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The Impact of the Fuel Ethanol Industry on Rural America Presented to Kansas Energy Council By Dave Vander Griend August 2007. The Early Days of Ethanol Production. Brazil (1960s), the first country to adopt energy policy mandating ethanol use
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The Impact of the Fuel Ethanol Industry on Rural America Presented to Kansas Energy Council By Dave Vander Griend August 2007
The Early Days of Ethanol Production • Brazil (1960s), the first country to adopt energy policy mandating ethanol use • Bureau of Alcohol Tobacco and Firearms granted first U.S. fuel ethanol production license in 1979 to Dennis Vander Griend Vander Griend takes Project to Washington
The Trend in Ethanol Plant Sizing • Sizes increasing • In the 1980s, sizes ranged from 20,000 gallons per year to 7 million gallons per year (MGY) • In the 1990s, 20-30 MGY plants became standard • Today, 100 MGY is becoming the standard
Ethanol Production Growth in the U.S. Average growth = 770 mmgy gal./yr. Average growth = 75 mmgy gal./yr.
Ethanol Production Growth in the U.S.Projections through 2008 Requires ~ 4 billion bushels of corn Average growth = 2950 mmgy gal./yr. Average growth = 770 mmgy gal./yr. Average growth = 75 mmgy gal./yr.
A Change for the Better • Production Costs Decreasing • Economy of scale • Improved technology • Personnel needs reduced through process automation • Distillers grain sales increase revenue • Plants are Safer • Current ICM design has excellent safety record • Operator Training and Safety Audits • Keeping people safe is a top priority in the industry • Resources are Growing • Industry was in infancy in 1980s • Today’s leaders became involved in 1990s • Today, there are several professional companies from which to choose
Process Guarantees • 2.8 gal. denatured ethanol/bushel • < 32,000 Btu/gallon ethanol natural gas • Electrical usage < 0.75 kWh/gallon denatured ethanol • Emissions compliance GUARANTEED Dr. Scott Kohl, Technical Director
Ethanol’s Current Impact • Ethanol creates jobs • Average 35 new, full-time, high-paying jobs at each plant • Total outpouring into local economic pool: $100 million • More than 500 “indirect” jobs • Construction impact of $150 million and about 1,500 jobs • Ethanol promotes agriculture • Average corn price rises 10 cents per bushel in areas surrounding new plants • Good returns have encouraged farmer investment • Ethanol is good for the economy • $1.5 million/year tax liability • Gross revenue of $60 million, with 60-70% spent within 75-mile radius of plant
Switching Gears • Initially, the industry focus was on increasing the demand for ethanol • Focus shifting to increased competitiveness • Research & Development • Process optimization • New product development • Aftermarket services emerging to help customer care for the plant after startup
Educate the Consumer • Ethanol Promotion and Information Council • ICM was a key founder of EPIC, which was formed in the U.S. to help raise consumer awareness and demand for ethanol
Creating Demand for Ethanol INFORMATION EXPOSURE POST PRE Aware AND Very likely/ Likely to purchase Very likely/ Likely to purchase Unlikely/ Undecided/ Unaware Unlikely/ Undecided Research showed 1 in 3 consumers consider themselves aware of ethanol and likely to purchase. After exposure to the benefits, 3 in 4 would choose ethanol.
The Industry is Maturing • In 1990s, farmer-owned cooperatives were formed • Today, larger investors are getting involved • Many companies build smaller facilities at first and put profits back into their plants via expansion • More economical to build bigger plant vs. expanding at a later date • Because of farmer co-ops and bigger investors, more money is being invested upfront Husker Ag—Plainview, NE 20 MGY VeraSun Energy—Aurora, NE 100 MGY
Exploring New Feedstocks • Cassava • Wheat • Sugar/ Molasses • Barley • Sorghum • Cellulose
LifeLine Foods R&D Facility • Goal—Demonstrate new technology for grain-fed plants • Pilot plant investigates both forms of ethanol production from cellulose • Sugar platform – converting corn fiber to ethanol • Thermal platform – converting corn fiber to ethanol
Fifty years ago, the U.S. fed the world Tomorrow, we can help do that again A Better Tomorrow
Federal and State Governments Continue to Encourage Biofuels • Goal to reduce projected gasoline consumption 20% in the next 10 years (Bush administration) • Reduce oil consumption by 2 million barrels per day by 2017 • Increase the use of alternative fuels from 3% to 15% in 2017
U.S. Senate Goal of 36 Billion Gallons a Year of Renewable Fuels by 2022 • Continuous improvement in the grain-to-ethanol industry • Engine optimization favoring renewable fuels such as E85 • Blender pumps that allow consumers to choose blend • Solar energy • Wind energy • Hybrid vehicles
Cellulose is Key Next Step • Some experts say that the U.S. has enough excess cellulose to replace all imported petroleum products • Corn stover • Wheat straw • Wood waste • Energy crops • MSW (municipal solid waste)
Increased RFS From 7.5 BGY to 36 BGY Variable VEETC blenders credit $60/barrel oil Strong domestic economy Dependence on imports More greenhouse gases More urban pollution More idle land Reduced economic growth Biofuels YES or NO
What’s good forAmerica Interdependence of industry and business is what has made this country the bestplace in the world to live and raise a family. is good for America!