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Study Says U.S. Cellulosic Ethanol Industry Could Make 75 Billion Gallons

posted on February 13, 2009

The Agriculture Department predicted this week that 2009 will be another good year for the farm economy, though earnings will not equal those of 2007 and 2008.

USDA predicts net farm income will fall to $71.2 billion in 2009. That's down 20 percent from its preliminary estimate for 2008, but is 9 percent higher than the average of the previous 10 years.

2009 corn production is pegged at 12.7 billion bushels, which would be the second highest in history. And a record 4.2 billion bushels of the crop would be used for ethanol production.

Despite the bullish outlook, declining crude oil prices continue to paint an uncertain short-term future for ethanol. Currently, the home-grown, renewable fuel is trading around $1.50 per gallon. That's down about $1.00 from last summer's high.

But new research points to a bright future for the next generation of ethanol.

Study Says U.S. Cellulosic Ethanol Industry Could Make 75 Billion Gallons

The most recent study, released this week, concluded U.S. companies could make enough ethanol to cover nearly one-third of domestic gasoline needs over the next 20 years. The research partners, Sandia Laboratories and General Motors, predicted 90 billion gallons of cellulosic ethanol could be produced annually by 2030, more than double the current government biofuels mandate of 36 billion gallons. According to the study, 75 billion gallons of renewable fuels could be generated from various cellulosic feedstocks such as switchgrass, corn stover, and wheat straw while the remainder would be covered by corn-based ethanol. The scientists deduced the amount would be sufficient to replace 60 billion gallons of gasoline annually.

The report concluded that continued support of research and development was critical to the commercialization of cellulosic ethanol. The paper enumerated benefits and identified a break-even point where biofuels could be produced without subsidies. But, that assumption was predicated on crude oil prices of at least $90 per barrel, more than twice the current figure.

The most recent analysis comes on the heels of University of Minnesota study which concluded that switchgrass and other biomass are better feedstocks for ethanol production than corn. Researchers also criticized corn-based ethanol saying increased planting to supply the biofuels mandate would put more dust in the air threatening human health.

Critics of the paper quickly responded. The former head of the National Corn to Ethanol Research center questioned the study saying conclusions of the Minnesota paper failed to acknowledge increases in corn yields and advancements in production methods.

The biofuels mandate requires the production of 36 billion gallons of renewable fuels by 2022 with a maximum of 15 billion gallons coming from ethanol. Last year, the industry produced an estimated 9.1 billion gallons of ethanol. According to the U.S. Department of Energy, annual gasoline consumption in 2033 is expected to top 180 billion gallons instead of the 140 billion gallons currently used annually.


Tags: agriculture automakers biofuels ethanol industry Minnesota news renewable fuels