On a brisk morning in early November, the semis are lined up four deep outside the front gate of the Corn Plus plant, waiting before a sign that warns, in big red letters, NO SMOKING. In this corner of sleepy Winnebago, a small town in southern Minnesota, smoke billows from stacks, and a hum from the plant shatters the silence of the countryside. A sour scent, redolent of a brewery, hangs overhead.
The "plus" at Corn Plus is ethyl alcohol, better known as ethanol. In a day Corn Plus takes the kernels of corn hauled by 45 trucks and turns them into 122,000 gallons of fuel. Tank cars wait on railroad sidings behind the plant, ready to carry it to New England, to Chicago, to California.
With the price of crude oil at record highs, times are good at Corn Plus, and the roll is likely to last. The expense of making ethanol has fallen steadily over the last decade, even as some energy analysts predict we might never see gasoline below $3 a gallon again. After a much-quoted warning that "America is addicted to oil" in this year's State of the Union address, President Bush called for "cutting-edge methods of producing ethanol, not just from corn but from wood chips and stalks or switchgrass. Our goal is to make this new kind of ethanol practical and competitive within six years." The ultimate objective: "to replace more than 75 percent of our oil imports from the Middle East by 2025."
It was a remarkable position to take. In Washington, D.C., ethanol is commonly viewed as little more than a sop to the farm lobby. The conventional wisdom has become so entrenched that even fictional politicians embrace it: The presidential candidates on TV's West Wing, campaigning in faux Iowa caucuses, all criticized ethanol. "It takes more oil to transport it and fertilize it than we save using it," griped Representative Russell. Senator Santos complained about the logistics: "Transportation is difficult; storage is a nightmare. . . . Supporting ethanol's a mistake."
Still, the president's initiative was less an announcement of a new endeavor than an acknowledgment of work well under way. Nor is it as ambitious as it sounds; oil from the Persian Gulf accounts for just around 16 percent of U.S. consumption. Yet the researchers who know ethanol best believe that it represents an extraordinary opportunity. With a serious new push, they say, ethanol could displace 30 percent of domestic gasoline consumption within 25 years. Because ethanol is made from plants that pull carbon from the atmosphere as they grow, it could drastically reduce greenhouse-gas emissions from automobiles, the second largest source here, behind power plants. Although President Bush did not say as much, the Department of Energy is also pursuing an even more ambitious outcome—a "biorefinery" that could make not only fuel but also plastics and other products currently derived from petroleum.
Those claims sound less outrageous when you consider that they are being realized abroad right now. In Brazil—a country of 188 million people with the world's 14th largest economy—about 40 percent of the fuel burned in passenger vehicles is ethanol derived from sugarcane. The pump price for ethanol is roughly half that of gasoline. Seventy percent of new cars in Brazil are sold with "flex fuel" engines, which can run on pure gasoline or E85, a blend of up to 85 percent ethanol and 15 percent gasoline, and the Brazilian government has announced that it will wean itself from foreign oil imports completely by the end of this year. All this is happening with a fundamentally American technology: The flex-fuel engine and its precursor—the Model T, which Henry Ford expected to run on ethanol—were invented in the United States.
In fact, ethanol is already creeping into the mainstream. Last year about 1.6 billion bushels of corn were fermented in the United States to produce 4 billion gallons of ethanol, double the amount for 2001. Three percent of all gasoline pumped in this country is actually ethanol, which is often added as a component of low-emission "reformulated" gasoline. Some 5 million automobiles here can run on E85, even though most of their drivers probably don't know it. The Energy Policy Act of 2005 requires the use of 7.5 billion gallons of ethanol by 2012, and the industry is ahead of the target. Thirty-five new plants, capable of producing another 2 billion gallons, are under construction. In small but significant ways, at various labs, factories, and filling stations around the country, an energy revolution is under way.
Rick Lunz's family farm, one county over from Corn Plus, is one of the patches where the new ethanol economy has sprouted. I pull up to find him loading grain into silos.
He had already spent about eight hours in the cab of his John Deere 9650 STS combine. We climb back inside, and Rick's brother Bob fires it up. Soon sturdy six-foot-tall corn falls before our advance, eight rows at a time. Pieces of stalk, leaves, and cobs dance as the kernels disappear underneath, but inside the sealed cab the noise of corn gnashed by steel teeth barely registers. It takes about three minutes to complete a single quarter-mile pass, then Bob swings the combine around again. A truck pulls up alongside, he flips a switch, and grain pours from the combine bin behind into the truck. This is not your father's farming operation. Perhaps that's why Lunz, who is 49, still has a boyish face.
In 1979, when ethanol was called gasohol, Lunz saw an ad in a newspaper for an on-farm ethanol plant. The energy crisis of 1973 was still fresh in his mind. President Jimmy Carter had persuaded Congress to pass a law promoting synthetic fuels, which included tax credits to ethanol producers. Lunz ordered a kit that could produce 150,000 gallons a year: "It took me a long time to get it built. I ran it for three months." Lunz lets out a hearty laugh. Then President Reagan ended the incentives, and Lunz couldn't make the payments. "I turned around and ripped it down and sent it on to somebody in Nebraska. They had a state program, and we didn't."
By the mid-1980s, Minnesota had a program too. A tax credit buoyed ethanol to about 4 percent of Minnesota's gasoline supply. When Lunz began meeting with a group of farmers near Winnebago in 1991, they could count on a state-sponsored cash payment of 20 cents per gallon, up to $3 million a year. Lunz and his associates eventually raised $13 million—about half the construction costs—to build an ethanol plant they named Corn Plus. The plant opened for business in November 1994, with the capacity to make 15 million gallons of ethanol a year.
Production has since tripled. Legs, drags, and augers convey corn kernels into storage bins and then to a pair of hammer mills that crush them into a fine powder. In the mix tank, the milled grain takes on water and enzymes, which begin to convert the starch to simple sugars. Eventually, the slurry arrives at fermentation tanks, where yeast goes to work on the sugars. Over the next 54 hours, the corn slurry becomes a mash containing 15 percent alcohol. The alcohol is stripped away at the still; molecular sieves then pull out the last drops of water. Finally, the ethanol—2.7 gallons from a bushel of corn—is cooled into a liquid and denatured with gasoline. The mash at the bottom of the still is dried and sold as an animal feed called distillers' grains.
Outwardly, the way ethanol is made has not changed much, but each step of the process has grown markedly more efficient, beginning with the farmers. Lunz, for instance, says his fields produce about 175 bushels per acre, 25 more than a decade ago, while using 25 to 30 percent less fuel.
Corn Plus has contributed significant advances of its own. Engineer Gregory Coil hands me a pair of earplugs and leads me into a room dominated by a giant stainless-steel cone that calls to mind an old steam locomotive's smokestack. This is a fluidized bed reactor, an energy-generation technology that has been used for decades to power paper mills and waste-treatment plants but that had never before been installed in an ethanol plant.
Every minute, 80 gallons of the corn syrup left over from distillation are pumped into a bed of 1300-degree sand agitated by compressed air so that it behaves like a liquid. The sand ignites the syrup. "Syrup solids have a BTU content similar to lignite coal," Coil says over the roar of combustion. "When it burns, when it oxidizes, it produces heat." The heat generates steam for boilers and dryers. The fluidized bed reactor has cut the plant's natural gas use by more than half. A new heat-recovery system may further reduce natural-gas consumption to just a third of what it was two years ago.
These improvements are crucial. From the start, the ethanol industry has been dogged by concerns about its net energy balance—whether ethanol requires more fossil fuel to make than it replaces. This is measured by adding up all the energy inputs at every stage of production, from growing corn seeds to cultivating and harvesting the grain, transporting it to the factory, and shipping the ethanol to a terminal. If ethanol runs a negative energy balance, as asserted by some critics (including those nattering West Wing characters), then the enterprise is doomed: What is the point of wasting fossil fuels that could be consumed directly somewhere else?
Studies by researchers at the Department of Agriculture over the last decade give reason for optimism. They consistently show a positive and improving energy balance. By 2001 every BTU consumed in ethanol production generated 67 percent more energy, when coproducts like distillers' grains are taken into account. Other researchers have reported a similar trajectory; taken together, their findings show an unmistakable upward trend.
Yet nagging doubts remain, stoked by two persistent skeptics: David Pimentel, a professor of ecology and agricultural sciences at Cornell University, and Tad Patzek, a professor of geoengineering from the University of California at Berkeley who started the UC Oil Consortium, an industry-sponsored research group. In their latest studies they conclude that ethanol's balance is negative. The researchers, who found that ethanol requires 29 percent more fossil energy than it provides, question the morality of using grain to fuel cars in the face of world hunger. "Expanding ethanol production," they write, "could entail diverting valuable cropland from producing corn needed to feed people to producing corn for ethanol factories."
Most researchers agree, more or less, on the energy required in the conversion process, but unlike Patzek and Pimentel, they include an energy credit for the coproducts. Most of the discrepancy, though, comes from different measurements about the growing of corn. Patzek and Pimentel count many more inputs than the others, including labor energy expended by field hands and energy embedded in farm equipment and in the ethanol factory itself. Such external sources are not normally calculated when the fuel is gasoline.
A more relevant issue is whether ethanol's energy balance is better or worse than gasoline's. After all, as energy economist Philip Verleger points out: "We don't keep our balances in BTUs; we keep them in dollars and cents. So if I can find an energy source that's cheap and easy to use, then it may make sense to use a lot more of that to produce a gallon of gasoline."
By definition, petroleum's fossil energy balance is negative. Making a gallon requires 23 percent more energy than it contains. Even using Patzek's unreconstructed estimates, ethanol outperforms the incumbent. Corn Plus's fluidized bed reactor further tips the argument in ethanol's favor. Using Patzek's methodology for every aspect of ethanol production save the conversion process itself, a gallon of Corn Plus ethanol consumes less energy than it contains—even before factoring in credit for coproducts.
Meanwhile, ethanol's efficiency is continuing to improve. New machinery developed by Biorefining Inc. in Minnesota precisely breaks kernels into their constituent elements, which may convert more of the starch into ethanol at a lower cost, while also freeing up more of the valuable coproducts like corn oil. The biotech companies Genencor and Novozymes have developed enzymes that convert starches into sugars and ferment the sugars into ethanol in a single step, streamlining the process. Seed companies are trying to engineer corn that is tailored to ethanol conversion.
At some point, though, corn ethanol will hit a wall. Even if the United States decided to ferment its entire corn crop, that would displace less than 20 percent of our gasoline consumption. A more realistic, if still optimistic, scenario sketched by the National Corn Growers Association anticipates that corn ethanol production will quadruple to 16 billion gallons by 2015, not quite 7 percent of the likely demand. That's where President Bush picks up the story.
It turns out that Rick Lunz left a lot of energy out in his field that night. Corn stover—the husks, stalks, and cobs chewed up and spit out by the combine—is, in a sense, about two-thirds sugar. The problem is that the sugar is accessible only after it is chemically converted from the tough molecules that make up the walls of plant cells: fibrous cellulose, hemicellulose, and lignin.
Lignocellulosic biomass, as it is called, represents a vast, untapped natural resource. If we could find an effective way to convert it, corn residue could provide another 20 billion gallons of ethanol by around 2040, according to a recent report from the Oak Ridge National Laboratory in Tennessee. Better yet, every plant contains cellulose, so there is no need to restrict the fermentation process to corn stover.
Switchgrass, a tall prairie grass native to North America, is a much more promising raw material. It can reach nine feet high, and it grows easily from the Gulf of Mexico to the Canadian plains, from the Rockies to the Atlantic Coast. It can grow in poor soil as well as in dry climates, says agronomist David Bransby of Auburn University, so it requires little fertilizer and water and can grow in places that are not now useful cropland. An acre of switchgrass can produce more than twice as much ethanol as an acre of corn. By 2030 the Department of Energy envisions American farmers harvesting fields of switchgrass purely for their energy content.
People have coveted that energy for a long time. "When I first looked into the ethanol industry, there was this promise that the cellulose technology was just a few years away," Lunz recalled. "Well, it's been 25 years now." Biomass research that began at the Solar Energy Research Institute in Golden, Colorado, during the Carter years nearly came to a halt in the early 1980s and did not revive until George H. W. Bush became president. President Clinton expanded the facility, now called NREL, short for the National Renewable Energy Laboratory. Researchers there say they are tantalizingly close to fulfilling that early promise.
They have managed to solve a problem that has long bedeviled ethanol researchers: how best to split cellulose into simple sugars that can be fermented into alcohol. One method bathes the cellulose in sulfuric acid at high temperatures and high pressure, an expensive technique developed by Germany during World War II. Instead NREL researchers sought an enzyme that would do the job more cleanly and cheaply. Coincidentally, research into such a cellulose splitter, or cellulase, also dates to World War II, when the U.S. Army investigated the "jungle rot" that dissolved uniforms in the South Pacific. The most profitable application of cellulase so far has been to set it loose on the fibers in blue jeans just long enough to make them look "stonewashed."
In 2000, NREL made available a suite of patents for its protein research to Novozymes and Genencor, asking them to bring cellulase to the market while splitting the investment. Since 2004, each firm has announced that it has managed to cut the cost of a cellulase suitable for industrial production, although exactly how much is in dispute. The biotech companies claim a 30-fold reduction since 2000, from about $5.60 per gallon of ethanol to at most 18 cents; NREL puts the cost at 32 cents.
Thomas Foust, the biotechnology manager at NREL, says the cost of making ethanol from cellulose has dropped to $2.26 a gallon or less. The goal, however, is $1.07—what NREL and the Energy Department figured was the cost to make a gallon of ethanol from corn kernels at the time NREL made the enzyme pact.
Reaching that target will be a difficult, messy task. After handing me goggles and a hard hat, Foust and engineer Dan Schell usher me into the lab's pilot ethanol plant. It is clean and quiet, a collection of valves, tubes, and tanks unblemished by the grime of production because it is used mostly to test processes. We stand in front of a squat vessel. This is the pretreatment reactor, where hemicellulose is dissolved into a liquid of simple sugars, exposing the cellulose to enzymatic attack. Here, though, the lab still uses a variant of the old acid-bath technique, which is both expensive—this reactor is made of zirconium—and fussy. If the acid concentration isn't strong enough, some of the small polymers aren't broken up and don't get fermented. Too strong, and some degrade beyond use, inhibiting the fermentation of other sugars. Ultimately, NREL hopes to replace the acid bath with a more reliable cocktail of cellulase and hemicellulase enzymes.
That hasn't happened yet because hemicellulose is a tough nut to crack. It is an amalgamation of xylose, glucose, and small amounts of three other sugars, and so far NREL has been unable to engineer a bacterium that can digest all of these at once. "Twenty years ago, it seemed it was going to be real simple—just get your genetic tweezers out and away you go," Foust says. "It's proved infinitely more difficult than that." As a result, today's technology can coax only about 65 gallons of ethanol out of every ton of corn stover, instead of the 90 NREL is counting on.
A number of researchers think the solution is to abandon the whole idea of fermentation in favor of making ethanol through a technique called gasification. If a feedstock—grain, grass, husks, whatever—is burned in an environment where oxygen is limited, the reaction creates hydrogen, carbon monoxide, and methane. These can be burned in a turbine, but in the presence of the right catalyst, they will instead combine into ethanol.
BioConversion Technology, a start-up in Denver, claims to have developed such a catalyst and says that it can make more ethanol from a ton of feedstock for less money than NREL can by fermentation. "NREL has been extremely biased," says David Bransby of Auburn. "I think they're betting on the wrong horse." Foust does not deny gasification's potential—he considers the two technologies complementary. NREL, he says, has spent 40 percent of its biomass research budget on gasification. Still, BioConversion Technology has received no funding from the Department of Energy.
If the boosters of ethanol master cellulosic conversion, they will then have to find an effective way to deliver large quantities of the new fuel to the market. Like water, it is held together by the powerful bonds between hydrogen and oxygen atoms, so ethanol cannot travel through most petroleum pipelines. If ethanol encounters water in the pipes, it will absorb the water and become unusable. It also dissolves dirty petroleum gum residues on the walls of pipes and tanks. Robert Reynolds, a consultant who has studied ethanol infrastructure for the Department of Energy, says ethanol would have to make up at least 30 percent of the gasoline supply to justify the expense of making current oil pipelines fit for sharing.
Right now ethanol is used mostly as a fuel additive; about one-third of the gasoline sold in the United States contains a shot of ethanol (about 10 percent, typically) to reduce automobile emissions. That has given energy companies a chance to explore the transportation difficulties. Ethanol from places like Corn Plus travels by barge or railroad to distribution terminals, then is combined with gasoline at the rack where tanker trucks load up. To receive ethanol, these tank farms may have to add new railroad spurs, storage tanks, and blending systems. It costs roughly three cents to send a gallon of gas from the Gulf Coast to New York. Transporting a gallon of ethanol by train from the Midwest costs at least 12 cents, and the shipments are vulnerable to delays on the tracks.
But an interesting thing happened in recent years as many large markets phased out MTBE, a competing gasoline additive, in favor of ethanol: nothing. Adding new infrastructure at the terminals did not prove daunting; railroads delivered tank cars full of ethanol on time. When there were price swings, they were limited to the season of transition. In the long run, consumers did not appear to have been greatly punished at the pump for using ethanol. Reynolds even believes that if ethanol production hits 10 billion gallons and consumers embrace E85—the 85 percent ethanol mix—a dedicated pipeline from the Midwest to the East Coast could make economic sense, although the conventional wisdom remains against him.
For now, E85 remains a distinctly boutique concern. The roster of places to buy it grows every day, but the numbers are small: just over 600 stations, about a third of them in Minnesota. Many states have no stations at all. Detroit is trumpeting its commitment to build E85-compatible flex-fuel cars and trucks—1.25 million of them this year—but those are scattered on dealers' lots around the country, so most of their owners will have no access to ethanol. Furthermore, these vehicles incorporate rudimentary conversions of gasoline engines and do not fully exploit ethanol's high octane.
Even ethanol's fans concede that building up the ethanol infrastructure depends on government support, at least for now. A report by the Natural Resources Defense Council estimates that developing competitive ethanol technology will cost $1.1 billion; deploying it could cost just as much. "It's a long-term investment, and it requires a commitment," says Purdue University bioengineer Michael Ladisch. Besides research, the commitment includes a federal 51 cent per gallon tax credit, local credits, and incentives for building E85 pumps. The raw feedstock, corn, is subsidized, too, with cash payments to farmers. In 2004 that amounted to 16 cents a gallon. (Not all the taxes are stacked in ethanol's favor; a 54 cent per gallon tariff effectively bars cheap Brazilian ethanol from the American market.)
Red Cavaney of the American Petroleum Institute cautions that "it is important that we not ask government to pick technology winners and losers before the science has caught up." Still, the Department of Energy's real problem may be not where it is placing its bets but how much it is wagering. For 2006, the Bush administration proposed just over $50 million for ethanol research, less than half what Clinton's budget requested in 2001. Originally NREL set its goal of $1.07 ethanol for 2010; by last year, the target had slipped to 2020. With the current renewed emphasis on biofuels, Foust's team is poised to get $27.5 million in 2007, a touch more than it spent in 2004. The Department of Energy would increase its total biomass spending to $150 million—a 65 percent bounce.
In the end, this is up to Congress. Over the years, it has held a middle ground between the Clinton administration's enthusiasm for bioenergy and the Bush administration's indifference. Lately, legislative munificence has come with strings: directed spending projects, the lifeblood of pork-barrel politics.
"It started about three years ago," says Bob Noun, NREL's executive director for external affairs, "but in the last year, they've doubled." In the 2006 budget, earmarks divert $61 million, two-thirds of the total biomass research budget. The earmarks are vaguely titled and have no descriptions; staffers in the Department of Energy have to confer with Congressional Appropriations Committee staffers to figure out who gets what. Although the Energy Department encourages recipients to work toward its research agenda, it can't force them—it is required by law to hand over the money.
The grants are mostly death by a thousand cuts: a hundred thousand dollars here, a half million there. One notable exception is an $11 million grant to establish a "sustainable energy center" at Mississippi State University, secured by Representative Charles Pickering. The largesse appears to have taken the school by surprise. Although the legislation passed in November, the university's PR team only heard about it in April. "There are many questions to be answered that we can all work on," says engineering professor Glenn Steele, a codirector of the new center. "We're looking at wood chips and other feedstock sources that are not necessarily in the mainstream for ethanol but are in abundance in our region. And we will be working with the national laboratories to make sure we're not duplicating research."
In an encouraging sign, the House recently voted to provide extra money to pay for its pork-barrel add-ons; the Energy Department's biomass request was fully funded. Tom Foust believes that if department scientists get all of their R&D dollars, cellulosic ethanol will be commercially competitive by 2012. "We know the tools, and we know the protein engineering," he says. "None of these breakthroughs that we're proposing are the skies parting and a tablet coming down from the heavens."