On May 18th our troupe toured an ethanol plant in Nevada, IA (pronounced na-vay-da). Operated by Lincolnway Energy, the facility processes 55,000 bushels of yellow no. 2 corn per day (hence the quotation marks surrounding the word "food" in the title of this post) and produces approximately 50 million gallons of ethanol annually. Ethanol production in the United States exploded in the mid 2000s as an abundance of cheap corn and a demand for energy independence fueled expansion of the industry. The federal government established the Renewable Fuel Standard (RFS) creating a floor under the price of ethanol, ensuring that even in tough times (such as world financial crisis of 2008) ethanol production would continue, albeit at a reduced rate. Today ethanol continues to play a key role in global energy and food markets, although the economy today yields less profitability than the boom years of 2005 and 2006 due the higher price of corn. Luckily, the price of oil also has remained stubbornly high, allowing for the steady production of ethanol as an alternative to pure gasoline.
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| Our wonderful guide Francis located in front of the Lincolnway Energy Ethanol Plant |
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| Corn emptying from a truck into the ethanol plant |
Despite the presence of the RFS and the current favorable market for ethanol, I remain skeptical of the fuel's long-term future. The current budget/deficit crisis has brought agricultural and energy programs under the knife; these industries can not count on government support forever. Ethanol no longer receives any formal subsidies - both the ethanol tariff and blenders credit expired at the end of last year. Additionally, the entire ethanol production process is very energy intensive - plants are powered by coal or natural gas while the final ethanol blend must be diluted by gasoline. Higher input costs correspond directly with higher fossil fuel prices, reducing profitability. More expensive fuels also increase the price of corn, as farmers are required to spend more on inputs as well. Finally, increasing interest in electric cars and public transportation may eventually decrease reliance on gasoline and ethanol. However, two bright spots remain for the industry. The price of corn (which ultimately is the most significant factor in ethanol profitability) is likely to fall due to a major expansion of the corn acreage across the world and the increasing supply of corn come harvest time. Ethanol plants will be able to purchase greater quantities of the commodity at a reduced price. Expanding research regarding biofuel production (focusing on cellulosic production using corn stalks) also may aid the industry in the future.
The tour itself was excellent. Our guide (Francis - a biologist) did a superb job in explaining the production process to our group. She handled the chemical and biological explanations quite well, articulating them clearly without "dumbing down" the information. One fascinating (and incredibly useful) feature of the ethanol production process is its primary byproduct - DGs (distiller grains). Separated during the fermentation process, these highly-caloric and nutritious grains function quite well as animal feed. They are divided into two categories: wet and dry grains. Dried distiller grains (DDGs) possess more inherent value, as they store well and can be shipped long distances. Wet distiller grains (known colloquially as "wetcake") can mold within days, therefore limiting them to local distribution. DGs illustrate even further the interconnectedness of large-scale food and fuel production cycles.
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| Wetcake - like Play-doh, but edible! |
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| Our group in front of a massive pile of DDG's |
Both the economics and science of ethanol production fascinate me - I will certainly continue to track industry developments in the future.
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| The various stages of the ethanol production process - from ground corn on the left to 200 proof ethanol (diluted with gasoline) on the right |
On May 18th our troupe toured an ethanol plant in Nevada, IA (pronounced na-vay-da). Operated by Lincolnway Energy, the facility processes 55,000 bushels of yellow no. 2 corn per day (hence the quotation marks surrounding the word "food" in the title of this post) and produces approximately 50 million gallons of ethanol annually. Ethanol production in the United States exploded in the mid 2000s as an abundance of cheap corn and a demand for energy independence fueled expansion of the industry. The federal government established the Renewable Fuel Standard (RFS) creating a floor under the price of ethanol, ensuring that even in tough times (such as world financial crisis of 2008) ethanol production would continue, albeit at a reduced rate. Today ethanol continues to play a key role in global energy and food markets, although the economy today yields less profitability than the boom years of 2005 and 2006 due the higher price of corn. Luckily, the price of oil also has remained stubbornly high, allowing for the steady production of ethanol as an alternative to pure gasoline.
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