Ethanol
Biodiesel
Biofuel co-products
Market conditions and policy factors are fueling the rising interest in biofuels, fuels
made from biomass. There are two primary biofuels: ethanol and biodiesel. A
rapid runup of oil prices over the past several years has combined with provisions
of the Energy Policy Act of 2005 and already existing Federal and State biofuel
programs to provide economic incentives for an expansion of U.S. biofuels production.
In response to the increased demand for biofuels, production of agricultural
commodities that serve as feedstock for biofuels has increased.
A classic economic situation exists when additional demand absorbs a larger
share of a commodity: higher prices will affect domestic use and exports, providing
for more intense demand competition between domestic industries and foreign
buyers of the commodity. Higher prices also will affect farmers’ production
decisions as higher producer returns provide economic incentives to increase
acreage, which then affects the planting of other crops. Higher prices for
the commodity affect those that use the commodity; in the case of corn,
higher prices increase costs for livestock producers who use corn as feed for
their animals. Reverberations continue when the higher prices are translated
into higher food prices at the consumer level.
A comprehensive study, Increasing
Feedstock Production for Biofuels, jointly produced by the Department of
Energy and USDA, examines the economic drivers, environmental
implications, and role of research in the development and production of
biofuels.
Ethanol
Ethanol, also called ethyl alcohol, is produced by the fermentation of sugars
from any feedstock that contains plentiful natural sugars or starches that
can be converted to sugar. Ethanol, or a blend of ethanol and gasoline,
can be used as a fuel. Corn is the primary feedstock used to produce
ethanol in the United States today, but Brazil depends on sugarcane for its
ethanol production. The market implications of this additional demand
for corn (or sugarcane) extend beyond that commodity sector.
Ethanol accounts for a small share in the overall gasoline market, but use
of U.S. corn for ethanol production has important
implications for domestic crop and livestock production, as well as for global
trade and international markets. In 2006, ethanol represented less than 4
percent (by volume) of motor vehicle gasoline supplies in the United States
but grew to about 8 percent in 2009. With this growth, about one-third of the
2009 U.S. corn crop went to ethanol production, a share projected to grow to
about 35 percent most of the next decade (see Agricultural Baseline Projections).
Even so, by the middle of the next decade, ethanol production (by volume) is
expected to represent less than 10 percent of annual gasoline use in the United
States. Thus, while corn-based ethanol can contribute to the
Nation’s
fuel supply, that contribution is relatively small in the gasoline market but
can have large effects in the agricultural sector.
The U.S. and many other countries are very interested in cellulosic biomass
as a potential feedstock for ethanol. Cellulosic biomass refers to a wide variety
of plentiful materials obtained from plants—including certain forest-related
resources (mill residues, pre-commercial thinnings, slash, and brush), many
types of solid wood waste materials, and certain agricultural wastes (including
corn stover)—as well as plants that are specifically grown as fuel for
generating electricity. Some next-generation biofuels such as biobutanol, green gasoline, and green diesel likely will be made from traditional feedstocks
such as sugar beets, corn, and sugarcane or from new sources like algae. Green
gasoline and green diesel have essentially the same chemical composition as their
fossil fuel counterparts. Harnessing cellulosic biomass to produce ethanol
will require the development of economically viable technologies that can break
the cellulose into the sugars that are distilled to produce ethanol. No one
knows for sure how long it will take to develop these technologies into commercial
ventures, although the more optimistic predictions are in the neighborhood
of 3-10 years. Until cellulosic biomass is successfully commercialized, however,
corn will almost certainly remain the primary feedstock for U.S. ethanol production.
Biodiesel
Biodiesel is the name of an alternative fuel made from vegetable oils that
can be used in compression-ignition, or diesel, engines. Biodiesel
is made through a simple refining process called trans-esterification. The
process involves mixing methanol with sodium hydroxide, then mixing that
with a vegetable oil. The final products are methyl esters (biodiesel) and
glycerine. Glycerine is a valuable material used in the manufacture of soaps
and other products.
Methyl esters can be produced from vegetable and tree oils, animal fats, or
used oils and fats. Soybeans are the dominant feedstock for the production
of biodiesel in the United States. In other countries—particularly in
the European Union, where diesel engines are more common—other vegetable
oils such as those derived from canola (rapeseed) are used. Palm oil is another
source of biodiesel.
Biofuel co-products
The fermentation process produces both ethanol and a residue called distillers’ grains. Distillers’ grains
(usually dried, and called dried distillers' grains or DDGs) can be used as
animal feed. The marketing of these ethanol co-products is just one way in
which ethanol producers are making their operations more profitable. An additional
way to increase profits is to lower transportation costs associated with feed
acquisition by locating ethanol plants in close proximity to dairy or livestock
production. The DDGs may be quickly transported to feed nearby livestock without
needing to be dried. For larger ethanol plants and livestock operations,
the manure generated by the livestock can be used to produce heat or electricity
for the ethanol plant.
The growing supply of DDGs has spurred demand for detailed market information
about this commodity, comparable to what exists for other feedstuffs. More
information about the various types of data available is in the Recommended
Data section.
|
