Overview: More Harm Than Good? Authors: Sarah L Bruce Advisor: - - PowerPoint PPT Presentation

Ethanol Supply Chain and Industry Overview: More Harm Than Good?

Authors: Sarah L Bruce Advisor: Alexis Hickman Bateman, Edgar Blanco Sponsor: Yossi Sheffi MIT SCM ResearchFest May 23-24, 2012

Ethanol Topics

• What is Ethanol?
• Thesis Objective
• Goals of Ethanol
• Key US Legislation
• Unique Ethanol Properties
• Unintended Consequences
• Ethanol Supply Chain
• Ethanol Environmental Effects
• Conclusion

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Thesis Objective

• To determine if ethanol nets society more harm

than good, based on the aggregation of a number

• f studies

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Ethanol Goals

• Reduce Greenhouse Gas (GHG) emissions
• Eliminate dependence on foreign oil
• Reduce fossil fuel consumption

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Renewable Fuel Standard 2007 (RFS2)

• Mandates 36 bgal of biofuel by 2022
• 4 of those biodiesel
• 99 bgal gasoline used for transportation 2009

approximately 32% of transport fuel ethanol 2022

• RFS2 caps corn ethanol at 15 bgal (by 2015)
• Rest (22 bgal) must be fulfilled by Advanced

Biofuels

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Ethanol Properties

• Corrosive
• Absorbs water
• Lower energy content
• Higher octane

Leads to “Blend Wall” Higher than 10 percent ethanol (E10) creates difficulty transporting and in engines

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Transport: Farm to Ethanol Plant

• Bulky feedstocks mean ethanol plant needs to be

close to harvest site.

• From Ethanol plant must travel to Blender

terminal to be mixed with gasoline

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Ethanol Production and Distribution Gasoline Consumption & Distribution

Transport: Ethanol Plant to Blender

• Pipeline constraints
• Demand on Rail Capacity increases significantly
• Infrastructure upgrades needed if ethanol blends
• ver E10, which will be case this year
• US needs about $2.6 billion in transportation

investment to meet demand

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Transport: Blender to Refueling Station

• Stations must upgrade components
• 156,065 refueling stations in US in 2013
• 2,339 ethanol refueling stations in US in 2013
• For ten percent availability: $1.6 billion capital
• investment. For presence at all gas stations: $18 bill

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End Use: Consumers and Cars

• 8 million Flex Fuel Vehicles on road in US
• Study showed consumers learn about decrease in

energy content with E85 (85% ethanol) which results in a plateau in demand.

• Ethanol prices less than gasoline but not low

enough to account for decrease in energy content.

• E85 represents very small portion of demand

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Summary of Supply Chain

• Given RFS2 mandates ethanol is about 32% of

fuel in 2022.

• Total of at least $4.2 billion capital needed by

private and government funds to upgrade infrastructure

• Results in much higher blends than E10, like E30.

Given past consumer patterns they may not want.

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Unintended Consequences

Food versus Fuel Land Use Changes

Direct and Indirect

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Food versus Fuel

• 10% of corn crop “Sweet corn” for human
• consumption. “Field corn” used for livestock feed
• r ethanol.
• In 2012 40% of corn crop went to ethanol

production which produced 13.8 bgals of ethanol.

• 33% of ethanol production goes to distiller’s grain

which is also used for livestock feed.

• 48% of corn crop still avail for feedstock

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Land Use Changes

US crop yields have increased

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Land Use Change

• 52 countries with biofuel mandates over 60 bgals

by 2022.

• US has nearly reached maximum amount of corn-

based ethanol with current amount of land.

• Additional ethanol to come from cellulosic,

sugarcane or other advanced biofuels.

• Cellulosic technology is slow to ramp up.

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Ethanol Environmental Impact

• Assessed using Lifecycle analysis
• Greenhouse Gas Emissions
• Iowa study showed some methods of ethanol

manufacture results in 22% less ghg emissions than gasoline, but more gasoline if include global land use change.

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Lifecycle Greenhouse Gas Emissions

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Emissions GREET BESS* BESS** BESS*** CA GREET Low CA GREET High Crop Production 44 29 35 34 Biorefinery 43 30 31 25 Coproduct Credit

• 17
• 16
• 19
• 22

Denaturant

• Land Use Change
• 30

30 GWI 70 45 48 38 74.7 120.99 Gasoline 92 92 92 92 99.18 99.18 GHG Reduction

• 24%
• 51%
• 48%
• 59%
• 25%

22%

1units in g CO2-eq/MJ combusted fuel

*MidWest, New Natural Gas **Nebraska, Natural Gas *** Nebraska & N. Gas with wet distiller's grains only

Conclusion

• Ethanol’s benefit to society is not a binary

decision, good or bad.

• Criteria for judgment is not solely environmental.
• Should not be 100% of transportation fuel

solution.

• Ethanol industry is very competitive.

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Recommendations

• Most studies and models do not account for the

shipping south to Brazil for corn ethanol exports

• More capital investment for development of

commercial scale cellulosic plants is needed.

• Could fuel policy be regional policy: Optimal fuel

solution is likely geographically dependent.

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In Closing

Ethanol Policy and Execution of Policy must be managed and evaluated carefully. (i.e. do not cut funding to the EPA) Thank you for your time. Questions?

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