus situation, its availability is often localized (regionalized).

The cost of using it as feedstock for ethanol fermentation is therefore site specific.

Economic feasibility of producing fuel ethanol

from whey permeate. Whether it is economically

feasible to produce ethanol from whey permeate is

determined by the balance of the costs and the

expected revenues. Key components on the cost side

are:

● Feedstock cost: Cost of whey permeate (lactose)

as input for ethanol fermentation.

● Operating cost: Labor, energy, supplies, repair

and maintenance, depreciation, insurance,

licensing fees, etc.

● Capital service cost: Annual cost is calculated

at a rate of capital cost prescribed by the decisionmaker, based on the opportunity cost

(interest cost) of capital and risk premium for

undertaking the investment. It may be at 10

percent of capital cost, 15 percent, 20 percent,

or some other rate.

On the revenue side, there are three main considerations:

● Ethanol price: About 90 to 95 percent of ethanol

is sold under long-term contracts (6 to 12

months). Many of these contracts are fixedprice. The remaining amount is sold on the

spot market, and the spot-market prices fluctuate according to market conditions (Renewable

Fuels Association). The Annual Energy Outlook

2007 with Projections to 2030 forecasts ethanol

wholesale price (in 2005 dollars) to be $2.520

per gallon in 2007, $2.066 in 2008, $2.099 in

2009, $1.814 in 2010, and $1.742 in 2011.

Thereafter, the long-term trend is for the price

to be in the $1.650 to $1.720 range (DOE Energy

Information Administration).

● Byproducts value: Effluent dried as feed,

digested for methane gas, or used for other

purposes, with positive or negative returns.

● Incentives: Currently (through December 31,

2010) there is a small ethanol producer Federal

tax credit of $0.10 per gallon, up to 15 million

gallons or $1.5 million per year, for a production facility with up to 60 million gallons of

annual production capacity (26 U.S.C. ¤ 40. The

citation is intended for information only. Please

consult tax professionals for specific tax treatments.) Various grants, loans, and other incentives are also offered by various Federal and

State programs.

Depending on the magnitude of capital service

cost and assuming whey permeate is a free feedstock

that is converted to ethanol at an operating cost of $1

per gallon, the ethanol price must be higher than the

total cost of producing it for the new investment in the

ethanol plant to be economically feasible. Various production incentives may lower the price level required

for economic feasibility.

Net returns from the ethanol enterprise should be

measured against the profitability of making other

whey or whey-derived products or of other uses of

whey, to determine whether ethanol production is a

more worthwhile undertaking. A further consideration

should be which of the whey enterprises fits best with

a cooperative's overall business strategy.

Economy of scale. Because whey contains about

93.5 percent water and only 4.9 percent lactose, even a

whey-ethanol plant of modest size requires a very

large cheese operation to provide whey for feedstock.

This fact destines the scale of whey-ethanol plants to

be much smaller in size than present-day corn-ethanol

plants and higher in capital cost per annual gallon.

A larger scale whey-ethanol plant would benefit

from scale economy, where the capital cost increases

proportionately less than the increase in plant size,

resulting in lower capital cost per annual gallon. In a

joint project studying the cost of producing ethanol

12
from corn and lignocellulosic feedstocks, researchers

at USDA and DOE used the following expression for

scaling capital cost for equipment:

New cost = Original cost x (new size/original

size)exponent

The joint report cited USDA's value of the scaling

exponent of 0.6 and DOE's average value of 0.63; both

were within the range of 0.6 to 0.7 commonly cited in

cost estimation literature (McAloon,, et al).

Another estimate based on 19 corn-ethanol plants

built between 1996 and 2004 and ranging in size from

15 million to 50 million gallons per year yielded a

plant scaling exponent value of 0.77 ((S&T)2

Consultants , Inc., et al).

Regardless of the value of the scaling exponent,

as long as it is less than one, there would be scale economy for plants that lie within the relevant size range.

Although this reference is to plants making ethanol

from corn starch and lignocellulosic feedstocks, it is

reasonable to expect that a similar economy of scale

would apply to whey-ethanol plants.

A larger sized whey-ethanol plant would lower

the per-gallon capital cost, but also would require a

larger whey volume, either from a larger-sized cheese

plant or from a group of cheese plants.

Whey-Ethanol Plant Scenarios and Roles

of Dairy Cooperatives

The New Zealand report suggested an ethanol

plant with a minimum annual capacity of 5 million

gallons. Assuming lactose is completely consumed in

fermentation and ethanol is produced at the level of

the theoretical yield, the plant would require 195,000

pounds of lactose a day as input.

A cheese-whey/ethanol complex. A cheese plant

with a daily capacity of processing 4.5 million pounds

of milkÑabout the size of some of the largest cheese

plants in the United StatesÑwould generate four

million pounds of whey to supply the required 195,000

pounds of lactose to the ethanol plant. To pump over

whey permeate and save on transportation costs, the

ethanol plant should be located close to the cheese

plant.

The setups of the two U.S. whey-ethanol plants,

at Corona and Melrose, fit this single cheesewhey/ethanol plant complex scenario.

Multi-plant coordination. For cheese plants of more

modest sizes (typically located in the more traditional

dairy regions), assembling whey permeate for ethanol

production would require coordination among plants.

For example, three plants, each with a daily capacity of

processing 1.5-2 million pounds of milk into cheese,

would yield the necessary amount of whey to supply

lactose to the ethanol plant. At each cheese plant,

whey would be ultrafiltered (deproteinated) and the

permeate would be concentrated by reverse osmosis to

about 20 percent solids (15 percent lactose) and then

shipped to the ethanol plant for fermentation. To

reduce whey permeate shipping costs, the ethanol

plant should be located adjacent to the largest cheese

plant among the three or where it is most logical and

appropriate.

This coordination scheme, in fact, has been in

practice by dairy cooperatives for whey handling,

where several cheese plants condense their whey and

then ship the condensed whey (deproteinated or otherwise) to a whey powder plant for drying. The same

scheme could be used to coordinate whey handling

among cheese plants to supply a whey-ethanol plant.

Furthermore, such a coordination scheme could be

expanded to allow future whey-ethanol plants to be of

greater capacity in order to take advantage of the economy of scale.

Roles of dairy cooperatives. If a new whey-ethanol

plant is proved to be economically feasible and were to

be built, the enterprise might be organized according

to these forms:

● An ethanol plant adjacent to a dairy cooperative's large cheese plant, similar to the setups of

the two existing plants.

● An ethanol plant that ferments whey permeate

assembled from several cheese plants of a dairy

cooperative.

● An ethanol plant that ferments whey permeate

assembled from several cheese plants. The

coordination of whey handling may be among

a cooperative's and other cooperatives' cheese

plants, or among a cooperative's and other

cooperative and non-cooperative entities'

cheese plants. The coordination may be carried

out by contract or organized as a joint venture.

Small cheese plants looking for opportunities

to add value to whey may be inclined to participate in such undertaking.

13
14

Some Specific Issues in Whey-Ethanol

Production

Because of the composition of whey, there are

some issues that are specific to whey-ethanol production (Dale):

● Whey and whey permeate concentrate are very

susceptible to contamination and spoilage.

● Whey permeate concentrate is costly to transport (mostly water).

● The fermentation is susceptible to lactic contamination. The fermentation systems must be

very carefully designed and operated, basically

to food-grade cleanliness or, for some systems,

even to aseptic standards.

● Because the calcium salts in the whey are

Òreverse solubleÓÑbecoming insoluble at higher temperaturesÑscaling of the distillation column could be a problem or a cause for concern.

● The effluent is high in chloride. This limits the

rate of application on fields if land-spreading is

used. Just land-spreading of the effluent can be

a major operating cost. There are two ideas for

higher value products from the spent effluent:

(1) a base for a sports drink if whey permeate

concentrate is the substrate, and (2) a mineral

salt block for animals if permeate mother

liquor is the substrate.

Some Historical Lessons

In the United States, fuel ethanol production

started in the late 1970s. During the 1980s, about 165

commercial plants (plants with more than 500,000 gallons annual capacity) were constructed, with grain as

the primary feedstock. By the end of 1990, fewer than

40 plants remained in operation (Murtagh, et al),

although annual ethanol production grew to 900 million gallons (Renewable Fuel Association).

The reasons for the high attrition rate of plants

during that decade were reviewed in a 1991 paper

(Murtagh, et al). Experiences of that period may be relevant to future commercial whey-ethanol development

and are summarized in this section. They may provide

some useful lessons that illustrate the kind of mistakes

to avoid.

The most significant causes of project failures

during the 1980s were improper technology selection

and improper engineering design. Every aspect of the

plant operations was susceptible to such failures. From

feedstock pretreatment to yeast propagation, fermentation, distillation, DDGS (distillers dried grains with

solubles) drying and storage, and piping, the culpable

factors were inadequate design, equipment, and/or

process. Without being supported by adequate

research, novel steps taken to save cost, increase yield,

or otherwise cut corners, tended to invite disastrous

results.

Other factors that contributed to failures were

shifting public policy; fraudulent investment schemes;

plants that were constructed with high cost, without

feasibility studies, or without adequate financing; and

lack of technical and managerial expertise in the biochemical process.

Conclusions

There is a potential for supplementing the

Nation's fuel ethanol supply by an estimated 203 million gallons a year (2006 data) if all lactose in surplus

whey and whey permeateÑwhey that is not used in

value-added whey-derived productsÑis fermented for

the purpose. Dairy cooperatives could have a share of

65 million gallons of this potential. However, there are

only two commercial whey-ethanol plants with an

annual production of 8 million gallons. Both plants are

currently owned and operated by dairy cooperatives.

The fact that the two plants have been in operation for more than 20 years is an indication that (1) fuel

ethanol production from whey is technically feasible,

(2) whey-to-fuel ethanol production technologies and

processes are mature and capable of being adopted for

commercial operations, and (3) producing fuel ethanol

from whey is economically feasible.

Because there are no publicly available, actual

production-cost data, no attempt was made to estimate

the profitability of the whey-to-ethanol enterprise. The

cost of producing ethanol from whey permeate estimated by the 2005 New Zealand report was U.S. $1.60-

1.85 per gallon (at a currency exchange rate of N.Z. $1

= U.S. $0.7), with a level of uncertainty of +/- 20 percent. Estimates ascertained from U.S. sources in the

course of this study yielded a per-gallon operating cost

of about $1 and a capital service cost that may be calculated on a capital cost of $1.50 to $4 per annual gallon. These cost estimates have a wide range of uncertainties and are also sensitive to the scale of the plant.

Then there is also the uncertainty regarding the

cost of using whey permeate as feedstock. Prior to the
price run-up in 2006, the dairy industry's main task

concerning whey had been to seek more methods for

whey to be useful and valuable. Under those circumstances, whey and whey permeate used in fermentation may be regarded as a feedstock of no or even negative cost. This free feedstock premise remains true if

there are no readily accessible, profitable alternatives

for the whey.

In assessing the feasibility of a new whey-ethanol

plant, the cost of whey permeate as feedstock needs to

be carefully evaluated in this era of whey products'

price uncertainties. Every 1 cent of net lactose value

from alternative uses would increase the fermentation

feedstock cost by at least 12.29 cents per gallon of

ethanol. Other important factors to consider besides

feedstock cost are (1) an appropriate plant scale that

would minimize capital cost and the cost of assembling feedstock, (2) an appropriate technology and

process specifically for whey-ethanol production that

would minimize operating cost, (3) best alternatives

for using and/or disposing of the effluent, (4) ethanol

price, and (5) various government production incentives.

The OECD-FAO Agricultural Outlook 2007-2016

provides the only available long-term dry whey price

projection. It forecasts the wholesale price of edible

dry whey (F.O.B., Wisconsin plant) to peak in 2011,

but the decline afterwards will still see the 2016 price

to be 20 percent higher than in 2006 (OECD-FAO). On

the other hand, the Annual Energy Outlook 2007 with

Projections to 2030 forecasts the ethanol wholesale price

to peak in 2007 ($2.520 per gallon) and fluctuate in the

$1.650 to $1.720 range after 2011 (DOE Energy

Information Administration). However, care should be

used if the two projected price series are to be

employed for evaluating the feasibility of a new wheyethanol plant versus a new dry whey plant, because

the forecast of the dry whey price is in nominal dollar

and the ethanol price is in constant (2005) dollar.

Further complicating the picture is that the projection

of the dry whey price preceded, and therefore did not

incorporate, the unexpected price surges in 2007.

References

Alexander, Craig and Nelson, Mark. An Economic

Analysis of the US Market for Lactose, Cornell Program

on Dairy Markets and Policy, presented at Cornell

Conference on Dairy Markets and Product Research,

March 2002.

Anchor Ethanol. http://www.nzmp.com/cda/frontpage/0,,c334829 g500040,00.html.

Audic, J-L, B. Chaufer, and G. Daufin. ÒNon-food

Applications of Milk Components and Dairy Co-products: A Review,Ó Le Lait (Dairy Science and Technology)

83 (2003) pp. 471-438, EDP Sciences.

Belem, M. A. F. and Lee, B. H. ÒProduction of

Bioingredients from Kluyveromyces Marxianus

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Food Science and Nutrition, Volume 38, Number 7,

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Bio-Process Innovation, Inc. ÒWhey Lactose EthanolBPI Technologies for Whey Ethanol,Ó http://bioprocess.com/wheyEthanol.html.

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Cotanch, K. W., J. W. Darrah, T. K. Miller, and W. H.

Hoover. ÒThe Effect of Feeding Lactose in the Form of

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Research Institute, Chazy, NY, and Rumen

Fermentation Profiling Laboratory, West Virginia

University, February 23, 2004.

DAIRY FACTS, Issue 96, March 2007, ÒHigh Tech

Cheese Plant Comes to Clovis, N.M.,Ó Department of

Food Science & Technology, Virginia Polytechnic

Institute and State University,

http://www.fst.vt.edu/extension/drg/dfax/Mar07.html.

Dairy Farmers of America (DFA). News Release, ÒDairy

Farmers of America Announces Changes to American

Cheese Division,Ó August 8, 2007.

Dale, M. C. Discussions on Bio-Process Innovation,

Inc., processes, e-mail correspondence, April 15, 2007.

Dale, M. C. and M. Moelhman. A low-energy continuous

reactor-separator for ethanol from starch, whey permeate,

permeate mother liquor, molasses or cellulosics. Project

final report, April 1, 1994-February 28, 1997. U.S.

Department of Energy, DOE/CE/15594-T11, April 14,

1997.

15
http://www.osti.gov/energycitations/servlets/purl/4691

82-RsHsi0/webviewable/469182.pdf.

Desmond, John. A brief description of the Carbery

process, e-mail correspondence, May 15, 2007.

Farmnews for NZ Farmers. ÒFirst Milk-Made Fuel

Poured Today, Ò

http://www.farmnews.co.nz/news/2007/aug/775.shtml.

Hamilton, Ron (AnchorProducts, Tirau). ÒThe

Manufacture of Ethanol from Whey," New Zealand

Institute of Chemistry (modified on May 22, 2006).

http://www.nzic.org.nz/ChemProcesses/dairy/3H.pdf.

Irish Examiner.com. ÒMaxol launches biofuel mix for

standard vehicles,Ó

http://www.examiner.ie/story/?jp=EYKFKFKFSN&cat=

Business&rss=rss2.

Kosikowski, Frank V. and Mistry, Vikram V. Cheese

and Fermented Milk Foods, Volume I, Origins and

Principles, third edition, F. V. Kosikowski, L.L.C.,

Westport, Connecticut, 1997, Chapter 26.

Ling, K. Charles. Marketing Operations of Dairy

Cooperatives, 2002, USDA Rural Business-Cooperative

Service, RBS Research Report 201, February 2004.

Mackle, Tim. ÒBioEthanol as a Transport Fuel,Ó

Anchor Ethanol, Fonterra Cooperative Group Ltd.

http://eeca.govt.nz/eeca-library/renewable-energy/biofuels/report/tim-mackle-biofuels-conference-05.pdf.

Mawson, A. J. ÒBioconversions for Whey Utilization

and Waste Abatement,Ó Bioresource Technology 47

(1994): 195-203.

McAloon, Andrew, Frank Taylor, and Winnie Yee

(U.S. Department of Agriculture), and Kelly Ibsen, and

Robert Wooley (Department of Energy). Determining

the Cost of Producing Ethanol from Corn Starch and

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28893, October 2000.

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pp. 1029-1039.

Murtagh, John E., and P. W. Madson. ÒFuel Ethanol in

the U.S.A.: Review of Reasons for 75 percent Failure

Rate of Plants Built,Ó Ninth International Symposium on

Alcohol Fuels, Firenze, Italy, November 12-15, 1991, pp.

119-124.

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Organization of the United Nations (FAO). OECDFAO Agricultural Outlook 2007-2016.

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Classical and Future Applications, Wiley-VCH, 2001, Part

II, Chapter 5, pp. 139-148.

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American Cultured Dairy Products Institute, Volume

16 (4), November 1981, pp. 17-22.

(S&T)2 Consultants, Inc., and Meyers Norris Penny

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November 22, 2004.

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Chemical Precursors: Low-Energy Continuous System

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Patent 2,183,141, Kauffmann, W., and van der Lee, P. J.

ÒMethod of Fermenting Whey to Produce Alcohol,Ó

December 12, 1939.

U.S. Patent and Trademark Office. United States

Patent 4,665,027, Dale, et al. ÒImmobilized Cell

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Separation and Methods for Design and Use Thereof,Ó

May 12, 1987.

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table 8.

Appendix I. The Carbery Process

The Carbery process in its present-day operation

is provided by the Carbery Group (formerly Carbery

Milk Products Ltd.), Ballineen, County Cork, Ireland

(Desmond, used with permission).

ÒIn the alcohol plan the raw material, whey 

permeate, is converted into finished product,

potable alcohol. The first step in this process is

the conversion of the carbohydrate in the permeate (lactose) into ethyl alcohol. This is achieved

by fermentation with a specific yeast strain.

The fermentation is carried out in eleven cylin

dro-conical fermenter vessels. Compressed air is

used to agitate the contents of the vessel and it

also provides aeration of the contents to encourage continued yeast growth.

Whey permeate and yeast are added together

into a fermenter and the fermentation is allowed

to proceed under the optimum conditions of temperature, pressure and agitation, until all of the

lactose in the permeate has been exhausted. The

lactose is converted mainly into ethyl alcohol, but

other compounds known as congeners are also

produced by the fermentation. Depending on the

initial lactose concentration and yeast activity,

the fermentation will take between 12 and 20

hours to complete.

After fermentation, the contents of the fermenter are referred to as 'wash' or 'beer.' The

alcohol content of the wash will depend upon the

initial lactose concentration in the permeate and

the fermentation efficiency. The wash is pumped

to the distillation plant.

The next operational step performed on the 

wash is distillation. The purpose of the distillation step is to concentrate the alcohol portion of

the wash, and to remove the congeners formed

during fermentation. A continuous-distillation

process employing column stills is used. It consists of three sections:

i) Beerstill.

ii) Extractive-distillation unit.

iii) Rectifier.

In the beerstill, the wash is concentrated to 96 

percent alcohol. This is then fed to the extractivedistillation column where water is added, changing the boiling point of the mixture, so that highboiling-point 'higher alcohols' may be removed.

Finally, in the rectifier, the alcohol strength

which has been reduced in the extractive-distillation column is increased again to 96 percent.

Other congeners such as 'heads', 'esters' and

'fusel oil' are also removed in this final rectifier.

Most distillation units consist of a cylindrical, 

vertical column. Perforated plates (sieve trays)

are fixed horizontally at intervals of several 

inches throughout the height of the column.

Liquid is usually introduced to a plate approximately half-way up the column. Steam is introduced at the base. The steam and vaporized liq17
uid tend to rise up the column through the plate

perforations, while the liquid tends to fall to the

bottom via a series of down pipes.

Alcohol with a boiling point of 78¡C is more 

volatile than the water portion. The alcohol will

tend to rise up the column in the vapor whereas

the water will tend to go down the column with

the liquid. The alcohol is concentrated to 96 percent in a concentrating column. The product is

removed to storage/further rectification, and

spent wash, which contains very little alcohol, is

removed from the bottom of the column.

Vapors rising above the top plate of the col

umn are condensed in one or more condensers,

and a reflux line returns the condensate to the

uppermost plates, above the point where the

product is drawn off, thus maintaining a liquid

level on the draw tray.Ó

Ardent readers will find the process has evolved

over the years when compared with the original setup

(Sandbach). It also should be noted that potable alcohol

and fuel ethanol have different quality requirements,

and the processes of producing them may differ somewhat, although the basic principles are the same.

In addition, for potable alcohol, ethanol concentrations post-fermentation typically range from 2.5

percent to 3.5 percent (Desmond). Fuel ethanol production requires ethanol content in the beer to be at least

double that level for energy-efficient distillation and

dehydration.

Appendix II. The Processes of BioProcess Innovation, Inc.

The processes offered by Bio-Process Innovation,

Inc. (BPI), are the culmination of many years of

research (e.g., Dale, et al). Depending on the feedstock

and efficiency desired by a plant, the company offers

four kinds of fermentation systems (Bio-Process

Innovation, Inc.):

1. Immobilized Cell Reactor/Separator (ICRS)

This patented immobilized cell reactor/separator

separates ethanol as it is being produced and

allows the quick and continuous conversion of

clear whey permeate concentrate to ethanol. The

experiment for the patent application (U.S. Patent

no. 4,665,027) shows that it has an initial inlet lactose concentration of about double the natural

lactose content in whey permeate and a sugar utilization rate of 98 percent. The outlet (effluent)

BOD is about 2.5 percent of its original value.

2. Continuous Stirred Reactor/Separator

This technology allows high rates of fermentation

coupled with ethanol recovery from the fermentation vessel. Yeast can be immobilized or recycled to keep fermentation rates high.

3. Continuous Cascade Reactor

Three or four stage continuous cascade fermentation system coupled with the company's proprietary salt and ethanol tolerant strains of

Kluyveromyces marxianus (a lactose fermenting

yeast family) allows 7 to 10 percent ethanol to be

made from permeate mother liquor, whey permeate concentrate, or lactose. (U.S. Department of

Energy, Office of Industrial Technologies, Energy

Efficiency and Renewable Energy highlights the

Continuous Cascade Reactor as a low-energy

continuous system for converting waste biomass

to ethanol.

4. Batch Fermentation of Permeate Mother Liquor

Actual performance for the fermentation systems

two through four might be different from Immobilized

Cell Reactor/Separator (system 1). But each of the four

systems can attain near complete conversion of lactose

to ethanol, at 0.46 to 0.49 gram ethanol per gram lactose. Outlet ethanol will be high if the process does not

include simultaneous separation; low, if the technology is incorporated (Dale).

These associated technologies work with the

above systems: (1) salt and ethanol tolerant strains of

Kluyveromyces marxianus, (2) yeast production from

whey permeate, and (3) low energy/non-fouling distillation of beers produced from whey permeate or permeate mother liquor.

18
19
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