University Extension/Department of Economics Biofuels Farm Management In-Service Ames, Iowa Oct. 12, 2010 Chad Hart Assistant Professor/Grain Markets Specialist

University Extension/Department of Economics

Biofuels

Farm Management In-ServiceAmes, Iowa

Oct. 12, 2010

Chad HartAssistant Professor/Grain Markets Specialist

[email protected]


Ethanol Production

0

3

6

9

12

15

Bill

ion g

allo

ns

Source: EIA2010 Projection by Hart


Biodiesel Production

0

100

200

300

400

500

600

700

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Mil

lio

n g

all

on

s

Source: EIA2010 Projection by Hart


Monthly Ethanol Data

0

200

400

600

800

1000

1200

Mill

ion g

allo

ns

Production Consumption Net Imports

Source: EIA


Fuel Prices

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

1/3

/20

07

4/3

/20

07

7/3

/20

07

10

/3/2

00

7

1/3

/20

08

4/3

/20

08

7/3

/20

08

10

/3/2

00

8

1/3

/20

09

4/3

/20

09

7/3

/20

09

10

/3/2

00

9

1/3

/20

10

4/3

/20

10

7/3

/20

10

10

/3/2

01

0

$ p

er

ga

llon

Ethanol Gasoline


Ethanol Penetration

20%

30%

40%

50%

60%

70%

80%

90%

100%5/7

/2004

9/7

/2004

1/7

/2005

5/7

/2005

9/7

/2005

1/7

/2006

5/7

/2006

9/7

/2006

1/7

/2007

5/7

/2007

9/7

/2007

1/7

/2008

5/7

/2008

9/7

/2008

1/7

/2009

5/7

/2009

9/7

/2009

1/7

/2010

5/7

/2010

9/7

/2010


Monthly Biodiesel Data

Source: EIA

0

10

20

30

40

50

60

70

80

Mill

ion

gallo

ns

Production Consumption Imports Exports

End of “Splash and Dash”

End of Tax Credit


Renewable Fuels Standard (RFS)

0

5

10

15

20

25

30

35

40

2009 2012 2015 2018 2021

Bill

ion g

allo

ns

Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels


Renewable Fuels Standard (RFS)

11.75

12

12.25

12.5

12.75

13

2010 2010 Adj.

Bill

ion g

allo

ns

Conventional Biofuels Cellulosic Biofuels

Biodiesel Additional Advanced Biofuels


Oil Prices

Source: EIA for historyNYMEX for future

0

20

40

60

80

100

120

140

Jan-8

6

Jan-8

8

Jan-9

0

Jan-9

2

Jan-9

4

Jan-9

6

Jan-9

8

Jan-0

0

Jan-0

2

Jan-0

4

Jan-0

6

Jan-0

8

Jan-1

0

Jan-1

2

Jan-1

4

Jan-1

6

Jan-1

8

$ p

er

ba

rrel


Gasoline Consumption

Source: EIA, Annual Energy Outlook

139

140

141

142

143

144

145

146

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Bill

ion g

allo

ns


Ethanol Blends

13

15

17

19

21

23

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Bill

ion g

allo

ns

@E10 @E12 @E15


RFS

0

5

10

15

20

25

30

35

40

2010 2013 2016 2019 2022

Bill

ion g

allo

ns

Conventional Biofuels Cellulosic Biofuels Biodiesel Additional Advanced Biofuels


0

5

10

15

20

25

30

35

40

2010 2013 2016 2019 2022

Bill

ion g

allo

ns

Conventional Biofuels Cellulosic BiofuelsBiodiesel Additional Advanced Biofuels@E10 @E12@E15

RFS Coverage


Ethanol Blending Advantage

-0.04

-0.02

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

1/3

/20

07

4/3

/20

07

7/3

/20

07

10/3

/20

07

1/3

/20

08

4/3

/20

08

7/3

/20

08

10/3

/20

08

1/3

/20

09

4/3

/20

09

7/3

/20

09

10/3

/20

09

1/3

/20

10

4/3

/20

10

7/3

/20

10

10/3

/20

10

$ p

er

gallo

n


Co-Product Pricing (Jan. 2010 = 1)

0.75

0.8

0.85

0.9

0.95

1

1.05

1.1

1.15

Ethanol Corn Oil DDGs


Corn Composition

Source: 2009 FEW Conference presentation by Reg Ankrom (CPT)

Looking for:Improved efficiencyReduced energy usageReduced water usageDiversified product stream

Why Fractionate?


Capital Costs Range from $10 million to $40 million for a 50 million

gallon ethanol plant The inclusion of corn oil extraction technologies moves

costs to the higher end of the spectrum Most vendors point to a payback period of under 3 years

Variable Costs Decreased energy needs per gallon for:

Liquidification and cookingDistillationDrying of distillers grains and solubles

Possible energy generation from bran Could reduce energy demand by nearly 50%


Product StreamsCorn costs: $4.98 per bushel, Illinois ethanol plant report

(USDA-AMS, as of Oct. 8, 2010)

Traditional ethanol plant:2.8 gallons of ethanol @ $2.01/gallon = $5.6317.75 lbs. of DDGS @ $144.50/ton = $1.28Revenues per bushel = $6.91

Ethanol plant w/ fractionation:2.72 gallons of ethanol @ $2.01/gallon = $5.4713.5 lbs. of high protein DG @ $154.50/ton = $1.045 lbs. of germ @ $158/ton = $0.403 lbs. of bran @ $75/ton = $0.11Revenues per bushel = $7.02


Tapping into Many MarketsBiorefinery

Process Corn DST™

ProcessBiofuels

Germ Bran Wet Cake

Syrup

Starch

Animal Feed

Animal Feed

Solvent ExtractSolvent Extract

Corn Oil

Corn Meal

Burn CHPBurn CHP

Animal Feed

Animal Feed

WCGFWCGF

Cellulose Ethanol

Cellulose Ethanol

Cellulose Ethanol

Cellulose Ethanol

A.D.A.D.

Combine all – DDGSCombine

all – DDGSProtein IsolatesProtein Isolates

Burn CHPBurn CHP

Animal Feed

Animal Feed

Zein Protein

Zein Protein

Other Fermentation

Other Fermentation

FoodFood

Source: 2009 FEW Conference presentation by Neal Jakel (Delta-T)


BCAP

Biomass Crop Assistance ProgramTo support production of crops for bioenergy and

assist with collection, harvest, storage, and transportation of biomass to conversion facilities

Matching payments$1 for each $1 per ton paid by conversion facility, up to $45

per ton, for 2 years


BCAP

Iowa has fewer than 4 contracts, so no payment figures are released.

State Contracts PaymentMaine 408 $34,842,076 California 291 $29,458,438 Alabama 586 $24,509,263 Georgia 354 $21,499,949 South Carolina 253 $14,638,308 Florida 134 $12,595,046 New Hampshire 130 $11,822,402 Michigan 247 $10,268,635 Texas 114 $ 8,468,858 New York 142 $ 7,703,127

Source: USDA-FSA


BCAPResources Contracts PaymentsBark 1,418 $46,696,187Fuelwood 744 $34,403,825Hardwood chips 805 $32,521,203Forest harvest slash 386 $30,012,559Forest thinnings materials 399 $27,220,001Softwood chips 491 $17,661,305Orchard wood waste 123 $15,000,377Sawdust 357 $12,400,919Pellets 70 $ 5,367,939Non-edible, non Title 1 56 $ 3,226,417plant processing waste and scraps Corn cobs 15 $ 61,612

Source: USDA-FSA


Thank you for your time!

Any questions?

My web site:http://www.econ.iastate.edu/~chart/

Iowa Farm Outlook:http://www.econ.iastate.edu/outreach/agriculture/periodicals/ifo/

Ag Decision Maker:http://www.extension.iastate.edu/agdm/

Documents

University Extension/Department of Economics Biofuels Farm Management In-Service Ames, Iowa Oct. 12, 2010 Chad Hart Assistant Professor/Grain Markets Specialist