The Biofuel Revolution: Implications for CGIAR ‘Public Goods’ Research Kenneth G. Cassman, Director Nebraska Center for

1. The Biofuel Revolution: Implications for CGIAR ‘Public Goods’ Research Kenneth G. Cassman, Director Nebraska Center for Energy Sciences Research University of Nebraska—Lincoln www.ncesr.unl.edu 8th CGIAR SC meeting

2. Mega Trends • Rapid rate of economic growth in most populous developing countries • Per capita increases in consumption of energy and livestock products • Climate change and increasing public concern about protection of environmental quality and natural resources • Uncertainty of petroleum supply • Political instability in oil-producing countries • Decreasing replacement of petroleum reserves • Rising petroleum and motor fuel prices 8th CGIAR SC meeting

3. Energy Consumption and Income are Linked 5 billion low-income people in countries with rapid economic growth rates 8th CGIAR SC meeting

4. Oil Production vs Oil Discovery 8th CGIAR SC meeting

5. Response to Rising Petroleum Prices • Increased public and private sector investment in expansion of ‘first generation’ biofuels production capacity from starch, sugar, and oilseed crops • Convergence of energy and agriculture • Highest value use of these crops is now as a biofuel feedstock, not as food or livestock feed • Rapid rise in crop commodity prices and spillover to non-biofuel crops and forages • Expansion of biofuel crop area • Abrupt change from 50 years of supply-dominated crop commodity markets to demand-driven markets 8th CGIAR SC meeting

6. Ethanol feedstock is now the highest value use for maize. Breakeven maize price versus ethanol price; current CBOT ethanol price is about $1.80/gallon ($0.48/L). Assumes US$10/Mbtu for natural gas. Current ethanol price justifies corn price of ≈ $3.90/bu ($154/metric ton) Natural gas @ $6 per Mbtu and current ethanol price justifies corn @ ≈ $4.25/bu ($167/metric ton) 8th CGIAR SC meeting

7. Corn ethanol co-product distillers grains are a nutritious livestock feed: • 30% CP(65% UIP), 0.8% P, 11% fat, 40% NDF • High fiber energy source with high digestibility • Energy content and feeding value ~125% (wet or dry) of corn; can replace 40% of beef cattle diets • Sulfur content - .35 to 1.0%, variable 8th CGIAR SC meeting

8. Expansion of USA Maize-Ethanol Production 40% 32% Percentage of projected USA maize production, assuming 36 Mha planted maize area and trend line yield increase 8th CGIAR SC meeting

9. Expansion of Biofuel Production is a Global Phenomenon • Brazil: tremendous capacity to increase ethanol production from sugarcane, biodiesel from soybean and perhaps oil palm • Indonesia/Malaysia: rapid expansion of biodiesel from oil palm (perhaps also Nigeria and DR-Congo) • Europe and Canada: expansion of biodiesel from canola 8th CGIAR SC meeting

10. Gross Energy Yield of Various Biofuel Crops 8th CGIAR SC meeting

11. Biofuel crops are highly concentrated in a few countries • Argentina + Brasil + USA account for: • 48% of global maize production; 65% of maize exports • 81% of global soybean production • Indonesia + Malaysia account for 81% global oil palm production • Brasil produces 33% of global sugarcane • USA accounts for 56% of global humanitarian food aid 8th CGIAR SC meeting

12. Promise of the Biofuel Boom • Most exciting opportunity for agriculture since WWII • Economic development and jobs in rural communities in developed and developing countries • Substantial increases in prices for agricultural commodities • Higher land value and tax income • Less need for direct crop subsidies 8th CGIAR SC meeting

13. Biofuel Pitfalls • Energy inefficient biofuels that require more energy inputs than energy output; reduces capacity for replacement of fossil fuels • Excessive inflation in consumer food prices due to insufficient grain and oilseed crops for food, feed, fiber, and biofuel • Environmental degradation and unsustainable farming practices due to expansion of biofuel crop area and motivation to produce highest possible yields • Net increases in greenhouse gas emissions rather than a decrease • Expansion of cropping to marginal land resulting in a significant increase in erosion and habitat degradation • Expansion of cropping into rain forests, wetlands, grassland savannahs in Brazil, Indonesia, and other tropical countries • Reduction in water quality from increased fertilizer rates without development of new technologies to avoid nutrient losses in high-yield systems 8th CGIAR SC meeting

14. Energy Efficiency and Environmental Impact of Biofuels—Maize Ethanol ex. • There are many life-cycle analysis (LCA) studies of maize-ethanol systems • Includes crop production, ethanol conversion, co-product processing and utilization • Results vary depending on selection of system boundaries, energy content of crop inputs, crop yields and input levels, energy use in ethanol plant 8th CGIAR SC meeting

15. Energy efficiency and greenhouse gas mitigation estimates from different studies From Farrell et al.,Science 2006 8th CGIAR SC meeting

16. Backward-looking vs forward-looking life-cycle analyses • Previous studies use aggregate data from the recent past • But efficiencies of maize production and ethanol conversion are continually improving • More relevant question: what is the energy efficiency and greenhouse gas mitigation potential of current and future maize-ethanol systems? 8th CGIAR SC meeting

17. Biofuel Energy Systems Simulator (BESS) • Recently released life-cycle assessment software available at: www.bess.unl.edu • Uses updated input values for maize yields and production practices, energy requirements for ethanol fermentation-distillation, and co-product processing and utilization • Estimates much higher net energy efficiency and greenhouse gas mitigation potential than previous estimates 8th CGIAR SC meeting

18. BESS* Model for Emissions Trading and Biofuel C-cost certification BESS Life-Cycle Model includes 4 components: • Crop production • Ethanol biorefinery • Cattle feedlot for feeding distiller’s grains • Anaerobic digestion unit (optional, closed-loop facility) Three types of life-cycle analysis: • Energy analysis—life-cycle net energy yield/efficiency • Emissions analysis—net carbon dioxide (CO2) and trace greenhouse gases (CH4, N2O), and global warming potentional (GWP) • Resource Requirements—crop production area, grain, water, fossil fuels (petroleum, nat. gas, and coal) *Available at www.bess.unl.edu 8th CGIAR SC meeting

19. Tradable GHG credit (E) = A - B - C - D C = energy savings from use of distillers grains co-product to replace corn grain and urea in cattle diets 8th CGIAR SC meeting

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25. BESS life-cycle analysis: Net Energy Ratio -----Corn Production System----- 8th CGIAR SC meeting Based on a 378 ML/yr maize-ethanol plant

26. BESS LCA Analysis: GHG Emissions Reduction (%, Mt CO2eq*) -----Corn Production System----- 8th CGIAR SC meeting Based on a 378 ML/yr maize-ethanol plant

27. Energy efficiency and greenhouse gas mitigation estimates from different studies Liska et al. Univ of Nebraska: Improved maize grain ethanol technology From Farrell et al.,Science 2006 8th CGIAR SC meeting

28. Closed-Loop Integrated Corn-Ethanol Biorefinery: high energy efficiency and positive environmental impact CH4 CO2 N2O Corn Production --Grain and stover yields in relation to climate and management --All inputs and outputs have energy and GHG equivalents --Soil C sequestration, soil quality, water quality CO2 Ethanol Plant --Ethanol output per in relation to grain and energy inputs, and total ethanol yield --Greenhouse emissions --Distillers grains and other by-products Grain Ethanol Grain NO3 leaching Distillers grain Stillage N2O CH4 CH4 CO2 Cattle Feedlot --Feed, energy and other inputs --Animal weight gain and feed efficiency --Manure and urine outputs --Greenhouse gas emissions Methane Biodigestor --Manure, urine, stillage inputs --Methane biogas output --Biofertilizer output, fertilizer replacement value, land requirement Meat manure, urine NO3 leaching Biofertilizer Horticultural uses/organic ag? Fertilizer offset in crop production 8th CGIAR SC meeting

29. BESS LCA Analysis: GHG Emissions Reduction (%, Mt CO2eq*) -----Corn Production System----- 8th CGIAR SC meeting Based on a 378 ML/yr maize-ethanol plant

30. Bottom line: Energy Efficiency and GHG Mitigation • Current state-of-the-art USA maize ethanol systems • 30-70% net energy surplus and 25-70% GHG reduction compared to gasoline • Sugarcane-ethanol even better • Improvements in maize-ethanol will approach sugarcane efficiencies and GHG mitigation • Palm oil biodiesel is also highly energy efficient, but GHG mitigation depends on whether forest clearing is accounted for • Soybean will become the dominant vegetable oil crop because it is too low-yielding to be competitive as a biofuel feedstock 8th CGIAR SC meeting

31. Potential Ripple Effect: accelerated deforestation due to abrupt increase in demand for food, feed, and biofuel crops 8th CGIAR SC meeting

32. Ripple effect of rising food prices or shortages: rural poor in developing countries will be motivated to expand subsistence crop production onto marginal soils not suited for annual food crops causing soil degradation and loss of environmental services. 8th CGIAR SC meeting

33. Cereal Imports to Sub-Sahara Africa Wheat Percent of global exports Rice Maize 8th CGIAR SC meeting

34. Avoiding excessive food price inflation and ensuring environmental protection • Assure adequate grain and oilseed supply to meet global demand for food, feed, fiber, and biofuel • Maintain soil quality • Improving water quality • Avoid a large expansion of crop area into marginal land or into natural ecosystems (forests, wetlands, grassland savannahs) 8th CGIAR SC meeting

35. BUT HOW DO THESE PROJECTIONS COMPARE WITH RECENT TRENDS? 8th CGIAR SC meeting

36. Trends in Global Area Planted to Cereals is decreasing, 1966-2004 8th CGIAR SC meeting

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38. Global Cereal Yield Trends, 1966-2004 8th CGIAR SC meeting

39. Rate of gain for all cereals is linear, not exponential, which means that the relative rate of gain is decreasing: relative rates of gain in 1966. 8th CGIAR SC meeting

40. Rate of gain for all cereals is linear, not exponential, which means that the relative rate of gain is decreasing: relative rates of gain in 2004. 8th CGIAR SC meeting

41. A Critical Question:Will there be enough maize? • USDA Secretary Mike Johanns (11/16/06): • US farmers should be able to meet booming corn demand • We have companies telling us they are very close in their research to having more drought-resistant, more pest-resistant, more disease-resistant corn hybrids • 4 to 7 million idled CRP acres are viable for corn production • Robert Fraley, Chief Technology Office, Monsanto: National Renewable Energy Conf, St Louis, 10/12/06 • Average corn yields will double within the next 30 years (2.3% per year exponential growth rate versus actual current linear rate equal to 1.2% of current trend-line yield) • New biotech hybrids will achieve substantial yield increases under drought and require less N fertilizer • Little published in refereed journals to support these claims; most crop physiologists/agronomists who work on corn yield potential disagree with this prognosis 8th CGIAR SC meeting

42. USA Corn Yield Trends, 1966-20051 (embodies tremendous technological innovation) 12000 Transgenic (Bt) insect resistance Soil testing, balanced NPK fertilization, conservation tillage 10000 8000 Double-X to single-X hybrids Reduced N fertilizer & irrigation? GRAIN YIELD (kg ha-1) 6000 y = 112.4 kg/ha-yr 4000 Integrated pest management [1.79 bu/ac-yr] Expansion of irrigated area, increased N fertilizer rates 2 R = 0.80 2000 1965 1970 1975 1980 1985 1990 1995 2000 2005 YEAR 8th CGIAR SC meeting From: Convergence of Energy and Agriculture, www.cast-science.org

43. Nebraska contest-winning and average yield trends No increase in yield potential ceiling since the 1980s; average yields will soon approach this ceiling. 8th CGIAR SC meeting From: Cassman et al., 2003

44. WILL THERE BE ENOUGH RICE, WHEAT, AND OTHER STAPLE FOOD CROPS FOR THE RURAL AND URBAN POOR? 8th CGIAR SC meeting

45. Yield trend of IRRI cultivars and lines developed since 1966 11 Yield of IR8 in 1966 IR65469-161-2-2-3-2-2 10 IR72 IR50 IR59682-132-1-1-2 9 IR36 IR64 Grain yield (t ha-1) Based on field studies at two locations in 1997 and 1998; mean values IR60 IR30 IR20 8 BPI76 IR26 IR8 y = -139 + 0.075x 7 2 r = 0.73 6 1960 1965 1970 1975 1980 1985 1990 1995 2000 Year of release Peng et al. 2000; Crop Sci 40:307 8th CGIAR SC meeting

46. 10 (1998 dry season) 9 IR72 (De Datta et al. 1968) IR8 8 7 Grain yield (t ha-1) IR8 6 (1998 dry season) 5 4 3 0 50 100 150 200 -1 N rate (kg ha-1) ) Grain yield of IR8 grown in the late 60s and 1998 Peng et al. 1999; Crop Sci 39:1552 8th CGIAR SC meeting

47. Conceptual framework for stagnant yield potential and red-queen breeding to maintain disease/insect resistance and adaptation to evolving agro-ecosystems (soils, [CO2], climate change) 8th CGIAR SC meeting From: Cassman et al., 2003, ARER

48. Rice yields are stagnating in many of the world’s most productive intensive rice systems: China, Korea, Japan, Indonesia, and Punjab-India 8th CGIAR SC meeting

49. Yield trends of wheat in the Yaqui Valley of Mexico and in the major wheat producing states in India. 8th CGIAR SC meeting

50. Global Irrigated Area and as a % of Total Cultivated Land Area 1966-2004: little scope for further increase In 2002, irrigated systems occupied 18% of cultivated land area but produced 40% of human food supply 8th CGIAR SC meeting