Tag Archives: ethanol

Exageration & Errors in Biofuels News

How well do we really know that what we read is real, especially in those sectors where everyone is optimistic and the opportunities are large. Here’s an example.

Biofuels Digest recently published a story entitled

 

17 Mgy CrowNek Energy cassava ethanol plant opens in Nigeria _ Biofuels Digest-2.jpg


from: Biofuels Digest
(click image for full story online)

 

which clearly did not follow up source material enough, which although ambiguous to varying degrees did admit to this being a plan and not the start of operations as the story indicates.

 

THISDAY ONLINE _ Nigeria news _ African views on global news.jpg


from: This Day Online
(click image for full story online)

 


Of course takes off sounds like goes into production, but in the African way project tells us that ita bigger thing and not an actual refinery that is taking off.

 

Guardian Newspapers-1.jpg


from: Nigerian Guadian
(click image for full story online)

 

“Establishes” and “owned by” implies something real has been built, but “is to be established” makes it clear this is a plan and not a plant.

 

NIGERIAN TRIBUNE - Business and Economy-1.jpg


from: Nigerian Tribune
(click image for full story online)

 

 

Global Warming Awareness Inc - Nigeria plans ethanol project-2.jpg


from: Global Warming Awareness
(click image for full story online)

 

This is the only clear and concise reporting of the event.

Is it just jounalists using different words to add to the interest, an enthusiasm for the subject or a purposeful attempt a hiding the reality

No Ethanol from Maize in South Africa!

South Africa’s new government lead the way in banning smoking in public (even the French can’t smoke in their cafe now) and seem to be making good decisions again.

Business Day - News Worth Knowing-2.jpg

from: Business Day
(click image for full story online)

 

Responding to the potential food and particularly maize supply problems, the Agriculture Minister Lulu Xingwana has refused to ban exports arguing that this would limit the market available to farmers and therefore constrain the expansion of production.

Minister Xingwana also restated South Africa’s position on maize for ethanol production
“Corn will not be used for biofuels because we believe it is the staple food, not only for SA, but also for many countries in Africa,” Xingwana said.

It would be interesting to hear how the government would react to ethanol from sorghum and millet proposals. It also raises the question of how the government’s strategic goal for biofuels to account for 2% of total fuel consumption by 2013. Will it mean that sugar, which is probably the most efficient route to fuel anyway, will have to contribute more or will soya and sunflower with their byproduct problems be able to offer cost effective production. The contribution of second generation (eg cellulosic ethanol and algal biodiesel) and later processes are not sufficiently far advanced to make a contribution in this small time scale.

Ethanol From Corn – Costing

I hope this is not becoming too much of a biofuels blog, but I found this very interesting and was particularly struck by how a quick calculation can bring insight – maybe we need to to this more often in food processing!

While the “energy cost of ethanol” is much more difficult to calculate, the cost of production is much simpler. However, many people talk about the benefits of Ethanol without really knowing what it costs – like any costing it is not an absolute but depends strongly on time and location.

R-Squared Energy Blog has done a great of job of showing how to do a simple calculation of the cost of ethanol, presenting references to the costs he uses.

R-Squared Energy Blog_ Corn Ethanol Economics.jpg

 

By comparing the cost of ethanol production to the market price for fuel ethanol he avoided the effect of subsidies. However, it clearly shows that there’s not much margin in the business and that raw material prices (90% of total) is the predominate input cost. This has positive (scientific progress could have significant effects on yield both on farm and in plant) and negative (rising food prices) sides to it and is similar to the biodiesel scenario except that value of oil cake, the byproduct of that process, has a more significant effect on cost, than DDGS. In summary he found:

Times are tough for ethanol producers. This is what the economics roughly look like at $5 per bushel of corn and $8/MMBTU of natural gas. To produce 1 gallon of ethanol requires:

* $1.85 of corn

* $0.33 of energy

* $0.14 of enzymes, yeast, etc.

* $0.23 of labor, maintenance, and various miscellaneous expenses

There is a DDGS credit per gallon of ethanol of $0.55. Thus, the total cost to produce a gallon of ethanol today is $1.85 + $0.33 + $0.14 + $0.23 – $0.55, or exactly $2/gallon of ethanol. For reference, the February contract for ethanol in the Midwest as of this writing is $2.15. And $2/gallon is merely cost of production. It doesn’t take into account any return on investment.

Also note that due to the lower energy content, this production cost is equivalent to a $3 per gallon production cost for gasoline – and that this production cost is a moving target: As long as the ethanol mandates are driving up the price of corn and increasing the demand for and cost of natural gas, corn ethanol producers must chase their tails in a vicious cycle. Producers are going to be hard-pressed to ever match the 2006 windfall that was given to them when the MTBE phaseout drove ethanol prices sky-high.