U.S. Agriculture Secretary Tom Vilsack on Thursday said two reports released this month show corn ethanol produces more energy than it requires to make and that the effect of the biofuel on corn production has become marginal.
Vilsack said the studies directly refute some of the most cited criticisms of ethanol, that it is energy intensive to produce and that it makes an important food crop drastically more expensive.
“I think it is frustrating for the ethanol industry and the renewable fuels industry to constantly see citations to studies that are quite old suggesting ethanol is an energy user and not an energy producer,” he said.
“What we now know is that when you look at ethanol and the co-products and byproducts that are produced during the course of production for every unit of energy that goes in more than two come out, which is significantly better than when the industry began.”
The amount of total energy required to produce a bushel of corn has dropped by 35 percent from 1991 to 2010. Today more energy is being produced from ethanol than is used to produce it, by factors of 2 to 1 nationally and by 4 to 1 in the Midwest, according to the 2015 Energy Balance for the Corn-Ethanol Industry done by the U.S. Department of Agriculture’s Office of the Chief Economist.
Nebraska Ethanol Board Administrator Todd Sneller said myriad innovations have led to ethanol becoming more efficient, including improved production plant design, better crop genetics and improved enzymes for converting starch to alcohol.
“The oil industry continues to produce contrived studies in an effort to undermine this information but credible scientists around the world, in Brazil particularly, continue to document these efficiency improvements annually,” he said in an email. “The fact is that these new research results are quantifiable and can be replicated and validated. “
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The ethanol industry has been facing thin profit margins in recent months. A review of cost and sales data by the Iowa State University Center for Agricultural and Rural Development shows it would have cost slightly more to produce ethanol than the fuel sold for during most of January.
Todd Becker of ethanol giant Green Plains said he expects to see mergers and acquisitions in the industry this year. Becker made his comment earlier this month during a conference call on Green Plains' fourth quarter earnings.
Sneller said that while some consolidation might take place in 2016, ethanol producers are in a decent position overall.
“Plants are generally coming off a pretty good period of profitability, most of them reduced or virtually eliminated debt and most developed cash reserves that will get them through a downturn. International demand for ethanol is strong now and Low Carbon Fuel Standards are emerging in many places, including the U.S.,” he said.
The second study Vilsack referred to was released by researchers at the University of Missouri’s Food and Agricultural Policy Research Institute and looks at scientific findings published from 2010 to 2015 related to the impact of corn ethanol on corn price and quantity, land use, livestock and liquid fuels.
It found the impact of ethanol on corn prices amounts to a 15-cent-per-bushel increase for every billion gallons of ethanol.