Center for Crops Utilization ResearchAACC International

October, 2010

The BioeconomyThe Bioeconomy2010 and Beyond

Larry JohnsonDirector Center for Crops Utilization ResearchDirector, Center for Crops Utilization Research

Director, BioCentury Research Farm

Wh t i th Bi ?What is the Bioeconomy?

The bioeconomy is the way society will obtain vital sources of carbon and energy, in the process dramatically reduce our dependence on imported petroleum.

Agriculture will make this transformation ibl b idi bi blpossible by providing biorenewable

resources to produce biofuels and biobased d tproducts.

Motivation for a BioeconomyMotivation for a Bioeconomy• Excess agricultural production

– Especially in U.S., but many countries are becoming self sufficient in food production

• Environmental quality– Local and regional (smog, acid rain, waste

disposal)– Global climate change

• National security– Reduced reliance on foreign cartels

• Rural developmentRural development– Rural economies are not thriving in many

parts of the world• High petroleum prices• High petroleum prices

– Now makes economic sense Source: USDA NRCS

New Realities in Corn and Petroleum Prices

June 28, 2008$147/b l

Summer, 2010$70-85/brl

$147/brl

June 28, 2008

Summer, 2010$3.35-3.90/bu

Ju e 8, 008$7.88/bu

What has Changed in Relative Prices of Petroleum to Corn?

Summer 2010$80/brl ÷ $3.60/bu = 22 bu/brl

Ethanol Plants

203 operating

Expanding/New constructionCurrently in production

Map as of May 2008 data as of May 2010 p g11 under construction

Map as of May 2008, data as of May 2010Data from Renewable Fuels Association

US Ethanol ProductionProduction

12 billion gal = 4 3 billion bu

Est. 12 billion gal in 2010;we have 14 billion gal capacity

12 billion gal = 4.3 billion bu 4.3 billion bu out of a 13 billion bu harvest = 33% of crop

Corn Utilization40% of40% of

Iowa corn convertedto ethanolto ethanol

Provisions of the 2007 Energy Independence & Security Act

RFS2RFS2

RFS1RFS1

Corn Ethanol Profitabilityy

Data provided by C. Hart, CARD, ISU

Biofuels HaveBiofuels HaveEndured Many Charges

• Negative energy balance• Little impact on fuel consumption• Not enough corn and soybeansNot enough corn and soybeans• Corn and soybean prices are rising• Food vs fuel, we are starving the

worldworld• Ethanol uses too much water• Rain forests are being destroyed

N l d b ht i t d ti• New land brought into production exacerbates carbon emissions

• Depleting CRP and wildlife habitat• Ethanol is unsustainable

10 Key Messages

Message 1Science and engineering will make

biofuels more cost effective.biofuels more cost effective.

Ethanol has a positive (30%) renewable f l t f il ifuel-to-fossil energy gain –

But we can do better!

2

2.5

tio

Agri Canada

Shapouri et al. Kim & DaleGraboski

Shapouri et al

NR Canada

1

1.5

rgy

Rat

W i bl tt t l Ho

Marland & Turnhollow

DelucchiShapouri et al.

K & D L

Lorenz & MorrisWang et al. Wang

Pi t l

Shapouri et al.Kim & Dale

Average of unrelated studies = 1.3

0.5

1

Ener

Chambers et al.

Weinblatt et al. Ho

PimentelKeeney & DeLuca

PimentelPimentel

PatzekPimentel & Patzek

01975 1980 1985 1990 1995 2000 2005 2010

Year of Publication

Adapted from Wang (2005)

Energy Efficiency of Oil gy yRefining and Electric Power

Gasoline 84%

Energy valuesolid < gas < liquid < electricity

Modern power

Coal $1/106 BTUNatural gas $12/106 BTU

$ 6plant 33%

Early refining

Gasoline $23/106 BTUElectricity $2,700/106 BTU

Not all BTUs are equal!refining 20%

Not all BTUs are equal!

Adapted from: RBAEF Project (Dartmouth) and R. Anex (ISU)

Dry-Grind Ethanol Yields(industry average)

Source: R. Wisner, Iowa State University

Many Opportunities toAdvance Grain-based EthanolAdvance Grain based Ethanol

Debran (ethanol) and degerm (oil

New hybrids (more yield, easier processing, better co-products)

Debran (ethanol) and degerm (oil, pharmaceuticals), better co-product for poultry and swine; CO2 screw pressing; corn germ protein food ingredients

Eliminate by using raw starch (ultrasonics, new hybrids, ozonation)

New enzymes (more complete hydrolysis)

CO2 screw pressing

De-emulsification,3-phase centrifugation (oil)

2 p gNo-distillationfermentation

Fungal fermentation (feed, water recycle)

Zein extraction

Expanding and extraction (biodiesel, biolubricants, neutraceuticals)Biocomposites

M 2Message 2U S food has been and still is inexpensiveU.S. food has been and still is inexpensive.

It is not about food vs fuel.

Expenditures ofDisposable Income for Food

Food23 5%

Food9.8%

23.5%

1947 2007All other All thAll other77.5%

All other91.2%

US Spending on Food vs GasolineUS Spending on Food vs. Gasoline

Source: Newsweek, July 21, 2008

Ethanol Effect on Gasoline Prices

Source Cost Savings

Ethanol Effect on Gasoline Prices

Source Cost Savings from Ethanol

USDA/DoE 20 35 centsUSDA/DoE 20 – 35 cents per gallon

CARD 29 40CARDIowa StateU i i

29 – 40 cents per gallon

UniversityMerrill Lynch 50 cents per

gallon

Food and Fuel not Food vs FuelGasoline savings per household due to ethanol (29 to 40¢/gal): $210 to $526Fuel ethanol (29 to 40¢/gal): $210 to $526

Added cost to food due to impact of ethanolon food inflation: $6 to $15Food

Net impact of ethanol on household spending:$ $

Source: USDA and ISU statistics; June 2008.

$204 to $511

Message 3Farmers deserve a larger share of food and

fuel dollarsfuel dollars.

Cost of Corn in Corn Flakes• Corn• Corn

represents 13¢ of a13¢ of a $3.25 box of corn flakes when corn costs $7 00/b$7.00/bu

• Probably less thanless than energy costscostsSource: ISU Extension