Environmental and Econom

Facing Today’s Ethanol In

EPA Farm, Ranch, and Rural Comm

Committee (FRRCC) Meeting

September 8, 2008
Environmental issues facing o

What is our industry doing

• Working to reduce the lifecycle greenho

emissions associated with ethanol produ

• Enhancing the energy efficiency and sus

ethanol production systems

• Ensuring “land use change” modeling is 

the best science is considered

• Encouraging a level playing field for the 

the environmental impacts of all fuels
Lifecycle GHG Emissi

• In the past, lifecycle analysis was largely an a

• Emerging regulatory frameworks establish lif

reduction standards for biofuels

 Federal Renewable Fuels Standard (RFS2)

3⁄4 New plants must show 20% GHG reduction compa

3⁄4 “Advanced” biofuels = 50% GHG reduction

3⁄4 “Cellulosic” biofuels = 60% GHG reduction

 California Low Carbon Fuels Standard

3⁄4 Reduce GHG emissions by 10% by 2020

3⁄4 Other states looking at similar carbon‐based fuel s
Lifecycle GHG emissions fro

dry‐mill corn ethan

LIFECYCLE GHG EMISSIONS, DRY‐MILL CORN ETHANOL Agriculture Phase 

Biorefinery Phase Co‐product Credit ‐TOTAL Global Warming Intensity (GWI) Gasoline GHG Reduction Relative to Gasoline 

Source: GREET 1.8b and Liska, University of Nebraska.
Factors contributing GHG

corn ethanol lifecyc

Share of Corn Ethanol GHG Emissions by Phase

The glob

EACH o

reduced 

adoptio

and p

Source: Wang, 2007.
Improving the ag phase: Higher 

708090

100110120130140150160170

Bushels/Acre

U.S. Corn Yield

U.S. average corn yield has

more than doubled in the

last 35 years

Source: USDA; 2008 yield is estimated at 155 bu
Improving the ag phase: Fe

Fertilizer Trends and New Technologies• Variable/precision application• N inhibitors/slow release

• N utilization transgenic traits

• Economic incentive to use less
Improving the biorefinery phase

• New technologies have reduced the energy required • Producers have great incentive to reduce energy cos

• Increasing use of process heat from non‐fossil fuels 

20,00022,00024,00026,00028,00030,00032,00034,000

2004 2005 2006 2007 

BTU/Gallon

Dry Mill Thermal Energy Usage Improvement

(Average BTU per Gallon of Ethanol Produced)

Source: Christianson & Associates. “U.S. Ethanol Industry Efficiency

Improvements: 2004 through 2007” August 5, 2008
GHG emission reductions from et

on various practices & techn

“Our study shows that the GHG emission impacts of corn ethanol could vary from a 3% increase (if coal is used as 

the process fuel) to a 52% reduction (if wood chips).” –

Wang, ANL, May 2007

Source: Wang et al., May 2007.
Improvements in wate

6.5

5.8

4.7

3.45

2.5 

01234567

1994 1998 2002 2006 

Gallons of Water: 1 Gallon Fuel

Water Required to Produce

1 Gallon of Ethanol vs

Ethanol Gasoline

Sources: RFA, MN DNR, NREL

The ethanol industry constitutes four

‐tenths of 1% of total U

*Assumes ethanol industry uses 75 million gallons H2O

Total daily industrial H2O use is 18.5 billion gals./day
The land use change debate an

impacts on the biofuels lif

The concept of land use change is based on the f

1. Increased production of plant‐based biofuels w

conversion of previously (or recently) uncropp

forest and grassland) into crop production.

2. Conversion of these lands to cropping systems 

greenhouse gas emissions through clearing an

3. The GHG emissions resulting from these land c

then attributed to the biofuels lifecycle.

Potential Impact: Some questionable and discred

suggest GHG emissions from biofuels are wors

when land use change is considered.
Land use change

Two Types of Land Use Change:

• Direct: Growing biofuels feedstock on ground t

used for something else

3⁄4 Example: CRP to corn for ethanol

3⁄4 Analysis is relatively straightforward , data‐driv

• Indirect: Land somewhere in the world is clear

use as a result of land somewhere else being p

feedstock

3⁄4 Example: soy/corn converted to corn/corn Æ d

exports Æ results in demand for more soy acre

the world Æ causes grassland to be cleared for 

causes deforestation of rainforest to add pastur

3⁄4 Analysis is complex, driven by compounding ass

unverifiable
No statistical relationship betwe

production and Amazon defo

0

2,0004,0006,0008,000

10,00012,00014,00016,00018,000

0

2,0004,0006,0008,000

10,00012,000

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Million Gallons Ethanol

Square Miles Deforested

Brazilian Deforestation and Global Ethanol Production

Deforestation Ethanol Production

• Esurat

anpro

rel• Dde• 2low

Source: F.O. Licht; National Institute of Space Research (Brazil)
Recent analyses of indirect land 

are flawed and inval

• Quality, validation, and transparency of models

– GTAP model does not include CRP, idle land in land invent

– FASOMGHG, FAPRI models not publicly available

• Purpose of models

– GTAP was designed for global trade interactions and polic

• Inability to verify results

• Assumptions underlying analysis

– Searchinger assumes 30 BGY corn ethanol by 2015

– Crop yields, DDGS displacement, soil carbon emissions, e

• All fuels need to be evaluated with the same metrics

• No precedent for accurate accounting of indirect effect

• Incapable of integrating interplay of economic, instituti

cultural and demographic variables
Are indirect effect metri

applied to other fue

• Energy consumed in exploration and d

• Protection of oil supply

• Energy intensity and land use impacts 

• Oil field fires

• Venting and flaring

• Petroleum‐related deforestation (Ecua

• Etc.
Economic Issues

• Managing higher corn prices

• Energy input costs

• Transportation costs• Perceptions about ethanol’s ro

prices
Transportation Cos

• Transportation Impacts of 100 MGY et

– 3,448 railcars of Fuel Ethanol per ye

(10 tank cars per day)

– 9,867 railcars of Corn per year

(60% by Rail, 17 railcars per day)

– 3,048 railcars of DDGS per year

(9 hopper cars per day)
Shipping Ethanol via Pi

– Ethanol CAN be shipped via pipeline– Most economical mode of transport– Much research is being conducted

• Kinder‐Morgan to ship fuel ethan

pipeline from Tampa to Orlando

• Dept. of Transportation Research

• Association of Oil Pipelines Resea
Ethanol and Food Pr

• During the first 4 months of 2008, the all 

increased by 4.8 percent, with increased e

biodiesel consumption accounting for onl

percent of the total increase while other f

accounted for 95‐96 percent of the increa

97% of food price increases had nothing t

ethanol. ‐‐ USDA/DOE Letter to Senator Jeff Bingam

Senate Energy and Natural Resources Committee, June 

• Minimal impacts substantiated by studies 

Federal Reserve Bank of K.C., USDA‐ERS, P

University, Informa Economics, others
TABLE 1. Ethanol Impact on Household Gasoline Spending

Variabl

e

21,252

A. Miles

Dri

v

e

n

per Household

per

Yr. (miles)

20.2

E

n

B.

Average

Vehicle

Fuel Econom

y (mpg) 

1,052

$0.20‐0.50 

C. Gasoline Use

per Household

per

Year (gals.) 

D. Ethanol

S

a

vings per

Gallon

of Gasoline

E. GASOLINE SAVINGS PER HOUSEHOLD $210.40 – $526 

TABLE 2. Ethanol Impact on Household Food Spending

Variabl

e

$6,111 

A. 

Av

e

r

age Household 

Food 

Spending (2006) 

B. 

Added Cost to Food 

due t

o Food 

Price Inflation (5.2% 

June07 t

o June08) 

$317.77 Ju

C. Added Cost to Food 

due t

o Food 

Price Inflation 

with Ethanol Im

pact

$302.49‐$

3 

Up

without

Ethanol Impact (4.95%‐5.1%)

11.66 

D. ADDED COST TO FOOD DUE TO IMPACT OF ETHANOL

ON FOOD INFLATION (.10% TO .25%)

$6.11 ­ $15.28 

TABLE 3. Net Impact of Ethanol on Total Household Spending

Variable

$210.40 ‐ $52

A. Ethanol 

B.

Savings per

Household

A

dde

d

Cost to

Food per

Household due to Impact

of Ethanol $6.11  

on

Food Inflation

‐ $15.2

C. NET IMPACT OF ETHANOL ON HOUSEHOLD SPENDING $204.29 ­ $510

ESTIMATING THE IMPACT OF INCREASED ETHANOL PRODUCTION ON U
Summary

• Ethanol will continue to play an import

reducing GHGs from the transportation 

• The ethanol industry continues to impr

efficiency and sustainability

• Much research is needed on land use c

the current level of understanding is in

• The costs and benefits of ALL fuels sho

evaluated using the same metrics

• Ethanol producers are facing higher pro

• Ethanol’s impact on the household bud
Thank You

www.ethanolrfa.org

Geoff Cooper

Renewable Fuels Association

16024 Manchester Rd.

Ellisville, MO 63011

(636) 594

‐2284