Once touted as a savior—a way to reduce dependence on foreign oil while slowing global warming and helping farmers—ethanol from corn quickly became a fuel many people hated. Critics blamed ethanol for driving up world food prices and for costing taxpayers billions of dollars in subsidies. Plus, some analyses showed that replacing gasoline with ethanol doesn’t even help much in combating climate change, because of all the energy expended in making the stuff, and because the diversion of corn to fuel means crops have to be grown elsewhere in the world.
But recent developments suggest corn ethanol may not be such a bad guy after all. Prices of corn and other crops have plunged from their peaks earlier this year—even as ethanol production has increased to 9 billion gallons in 2008. And now comes a new analysis from the University of Nebraska that shows that the corn ethanol industry has a much lower carbon footprint than it did just a few years ago. “The first point to make is that nobody is wrong in this debate. It all depends on assumptions and parameters you put in,” explains Kenneth G. Cassman, professor of agronomy & horticulture at the University of Nebraska-Lincoln.
One of the wrong assumptions, though, is that the corn ethanol industry of today is the same as the one five or six years ago. “The industry is rapidly changing and evolving,” says Cassman. He put together a team to do an up-to-date life-cycle analysis of corn ethanol, covering soil effects, agricultural practices, refinery engineering, fermentation technology, and the use of the key co-product of corn ethanol, distillers grains. “The bottom line is that when you put all that together, looking at the industry as it is today, including improvements in crop production, innovation in making ethanol, and how the co-products are actually used, you get a number two or three times more favorable than the existing numbers,” says Cassman.
In the older estimates, even the most efficient corn ethanol
production only reduced greenhouse gas emissions by about 25% compared to gasoline. Cassman’s number? A bigger 50-60% reduction. Similarly, the old estimates showed only a small (10-20%) improvement in net energy over gasoline. “We get 50-80%,” says Cassman.
Why the differences? Here are some of the reasons:
-- Corn yields are up, yet “we find that farmers are not increasing the inputs,” says Cassman
-- Faced with higher costs for natural gas or electricity, ethanol companies have figured out how to make production more efficient. “We find today that energy use in the ethanol plant is 25% lower than amount of energy attributed to the ethanol plant in earlier studies,” says Cassman.
-- Since the early days of ethanol, a lot of the capacity to make the stuff has moved West. Iowa is still the largest producer, but now Nebraska comes in second (compared to Illinois in 2004). What that means is that the distillers grain (which a high-value animal feed, because it is high in protein) can be used in nearby cattle feedlots, saving the energy normally used to dry it. That cuts energy used by 30% , says Cassman. “It is a tremendous energy saving if the ethanol plants are close to feedlots.”
-- Studies show that distillers grain increases the fertility rate of heifers compared to corn or soybean feed. “When distillers grain is used to replace corn in cattle diets, one pound of distillers grains can replace 1.25 lbs of corn,” Cassman explains. “So even though [the production of ethanol] is withdrawing corn from feedstocks, you get the equivalent of about 40% of the weight of corn back in the distillers grains.”
“None of this was included in the earlier analyses,” he adds.
Of course, all of this is about the direct effects of ethanol production. What about the fact that taking land to grow corn for ethanol may cause land elsewhere in the world to be converted to farmland, releasing more CO2 in the process? Cassman readily admits this is a thorny issue, but says that the idea of requiring that indirect land use changes be considered has all sorts of bizarre consequences if applied to agriculture generally. For instance, “if you applied the concept of indirect land use change and carbon debt, then the Conservation Reserve program would never have existed,” he says. The program, which has been hailed as a great success, pays farmers to take environmentally sensitive land out of production. But while that helps the environment in the United States, the loss of production means that crops may have to be grown elsewhere in the world, potentially at high environmental cost. If indirect land use changes had to be taken into account “we would never have had the conservation reserves, which is a great program,” says Cassman.
Cassman’s study was funded by the Western Governors’ Association, Environmental Defense Fund, the University of Nebraska, USDA and others (but no industry funding).
BusinessWeek correspondents John Carey and Mark Scott, cover the green scene, keeping on top of the business aspects of energy, the environment and climate change, as well as the technologies, policies, markets and people that are shaping how the earth's resources will be used in the century ahead.