Ethanol USA - Environmental Science & Technology (ACS Publications)

Dec 29, 2008 - Eng. Data, J. Chem. .... Increased pressure on food prices is sure to result (7). .... since EISA 2007 calls for life cycle analysis an...
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Environ. Sci. Technol. 2009, 43, 8–11

Ethanol USA DENNIS KEENEY Iowa State University

SHUTTERSTOCK/RHONDA SAUNDERS

Environmental, social, economic, and food issues brought on by the rapidly expanding ethanol-from-corn industry in the United States are reviewed and discussed.

Ethanol from corn has become a major environmental, political, and economic issue for the United States. Currently there are several federal and state subsidies in place, a protective tariff, and a renewable fuel standard (RFS) that requires production of at least 15 billion gallons per year (BGPY) of ethanol or biodiesel by 2015 (1, 2). Already the industry has the capacity to produce over 13.4 BGPY of ethanol from starch grains (3). This will require over 39% of the projected 2008 corn crop. I discuss how federal ethanol policies evolved, the impact of ethanol from corn on energy independence, its off-site effects on water quality and quantity, biodiversity, and its potential economic impacts. Finally, I suggest ways that the U.S. biofuels industry could move forward. In September 2008, the capacity of the ethanol industry to produce ethanol from starch grains (almost entirely corn) in the U.S. was 7.2 BGPY and an additional capacity of 6.2 BGPY was under construction (3). The production of 13.4 BGPY of ethanol will require about 4.8 billion bushels of corn, which is 39% of the predicted U.S. corn crop production 8

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of 12.4 billion bushels assuming good growing conditions (4, 5). There is not enough corn in the U.S. to cover this demand without other needs going unmet, or ethanol plants running below capacity (5). This has caused rapid increases in the price of corn (futures): prior to 2006, the price was below $3.00/bushel, usually close to $2.00/bushel; the 2008 price outside of summer floods and before the September market drops had corn averaging $5.50/bushel (6). Increased pressure on food prices is sure to result (7). About 6.7% of the gasoline used in the U.S. will be displaced by ethanol in 2009, when corrected for the lower energy content of ethanol and assuming an annual gasoline consumption of 140 billion gallons. Assuming a net energy gain in the conversion of corn to ethanol of 1.25 (8) there is a net energy displacement of approximately 2.8 billion gallons of gasoline, about a 2% net energy gain. If the energy in nonfuel byproducts (e.g. distillers grains, which are used for cattle feed) is removed from the equation, the net energy gain is close to nil. In other words, ethanol from corn will do nothing to boost net energy supplies. Is this good energy policy? The U.S. Department of Energy (DOE) has been criticized for lacking a strategic approach to energy policy, especially with regard to biofuels (9). Recently, the nation has become engaged in a debate regarding ethanol from corn for many reasons. I wish here to explore the many issues surrounding ethanol biofuel derived from corn, including how the nation arrived at this policy, examine its unintended consequences, and evaluate future avenues to obtain biofuels without the offsite effects and disruption being caused by ethanol from corn. At the outset, it seems obvious that the nation, and the world, must have alternative energy sources for its transportation fleet if development of the world’s economies is to continue peacefully. The U.S. Secretary of Energy Samuel W. Bodman, in a recent presentation to the World Future Energy Conference (10), estimated that the world’s primary energy needs will increase by 55% by 2030. He asserted that the additional energy must come from more than hydrocarbons. Bodman cited the Energy Independence and Security Act of 2007 (EISA 2007) (1, 2) which increased the biofuel mandate to 36 billion gallons by 2022 as an example of the U.S. advances in renewable fuels. He also discussed many alternate energy technologies, the impact of global warming, and included one line on the need to increase energy efficiency. Notably, energy conservation was not discussed. Use of corn-based ethanol for a transportation fuel as a national policy is firmly entrenched, and will be with us for the foreseeable future. So it is imperative that ethanol and other biofuel production be sustainable, economical, and done in ways which improve on environmental qualities while protecting the food supply for future generations (11-13). Can this be done, or are sustainable biofuels an oxymoron?

The history of ethanol The conversion of plant products to fuels for heat, light, and power has a long history. Liquid fuels, primarily methanol and ethanol, but also butanol, were used to power early 10.1021/es8016182

 2009 American Chemical Society

Published on Web 12/29/2008

internal combustion engines. The Otto cycle engine was developed in 1876 and the Ford Model T can be considered the first “flex-fuel” vehicle. During World War II (WWII) the U.S. Army operated an ethanol plant to produce fuel for domestic army vehicles. Post-WWII gasoline prices were low and gasoline was widely available, so the government’s efforts to use ethanol as a fuel were abandoned (14). Why ethanol? Why not other oxygenates that can also be made from biomass, many of which are more compatible with current fuels and infrastructure? The story starts innocently enough in 1957 when U.S. scientists discovered a way to enzymatically convert dextrose (viz. corn syrup) to D-fructose (15). Fructose bound with its isomer glucose is sucrose, or common table sugar. The resulting high-fructose corn syrup (HFCS) is sweeter than sugar. Mixing HFCS with unadulterated corn syrup can render a sweetener with the same sweetness as sucrose, but is less expensive to produce than refined sugar. Such a mixture is used in many soft drinks, which explains its significant production: by 1974, HFCS dominated the sweetener market (16). HFCS is produced by the corn wet milling process; ethanol is another product of this process. Archers Daniels Midland (ADM), the main HFCS manufacturer by 1974, sought additional markets for products of the ADM wet mills (especially ethanol). In an intensive lobbying and educational effort, the president of ADM, Dwayne Andreas, began to aggressively promote ethanol as an automobile fuel. Andreas convinced politicians such as Senator Bob Dole (R-Kansas) and President Jimmy Carter that ethanol offered a way out of the 1973 OPEC oil embargo that had sent the American economy reeling (17, 18). Congress first acted by passing the Energy Tax Act in 1978 that exempted $0.04/gallon of the federal fuel excise tax on gasoline blended with at least 10% ethanol. Ethanol-friendly bills, strongly supported by ADM, farm, and corn lobbies, were passed in 1978 and 1980 (19). Both the 1978 and 1980 legislation promoted energy conservation and domestic fuel development (19). Tax exemptions for ethanol-blended fuel were increased in 1982 and 1984, but were reduced slightly in 1990. The many energy bills during that time provided additional funds for research and development and provided fuel economy credits for automakers, bringing about the E85 vehicle. The Clean Air Act Amendments of 1990 required gasoline sold in cities with high levels of air pollution (mostly east and west coast cities) to contain fuel oxygenates that promote cleaner burning. Methyl tert-butyl ether (MTBE) was the additive chosen, but this proved to be unwise, as MTBE was found to be toxic and contaminates groundwater supplies. Despite industry concerns (20), MTBE was replaced by ethanol, creating an immediate ethanol demand of close to 3.5 billion gallons (21). This caused an ethanol price spike and greatly accelerated investment in ethanol production capacity. We are witnessing the impact of this production capacity today in the continued expansion of the industry from upgrades of additional plants and new plants that had groundbreakings during the high-profit period. Federal policies. Several federal policies have been critical to the development of the American ethanol industry. The most important involve direct payment to blenders of ethanol with gasoline, and binding requirements for renewable fuel use (the RFS) by set dates. The Volumetric Ethanol Excise Tax Credit (the “blenders credit”), was created in 2004 as part of the American Jobs Creation Act (22). The tax credit gives oil companies an economic incentive to blend ethanol and gasoline. It is currently $0.51/gallon for pure ethanol, scaled to the amount of ethanol in the blend. Additionally, a $0.54/ gallon tariff on ethanol from Brazil was established to protect the domestic ethanol industry. The 2008 farm bill reduced the blenders credit to $0.46/gallon and maintained the tariff through 2010 (1, 2, 23, 24).

The establishment of RFS provided additional incentives for ethanol use, mainly in the form of binding mandates (2). The act required that 4.0 BGPY be mixed with gasoline in 2006, 6.1 BGPY by 2009, and 7.5 BGPY by 2012. The EISA 2007 then revised the mandates to require 15 BGPY by 2015 (2). Other biofuels and feedstocks are also in the bill, but will not be part of the discussion here. No doubt the industry is highly subsidized: one analysis estimates that the biofuels industry in the U.S. receives a $60 billion subsidy each year (25) The stated purpose of the RFS is to increase American jobs, but the real reason is obvious: to increase the amount of corn-based ethanol. By law, the mandates must be met unless modified by new legislation. The RFS, blender’s credit, numerous state tax subsidies, and fuel tax exemptions have done their job, perhaps all too well. Ethanol production capacity continues to increase, driving demand for corn. But what about the unintended consequences? The “whoops” of ethanol. Never in my six decade career in agriculture (starting as a preteen!) has there been such an enormous change in such a short time. The only comparable technological change would be the adoption of genetically engineered crops which was, and remains, controversial. At least the biotechnology debate had the advantage of scientific input on both sides. The ethanol sweep was promoted by policy abetted by lobbying from “Corn Belt” state interests. These included grain handlers and processors, especially ADM, and the establishment of a lobbying and educational organization, the Renewable Fuels Association. Scientific, environmental, social, and economic concerns were, and still are, swept away in a barrage of criticism from established lobbying groups, abetted by those from federal and state agencies. There is little doubt that the first presidential caucus, always in Iowa, has played an important role. Any politician, be it dogcatcher or presidential candidate, speaking against ethanol in Corn Belt states has been doomed to denigrating letters, jeers from peers, and political obscurity. Some nongovernmental organizations (NGOs) spoke out with the usual discordant voices due to myriad vested interests. Academia has for the most part remained silent. The one negative scientific voice has been Pimentel and Patzek (26) and they have not done a convincing job with their analyses. These dramatic policy actions have had numerous unintended consequences. Had ethanol expansion been subject to environmental assessment guidelines and or life cycle analyses, the ethanol support policies, in my opinion, would never have been adopted. However, as I have stated, money, not science, has driven ethanol fuel policy.

Issues Energy balance and energy independence. No single issue with ethanol has received as much heat and as little light as energy balance. Does it take more energy to produce ethanol crops than such crops yield in ethanol-energy? That is, does the endeavor consume more energy than it produces? How does this balance change even with higher yield/efficiency plants? I will not go into the technical issues. Calculations depend on the boundaries chosen and the energy ascribed to production of ethanol and dried distillers grains plus solubles (DDGS). Most studies have shown that ethanol from corn has a positive net energy balance of ∼25% (8), but Pimentel and Patzek (26) have concluded that far more energy is needed to produce ethanol than it returns. This issue has less relevance if ethanol is regarded as an oxygenate and octane enhancer. Unlike a compounded savings account, this ∼25% gain cannot be obtained without fossil fuels. Hence while feedstocks can be grown annually, ethanol is not renewable. Ethanol production is entirely dependent on non-renewable VOL. 43, NO. 1, 2009 / ENVIRONMENTAL SCIENCE & TECHNOLOGY

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(petro-) energy in to get any energy out. The term “renewable” is grossly overused by those promoting ethanol and other biofuels, indeed the promotions sound like a call for a perpetual energy machine (of the first kind). Further, biofuels such as ethanol will not bring independence from foreign oil, although they will promote some independence of choice. The DOE (27) estimates that biofuels will supply about 2.9% of the U.S. total energy needs in 2010 and that will rise to about 4.6% in 2030. Meanwhile, oil imports will continue to supply more than half of our liquid fuel needs (28). This is hardly “independence.” Greenhouse gas reduction. Another important, but little understood, issue surrounding biofuels, especially ethanol, is the overall impact on global carbon cycling. Ethanol from corn is promoted as one way to modestly reduce greenhouse gases (GHGs). In theory, because biofuel feedstocks such as corn remove CO2 from the atmosphere, they should reduce GHGs compared to fossil fuels. This is true for land currently under production. However, when full life cycle analyses (that is looking at all the inputs, outputs, and side effects as compared to alternate sources) are conducted, biofuels such as corn are found to displace undeveloped land such as grasslands, conservation reserve program (CRP) lands, and forests, both in the U.S. and worldwide, to keep up with increasing demands for grains. Accounting for land use displacement is difficult, but recent studies (29, 30) have found that because land use change promotes loss of CO2 sinks and emits CO2 in the development, biofuels actually release from 17 to 420 times more CO2 than they capture. Estimates suggest that it would take up to 167 years to break even, let alone retain a net carbon sink (29). These analyses have been sharply criticized by biofuel supporters (e.g., 31). The debate on this topic will continue, especially since EISA 2007 calls for life cycle analysis and that current biofuels must achieve at least a 20% reduction in GHGs. If the 20% standard is enforced, ethanol from corn will likely not qualify. Water quality and quantity. It is intuitive that more land planted with corn, especially out of grasslands and other permanent cover, will increase the transport of nitrate to surface and ground waters and impact the Gulf of Mexico (32). A model estimates an increase in the size of the hypoxic zone by as much as 10-34% (33). Yet it is hard to lay all the blame on 10

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ethanol. The hypoxic zone rapidly expanded in the 1970-1990 period when corn was cheap, but farmers even then overplanted and over-fertilized their corn crops. In 2007, the U.S. increased corn acreage by over 10%. What is certain is that more corn for biofuel will make alleviation of hypoxia even more difficult as options for perennials are reduced (34). High nitrogen use on row crops, particularly corn, also has caused extensive contamination of ground water supplies (35) Ethanol production processes are water intensive; often the process water required is more than is available locally, causing controversy over siting of the plants (36, 37). Corn production on irrigated lands accounts for a major proportion of water use in agriculture and often involves aquifers that are being depleted (37). As potable water becomes less available in developed and developing economies, priorities for water use there may preclude biofuels. The use of scarce water supplies to grow corn for ethanol must be strongly questioned. Water is becoming the most critical natural resource for food production and we could end up with a biofuel industry that is taking water from food production. Personally, I regard this as even more critical than the GHG issue. To mitigate water resource impact, perhaps the next energy policy act should also insist on a water footprint analysis of all biofuels. Biodiversity. Biofuels have negatively impacted biodiversity worldwide (38) and intensive land use by agriculture in the U.S. has already destroyed much of the native biodiversity. Alternatives to corn, especially cellulose feedstocks, offer promise domestically and abroad (38). However, the concern is that as biofuel production concentrates more on rainforest regions, biodiversity will be further reduced. Conflicts with food supplies. The rapid increase in food prices in the past few years has focused on the possible role of biofuel production that uses food crops. This is yet another body blow for current biofuels and has brought the expected rebuttals from ethanol proponents. Many factors conspire to affect food prices, probably the most dominant being energy prices. A doubling in the price of oil thus likely is at the root of the issue, but most agree that biofuels including corn for ethanol have played a role (39). Because weather also plays such a large role in food and feed production, precise calculations of the role of biofuels in the world food supply will be difficult at best. But undoubtedly impacts exist and this issue will be ongoing.

The future The U.S. and many other countries got on an “irrational exuberance” trip with biofuels in 2000-2005. Biofuels were touted for their energy independence, rural economic development, and promise to decrease the rate of global warming. Although these benefits can be debated, there is little doubt that ethanol resulted in financial windfalls for many corporations, early investors, and grain traders, and gave politicians more job security. Now government and the industries vested in corn-based ethanol will have to deal with the public opinion backlash, loss of political support, and financial insecurity. Corn and ethanol are commodities, and prices have fluctuated wildly in recent months. Currently the industry is operating on a small profit. This makes it even more dependent on subsidies. Economic analysis is showing that the promised community benefits have not occurred: only a few jobs are created, and most of the profits go out of the community. Meanwhile, infrastructure, particularly rural roads and bridges, are deteriorating and must be strengthened to withstand the weight of trucks moving feedstock in and product out. Will the future be littered with the hangovers of the past? The use of feedstock(s) that do not impinge on food supplies and do not add GHGs is the only sustainable future for biofuels. At present, large government and private ventures

are supporting the attempt(s) to develop an economical cellulosic ethanol industry. This investment may preclude development of more viable alternatives. I propose that policy and technology move on to a “third generation” biofuel mindset, where possibilities are numerous. Research could focus on developing larger, more energy-rich molecules such as butanol and octanol that could replace gasoline without the problems relating to transportation and engine performance. Developing compounds from plants and plant residues that are closer to crude oil would advance the biodiesel industry. Some promising research projects are now underway, although most remain at the bench or small pilot stage. ADM’s Andreas got the biofuel ball rolling, unfortunately in the wrong direction. At least we have one viable biofuel in place and can analyze its advantages and disadvantages. Perhaps that is the only way that science and policy can advance together: make stupendous blunders, then come around and look at how to improve from the mistakes. The trouble is, it takes so much time, energy, and cost to overcome the blunders. Surely we can do better. There are many entrepreneurs out there ready to take a chance. Can the Political Action Committee dominated lobbyist style of U.S. government be overcome to give new biofuel feedstocks and processes a chance? An example is the research and development on advanced biofuels conducted at the Iowa State University Energy Center (40). Research and development of advanced biofuels could herald an exciting time to be a scientist and a policy maker. Dennis Keeney is emeritus professor, Department of Agronomy and Agriculture and Biosystems Engineering, Iowa State University, Ames. Please address correspondence to the author at [email protected].

Literature Cited (1) Capehart, T.; Schnepf, R.; Yacobucci, B. D. Biofuels Provisions in the 2007 Energy Bill and the 2008 Farm Bill: A Side-by-Side Comparison; Congressional Research Service: Washington, DC, 2008; www.nationalaglawcenter.org/assets/crs/RL34239.pdf. (2) Energy Independence and Security Act of 2007. Public Law 110-140, 2007; http://frwebgate.access.gpo.gov/cgi-bin/ getdoc.cgi?dbname)110_cong_public_laws&docid)f: publ140.110.pdf. (3) Renewable Fuels Association. Industry Statistics; www.ethanolrfa.org/industry/statistics. (4) Douglas, J. Expert predicts 2008 corn crop won’t be enough; need to ration. Purdue University News, Jan 2, 2008; www.purdue.edu/uns/x/2008a/080102HurtEthanol.html. (5) Good, D. Corn production prospects remain uncertain;Farmdoc, May 5, 2008; www.farmdoc.uiuc.edu/marketing/weekly/html/ 050508.html. (6) CME Group. Commodity ProductssCorn; www.cmegroup.com/ trading/commodities/grain-and-oilseed/corn.html. (7) Babcock, B. A. High crop prices, ethanol mandates, and the public good: do they coexist? Iowa Ag Rev. 2007, 13 (2), 1–3. www.card.iastate.edu/iowa_ag_review/spring_07/ article2.aspx. (8) Hill, J.; Nelson, E.; Tilman, D.; Polasky, S.; Tiffany, D. Environmental, economic and energetic costs and benefits of biodiesel and ethanol biofuels. Proc. Natl. Acad. Sci. U.S.A. 2006, 103, 11206–11210. (9) Biofuels: DOE Lacks a Strategic Approach To Coordinate Increasing Production with Infrastructure Development and Vehicle Needs; Highlights of GAO-07-713; U.S. Government Accountability Office: Washington, DC, 2007; www.gao.gov/ new.items/d07713.pdf. (10) Bodman, S. W. Keynote remarks to the MASDAR/World Future Energy Conference, Jan 21, 2008. U.S. Department of Energy; www.doe.gov/news/5867.htm. (11) Holdren, J. P. Ed. Special section: sustainability and energy. Science 2007, 315, 781–813. (12) Sustainable Bioenergy: A Framework for Decision Makers; Document A1094/E; Natural Resources Management and

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