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Stalking the answers

Critics and boosters tackle the questions about ethanol

MT photo: Doug Coombe
MSU's Bruce Dale first became interested in ethanol during the energy crisis of the 1970s.
MT photo: Ben Lefebvre
This ethanol plant near Caro is the first of four planned for Michigan.
MT photo: Ben Lefebvre
State and federal plans would encourage more stations to offer E85, which is 85 percent ethanol.
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Published 7/19/2006

Bruce Dale got his education early.

As a 12-year-old living in the mining town of Ruth, Nev., he saw his dad leave every morning to work at the nearby copper mines. Normally his father would come home and talk to his son about fishing, hunting or Bruce's schoolwork. But one evening it was different.

"Dad came home and called the whole family together," Bruce says. "He told us the mine's got seven more years, so we're getting out. We had to leave because the area was going to convert into a ghost town. He was a mining engineer. He knew."

So the family moved to a mining town in Arizona, where the lode was still rich. Eight years later, Dale says, the Nevada vein went bust, proving his father right. And Dale learned an important lesson: Put your trust in finite resources and they'll only break your heart.

The country learned the same lesson during the oil crisis of the 1970s. In 1973, a consortium of oil-producing countries in the Middle East cut exports of petroleum to Western countries for political reasons. As U.S. gas pumps dried up, the cost of gasoline skyrocketed. Some drivers waited in line for hours to fill their tanks.

At the time, ethyl alcohol, or ethanol, distilled from crops such as corn, was one of the alternative fuels used to help ease America's dependence on oil. Mixing it with gasoline stretched the country's fuel supply.

Dale, then a student at Purdue University, decided to pursue a degree in chemical engineering. He researched the viability of ethanol as an alternative fuel source.

The original oil crisis ended, but Dale didn't stop studying. Now the associate director at Michigan State University's Office of Bio-based Technologies, Dale has become a recognized expert on the subject. He says he spends half his time trying to make ethanol production more efficient and the other half studying the fuel's environmental impact.

Outside East Lansing, he butts heads with skeptical academics. During the past year, he has promoted ethanol at debates sponsored at the National Press Club in Washington, D.C., the Chicago Board of Trade and British Petroleum's New York office. In his spare time, he teaches "green" engineering to graduate students.

Now, as gas prices continue to rise and as even President George W. Bush — once chief executive for a Texas oil company — laments that "America is addicted to oil," Dale's fuel of choice is getting a still bigger boost.

Bush promised $120 million in biofuel research by 2007, some of which will go to ethanol research.

But as state and federal governments continue to push ethanol research and tax abatements for ethanol infrastructure, experts are still debating how large a part ethanol of any sort should play as a fuel source and where that ethanol should come from. Corn is currently the king of the ethanol-producing crops, but some farmers and some voices within the environmental community think that, as bad as being addicted to oil may be, dependence on that crop for a large chunk of U.S. fuel is a potential boondoggle.

The widespread use of ethanol raises questions about its environmental impact and economic viability, critics say, and a larger conversation needs to take place before it is given a bigger role in fueling our society.

"I don't think there's a lot of debate going on right now," Dale says. "I don't think enough people are prepared to contribute to that debate. People are mainly responding on emotion and only partial analysis. The questions should always be, how would this compare to what are we doing now?"

Michigan has one ethanol refinery in operation, with three more on the way. State lawmakers have also been pushing ethanol hard, recently passing a series of subsidies for the industry to get on its feet. This, then, is a perfect time for Dale's debate.

The biofuel's roots

The fuel itself isn't anything new. Originally used as lamp fuel before kerosene became widely available, Henry Ford designed his first Model T's to run on it. About 600 million gallons of it were produced during World War II for use as fuel and to make synthetic rubber. But as fuel shortages and production disruptions caused by the war eased, ethanol again became an impractical alternative.

The fuel got another look in the 1970s, as gas prices spiked. Since then, production costs have dropped, thanks in part to government subsidies. In 1978, Congress passed the Energy Tax Act, which exempted fuels containing 10 percent ethanol from the 4-cent-per-gallon federal fuel tax imposed at the time. That mix has been the standard to this day, although the big push now is for E85, a mix of 85 percent ethanol and 15 percent gasoline that is sold at several hundred gas stations in the country, 13 in Michigan, for use in flexible fuel vehicles.

And corn has political pull. At 81 million acres, it's the largest crop grown in the United States, and in 2004, according to the Washington, D.C.-based Environmental Working Group, its producers received $4.5 billion in subsidies. Since it's so cheap, farmers have habitually overproduced it. Its growers have political clout in Lansing and Washington, D.C.

In Michigan there are 2 million acres of the stuff, constituting 20 percent of the state's agriculture; in 2005, it generated $450 million in income for state farmers, second only to dairy for agricultural income.

So when corn farmers and corn processors, such as the politically connected conglomerate Archer Daniels Midland, recognized ethanol as an additional market emerging for their crop, they clamored for it. Those companies aren't just pushing corn. They're rolling in it. ADM, ranked by Forbes as the 54th largest company in the country, controls a quarter of the ethanol market. Its seven ethanol plants annually produce more than a billion gallons of E85. When it blends ethanol to gasoline in its petrochemical plants, the government subsidizes 51 cents for every gallon produced.

"If you look at the lobbying groups — Archer Daniels Midland, Monsanto, etc. — all the forces right now are pushing corn," says Gayle Miller, program director for the Michigan chapter of the Sierra Club. "Some of our sources say ethanol is welfare for ADM. Our position is that we should slow down and think what's best for farmers, best for the environment, best for Michigan."

The environmental debate

Driving down M-81 through the town of Caro in Michigan's thumb, one sees the Michigan Ethanol plant, a collection of silvery silos and refinery tanks rising out of a carpet of corn stalks. It started producing ethanol in 2005, and made 50 million gallons in its first year.

Corn ethanol refineries are basically big stills. Enzymes are added to cornstarch to convert it into sugar, which is then combined with yeast and allowed to ferment into ethanol and carbon dioxide.

In 2005, there were 95 ethanol refineries similar to this one in 19 states. That's almost twice the number there were five years earlier. Combined, they distilled about 4 billion gallons of ethanol last year. Although a few, like the refinery owned by the Coors family in Colorado, use "waste beer," the vast majority of them — 89 in all — use corn as their raw material.

But there are concerns about the environmental impacts of ethanol surrounding every stage of its existence, from stalk in the field to fuel in the tank.

First there's the crop. Compared to other plant material that could potentially act as ethanol sources, corn requires more care. According to a study of ethanol conducted by Tad Paztek, civil and environmental engineering professor at the University of California-Berkeley, corn requires as much as 10 times the amount of pesticides and fertilizers needed to grow switch grass, hemp or wood. Those chemicals can then trickle their way into the local groundwater supply.

There are also questions about distillery operations, especially how ethanol plants affect air quality. Most ethanol plants, including the one in Caro, use natural gas to fire their operations. Environmental groups charge that these plants release an undue amount of greenhouse gases into the air, and the Environmental Protection Agency has recently cited two ethanol plants for violating the Clean Air Act. (Neighbors of the Caro plant mainly complain about the noise of the operation. Plant officials declined to comment.)

But the problem could worsen, since as many as 10 ethanol refineries nationwide use the much dirtier coal, according to the Renewable Fuels Association in Washington, D.C. The Michigan Department of Environmental Quality approved a permit in September for a company planning to build a coal-fired ethanol plant near Port Huron.

Alex Sagady, an environmental consultant in East Lansing, has also been following the ethanol debate for years, poring over the plant proposals and permit requests filed by prospective distillers. He says that even the plants that don't use coal, the dirtiest fossil fuel, emit harmful greenhouse gases into the air. The plants can't — or won't — use ethanol to fire their fermentation process, so they depend on fossil fuels.

Sagady is currently evaluating an ethanol air pollution permit for a distillery in Illinois that plans to produce 110 million gallons of the fuel a year. Though that's more than twice what's distilled in Caro, Sagady says that size is becoming the norm for newer plants.

"This ethanol plant in Illinois will burn 3,720 million cubic feet of gas annually," he says, doing some quick calculations on his computer. "So every year, from natural gas combustion, this plant will discharge 223,000 tons of CO2. That's a huge amount. And it doesn't include the amount the plant will emit from fermentation."

That gas just billows up into the air, as CO2 emissions aren't covered under state or federal laws. The Clean Air Act does bind the plants to emit no more than 100 tons of the six most common pollutants annually, but Sagady says that lobbyists in recent years have been pushing the U.S. Congress to exempt ethanol plants from the act, or to raise the cap to 250 tons of pollutants.

As to how ethanol refineries environmentally compare to oil refineries, the Sierra Club's Gayle Miller says the jury is still out.

"There are a lot fears and projections being made, but not a lot of data," she says. "They both are heavy industry. They both produce a flammable, toxic substance and they both have emissions that are going to have environmental impacts."

The most tangled question in the debate is the issue of ethanol's energy balance. Patzek and Cornell ecology professor David Pimentel are currently locked in debate with other academics as to how much energy goes into the production of a gallon of ethanol compared to how much is released. The two professors claim that it takes 29 percent more fossil fuel energy to create a gallon of corn-based ethanol than what's released by the finished product, resulting in a net energy loss. They based their findings on a formula that took into account the various energy sources that went into ethanol production, such as diesel-powered tractors in the field and heated fermentation tanks in the refinery.

A report published in the January edition of Science disagreed, saying that Pimentel and Patzek relied on obsolete data to back their findings.

"All studies indicated that current corn technologies are much less petroleum-intensive than gasoline," study authors wrote.

The Science report also claims that, from creation to its being burned in an engine, corn-based ethanol produced about 13 percent less greenhouse gases than gasoline.

Dale also disagreed with Pimentel's work, calling it "fundamentally flawed."

"Pimentel never compared ethanol to other fuels," he says. "All of our energy production methods lose some kind of energy quantity to gain energy quality, or energy usefulness. You can't put crude oil into your gas tank, so you have to refine it to improve its energy quality. If you compare the energy loss to that of other fuel sources, ethanol's much better."

If the formula devised by Pimentel and Patzek were strictly applied to gasoline, Dale continues, a gallon of gasoline would return 40 percent less energy than it took to produce it. Electricity produced by today's coal-fired generators would fare even worse, he says, offering a 230 percent energy loss.

Patzek released another report this month repeating his earlier claims and criticizing the data used in the Science report. So the debate continues.

The economic debate

Sagady, like many other observers, sees the push for corn ethanol in the context of the country's agricultural policy.

"There is a tremendous lobbying effort aimed at ethanol to try to consume all this extra corn in the marketplace," he says.

"We produce all this corn, use it for animal feed, make corn syrup out of it, now they want to put it in fuel. If there were no subsidies, none of these plants would probably be built."

But they have been built. It costs a lot to create the refineries that will produce the ethanol, the infrastructure to deliver it and the vehicles that will consume it. The funds come in part from state and federal governments. Lawyers from the Sierra Club estimate that the latest energy bill being shaped by Congress includes about $5 billion in subsidies for the industry.

Part of that would be from an amendment U.S. Sen. John Kerry, D-Mass., announced that he plans to introduce into the bill. His plan would put E85 pumps in 1,800 gas stations this fiscal year, with the goal being to install 18,000 by 2010. The first step of the plan goes to the tune of $25 million worth of tax credits to station owners. Kerry says this would be paid for by a rollback of tax breaks and a closing of tax loopholes for oil companies — which themselves received $2.6 billion in tax breaks in last year's energy bill.

On the local level, the Michigan Legislature passed the Fuels of the Future initiative last month, a package of bills to promote ethanol production and use in the state. As part of that enterprise, Lansing will now also provide matching grants of up to $20,000 to gas station owners who install new E85 fuel systems and $2,000 to convert old systems to the new fuel. It will also create 10 agricultural "Renaissance Zones," where biofuel research facilities or processing plants would receive tax abatements. So far the state hasn't estimated how much taxpayer money might be used.

It does know, however, that for biofuels it will cut 7 cents from the state's current 19-cent per gallon fuel tax, a move that the state Treasury Department estimates could cost the government as much as $2.5 million over 10 years.

Some critics are charging that without these subsidies, ethanol could not be considered a viable fuel source. But Dale, again, says that the larger picture must be considered.

"We already subsidize oil very heavily, and that's not considering maintaining an army in oil-producing nations," he says. He points to the Oil Depletion Allowance, a tax credit given to oil companies. Between 1926 and the mid-1970s, it allowed oil companies to deduct 27.5 percent from their reported income. Now they can deduct 15 percent.

While the government spends heavily on corn farmers, Dale argues, there are worse places the money can go to.

"We will send out $250 billion to buy oil from other countries," he says. "A lot of that money is going to countries that don't like us. That can buy a lot of bombs that can be used against us."

While politicians are pushing for ethanol infrastructure, Michigan's automakers have pledged to build more vehicles that can burn the fuel. Last month, the heads of the Big Three told Congress that by 2010 they plan to build 2 million vehicles a year capable of running on ethanol and other renewable fuels. This would be more than double the 3.5 million of these so-called "flexible fuel vehicles," capable of using either gasoline or E85, on the road today.

There's also the question of whether drivers will find ethanol a good deal at the pump. It currently costs $1.40 to produce a gallon of corn ethanol. At the recent $70 cost of a barrel of crude oil, producing a gallon of gasoline costs about $1.60. But since ethanol doesn't yet provide the same kick as gasoline does, current vehicles would require larger amounts of ethanol than gasoline to get places.

"A gallon of ethanol will give you 70 to 75 percent of the mileage of what gasoline will give you," Dale says. "That's with current engines. People in the auto industry say if they design engines for ethanol, you could get more power out of it and make it more comparable to what you could get with gasoline."

Then there's the market effect. To manufacture the fuel, the ethanol plants consume large amounts of corn and natural gas. If current levels of production growth continue, some say, it won't be long before consumers feel the pinch in the cost of food and heating oil.

The state's Corn Growers Association estimates that once the four plants in Michigan are all chugging together, they'll cumulatively consume 100 million bushels of corn annually to produce up to 250 million gallons of ethanol. That amount of corn represents about 40 percent of the state crop — roughly the amount the state exports to other regions. While association spokeswoman Crystal Schulz says that the demand for corn ethanol would have to rise dramatically before it would affect food prices, the scenario is still being debated among experts.

Environmental consultant Sagady is more concerned with gas than corn. Since the ethanol plants can't — or won't — use ethanol to fuel themselves, they have to import large amounts of outside fuel.

"To produce 110 million gallons of ethanol, the plants would need to burn 45 million gallons of ethanol," he says. "But they don't do that — they use natural gas. The facility in Illinois will burn up to 3,720 million cubic feet of natural gas. These plants are natural gas energy hogs. They're going to put a lot of financial pressure on people using natural gas to heat their homes."

And for all that, corn-based ethanol may only make a small dent in the country's oil consumption. The United States consumed 140 billion gallons of gasoline last year, a number expected to nearly double in the next 20 years. The Corn Growers Association and Department of Energy concede that national production of corn-based ethanol will max out at roughly 15 billion gallons — after that, the corn needed would require so much acreage that the fuel wouldn't be practical. Since it now takes an acre of corn to yield about 350 gallons of the fuel, it would take 400 million acres just to meet last year's gasoline demand, let alone to meet future targets. That's five times more corn than U.S. farmers planted last year.

"If corn-based ethanol reached the level of demand as gasoline now enjoys, we couldn't possibly produce enough of it," says Sandy Nordmark, legislative director for Michigan Farmer's Union. Ethanol may be an important piece of the country's alternative fuels puzzle, she adds, but it can't be the only piece.

"We are looking at corn ethanol as a silver bullet when what we really need is silver buckshot," she says.

The cellulosic debate

Corn may be king now, but another type of ethanol — cellulosic — could represent a major step forward for the alternative fuel industry.

By using switch grass, hemp, woodchips, paper pulp and other biodegradable material to create cellulosic ethanol, experts say, more ethanol could be produced using material not originally meant for human consumption.

Cellulosic ethanol would unlock a larger alternative fuel system, says Bill Knudson, a marketing economist at MSU's Agricultural Product Center. The center helps businesses utilize and market new technologies. Since its main ingredient could be almost anything biodegradable, ethanol production could get farther out of the Corn Belt and into gas tanks nationwide.

"From our perspective, with four ethanol plants on the line, we've maxed out on corn-based ethanol," he says in reference to Michigan. "But the potential with cellulosic ethanol is enormous."

But cellulosic biomass is currently more difficult to distill than its corn cousin, since it takes more energy to extract the sugars from the raw material. Dale says the technology hasn't come far enough to be commercially viable. If cellulosic ethanol were on the market today, he estimates it would probably cost consumers as much as $4.50 per gallon.

To make the fuel more affordable, Dale says, the basic enzymes that remove the starch from the plants have to be made cheaper, as do the enzymes that turn the starch into sugars.

"There's progress in all of those areas, but I can't say we've got it knocked."

Once it's created, however, cellulosic ethanol could be a bigger economic and environmental boon than its corn-based cousin. Since it can be made out of a wide range of material and not just crops with high sugar content, refineries will be less constrained by what they can use as ingredients.

Cellulosic is also cleaner to create. A report published in the January edition of the journal Science posits that through its creation and consumption cellulosic ethanol emits 90 percent fewer greenhouse gases than gasoline. The report's authors concluded that corn-based ethanol resulted in about 13 percent fewer emissions.

"Cellulosic will be made by using crop residues that have a great amount of material that can't be broken down, but can be burned as fuel for the refineries," Dale says. "That's a big difference. In corn, there's not much left to be burned."

The U.S. Department of Energy has started to push research into cellulosic ethanol production. On its Web site, it has posted a blueprint on what kind of progress needs to be made so researchers like Dale can plan their next moves.

The Department of Energy has asked for plans on how to efficiently create large quantities of cellulosic ethanol, offering $160 million to implement the three plans showing the most promise. The department's goal is to reduce the cost of producing a gallon of cellulosic ethanol to about 60 cents.

The Department of Energy estimates that there are about 1 billion tons of raw materials available for cellulosic material annually, which includes everything from plants to waste product. One dry ton of biomass can result in 100 gallons of ethanol, an output Dale and other scientists still consider too low.

Over at the Department of Agriculture, Deputy Under Secretary Doug Faulkner says the government is serious about making the fuel widely available within the next decade or so.

"There are a lot hurdles to producing large quantities of cellulosic," Faulkner says. "But we're within striking distance of making cellulosic ethanol affordable. We think we can do it by 2020."

This isn't to say that plants producing corn ethanol would go out of business, he adds.

"We'll have two different strands to develop," he says. "Corn-starch ethanol is basically in the corn belt. But if you look at the different feedstocks — switch grass, wood chips, corn stalks — you can see a nationwide picture of ethanol production. You gotta have it all."

According to Dale, one of the most exciting biofuel projects to be announced in a long time hasn't come from the government. Instead, it's come from an unexpected source: an oil company.

British Petroleum (BP) announced in June that it plans to spend $500 million over the next 10 years to fund a biosciences institute to be built either in the United States or United Kingdom. That's four times the amount President Bush promised in his State of the Union speech. Among BP's research goals is to study ways to heighten production of cellulosic ethanol.

"This is going to be really important," Dale says. "For the first time, a major oil company will invest capital to do this." They would do so, he says, "because they can be practical and they'll make money off this."

That idea is certainly borne out by the BP press release that announced the project:

"We expect demand for biofuels to rise significantly through the next decade to meet consumer desire for more environmentally responsible products and to satisfy the requirements of governments for more energy to be home grown," said BP's CEO Lord John Browne in a press release.

Dale says he'll be helping to spearhead the effort to bring that institute to MSU. If more research and experimentation is devoted to cellulosic ethanol production, he says, it could soon find a toehold in the market.

"Five years away, we'll crack the ability to produce 1 billion gallons" of cellulosic ethanol, he predicts. At that point, he adds, a gallon of cellulosic could cost $1 to produce, compared to the $1.40 it currently costs to produce a gallon of corn ethanol and $1.60 for gasoline.

Dale's father is 86 years old now and living with Bruce's family. He still talks to his son about the perils of finite resources and the advantages of homegrown, renewable energy.

"He says it's a damn sight better than importing foreign oil," Dale says.

Ben Lefebvre is a Metro Times staff writer. Send comments to blefebvre@metrotimes.com, or call 313-202-8015.

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