Francis Epplin Department of Agricultural Economics Oklahoma State University

1. Alternative Energy and Agriculture:Perspectives on Cellulosic Feedstock and Cellulosic Biorefineries Francis Epplin Department of Agricultural Economics Oklahoma State University Southern Association of Agricultural Sciences - Atlanta, GA February 1 – 4, 2009

2. Collaborators Plant & Soil Sciences Charles Taliaferro (Retired) – grass breeding Yanqi Wu – feedstock development Biosystems & Agricultural Engineering Ray Huhnke – biomass harvest and storage Dani Bellmer - gasification Tim Bowser - gasification Mark Wilkins - bioconversion Chemical Engineering A.J. Johannes – process engineering Randy Lewis (BYU) – bioreactor, bioconversion Microbiology Ralph Tanner (OU) – microbial catalyst development

3. U.S. Energy Use and Imports (2007)

4. US Ethanol Production January 2009 Capacity of 10.5 billion gallons

5. US Gasoline and Ethanol Use

6. Energy Content Btu/gallon • Gasoline 115,000 • Ethanol 75,700 (66 % of Gasoline) • E-10 111,070 (97 % of Gasoline (LHV - based on actual energy yield from use in motor vehicles) Source: http://bioenergy.ornl.gov/papers/misc/energy_conv.html • Miles per gallon Gasoline E-10 (based on Btu content) 35 33.8 25 24.1 15 14.5

7. Ethanol Price (minus the $0.51/gal blenders credit) as percent of Gasoline price

8. Ethanol Price (minus the $0.51/gal blenders credit) as percent of Gasoline price and Potential Post E-10 Barrier (based on Btu content)

9. U.S. Gasoline and Ethanol Use (Energy Content)

10. U.S. Energy Imports and Energy from Corn Ethanol (2007)

11. Ethanol’s Btu Contribution Relative to US Gasoline 2.9% in 2007

12. Ethanol’s Btu Contribution Relative to US Gasoline With E-10 Blends Maximum Contribution is 6.2%

13. Cellulosic Ethanol • Energy Independence and Security Act of 2007 • By 2022 • 36 billion gallons of biofuel • 21 billion gallons of ethanol to be derived from non-grain products (e.g. sugar or cellulose) • 15 billion gallons of grain (corn/sorghum) ethanol • Based on 2007 gasoline use of 142 billion gallons, 14.2 billion gallons of ethanol would have encountered the E-10 barrier

14. U.S. Energy Imports and Potential Energy from 21 Billion Gallons of Cellulosic Ethanol (EISA Mandate for 2022)

15. Potential Energy from EISA Mandate for 2022 Relative to 2007 Use

16. Perspective • 2022 goal of 36 billion gallons of ethanol would be equivalent to increasing fleet mileage by • Four miles per gallon (e.g. 25 to 29 miles per gallon)

17. Challenges to Cellulosic Ethanol • Economically viable conversion system • Profitable business model • Energy is a commodity • The least-cost source will be used first • In the absence of policy incentives (subsidies, carbon taxes, mandates) extremely difficult to compete with fossil fuels on cost

18. Optimal Biorefinery Size

19. Feedstock Transportation Cost

20. Challenges • Cost efficiency suggests • Year-round operation of the biorefinery • Year-round harvest of feedstock • Optimal size is unknown but 50+ million gallons per year is common for corn ethanol plants • Anticipate that a cellulosic biorefinery would require 2,000 dry tons per day

21. Quantity of Feedstock Required for a2,000 tons per day Biorefinery • 700,000 tons of biomass per year • 350 days of operation per year • 17 dry tons per truck • 118 trucks per day • 24 hours per day • 4.9 trucks per hour

22. Can Agricultural Resources be Reallocated to Provide Feedstock for Cellulosic Ethanol? Hypotheses • Land suitable for economically producing continuous corn and corn-soybeans in rotation is too valuable for producing perennial grass for cellulosic feedstock • “Corn lobby” will spend a great deal trying to make corn stover work as the base feedstock for cellulosic energy (ethanol business is concentrated in the corn belt) • Corn stover is not likely to be an economical feedstock (but it won’t be for lack of trying and lack of research funds) • If the subsidies/incentives are sufficiently great, stover “may work”

23. Trouble with Stubble Findings of a pilot corn stover collection project conducted near Harlan, Iowa • collection, storage, and transportation of a continuous flow of corn stover is a “…logistical nightmare…”. • In the U.S. Corn Belt, stover harvest may be complicated by • Rain • Mud • Snow • Narrow harvest window • Fire • Stalk moisture retention • Dual collection combines, substantially more expensive, slow harvest, increase the risk of grain loss Source: Schechinger, Tom. Current Corn Stover Collection Methods and the Future. October 24, 2000. Online. Available at http://www.afdc.doe.gov/pdfs/4922.pdf.

24. Trouble with Stubble "Our main concern is $4-per-bushel corn (worth $750 to $800 an acre)," Johnson (a corn producer) said. “$30/acre for biomass is a minor concern for our operation.“ Source: Bill Hord, 27 March 2007, Omaha World-Herald May require 350,000 acres of corn stover for a single biorefinery contracts? spot markets?

25. Will Perennial Grasses Work ? Hypotheses • Not on land suitable for economical production of continuous corn and/or of corn-soybeans rotation • Perhaps on marginal cropland and cropland pasture (remains to be seen if pasture can be bid from livestock and converted to perennial grasses)

26. Land ? “…The rationale for developing lignocellulosic crops for energy is that …poorer quality land can be used for these crops, thereby avoiding competition with food production on better quality land….” (McLaughlin et al. 1999, p. 293). (Source: McLaughlin, S., J. Bouton, D. Bransby, B. Conger, W. Ocumpaugh, D. Parrish, C. Taliaferro, K. Vogel, and S. Wullschleger. 1999. Developing Switchgrass as a Bioenergy Crop. J. Janick (ed.), Perspectives on new crops and new uses. ASHS Press, Alexandria, VA.)

28. DOE (Oak Ridge) Estimates of Least-Cost Production Counties for Switchgrass Acreage (1996) Graham, R. L., L. J. Allison, and D. A. Becker. “The Oak Ridge Crop County Level Database.” Environmental Sciences Division, Bioenergy Feedstock Development Program, Oak Ridge National Laboratory, December 1996.

29. DOE (Oak Ridge) Estimates of Potential Switchgrass Acreage (1998) http://bioenergy.ornl.gov/papers/bioen98/walsh.html

30. Biorefinery LocationsJanuary 2009

31. Grass Yields (dry t/acre/year) OK MS IL NE AL IL ND Switchgrass 7.1 12.5 2.5 3.2 9.9 4.5 Miscanthus 5.5 14.5 8.5 13.4 Sources: Busby. 2007. MSU MS Thesis. Khanna. 2007. Choices. Schmer et al. 2008. Proc. National Academy of Sciences . Sladden et al. 1991. Biomass and Bioenergy . Heaton et al. 2008. Global Change Biology.

32. Feedstock Acres • 21 billion gallons (2007 Energy Act) • 90 gallons per ton (DOE NREL goal) • 233 million tons • 3 - 7 dry tons per acre • 33 - 78 million acres (if all from dedicated energy crop) • In 2007 US farmers planted • 94 million acres of corn • 64 million acres of soybeans • 60 million acres of wheat • 11 million acres of cotton

33. Business Model • Is the most efficient switchgrass-biorefinery business model likely to resemble the corn-ethanol business model? • Perhaps in distillation and post-distillation • Not in feedstock procurement

34. Corn versus Perennial Grasses Corn Switchgrass Perennial Zero spot markets Zero Infrastructure Limited harvesting, transportation, and storage systems Few alternative uses for mature switchgrass No futures markets After established, not much “farming” • Annual crop • Spot markets • Infrastructure exists • Planting, harvesting, transportation, and storage systems • Many alternative uses • Risk management tools (futures markets) in existence • Farming activities

35. Policy Models • Most U.S. agricultural policy models were designed to evaluate acreage response among “program” crops (corn, sorghum, barley, oats, wheat, rice, cotton) and soybeans to alternative policies • Annuals • Single harvest • Grown on high quality cropland • Energy crops • Perennials • Proposed for “low quality” land (e.g. pasture) • Traditional policy models are not well suited to model perennial grasses on pasture land and capture the consequences of harvest timing

36. Efficient Production, Harvest, Transportation, and Storage System Hypothesis • A mature system to produce and deliver cellulosic feedstock to a biorefinery is more likely to resemble the U.S. timber industry than the U.S. corn industry

37. Example of U.S. “Cellulose” Production(Weyerhaeuser Locations) Source: http://www.weyerhaeuser.com/Sustainability/Footprint/TimberlandsOwnership

38. South relative to Corn Belt for Producing Perennial Grasses • Higher yields • Less expensive land • Longer harvest window • Longer growing season • History of large integrated “cellulosic” production and processing systems (timber)

39. Issues • Profitable business model • Efficient method to acquire the long term services of millions of acres of land (contract acres or contract production; insurance for the land owner in the event of default by biorefinery) • Sources for billions of dollars of investment capital • Policy could be implemented that discriminates against integrated systems

40. Cellulosic Ethanol • Potential market is huge • Many challenges remain

41. Acknowledgements • Oklahoma Agricultural Experiment Station • USDA/CSREES • USDA/IFAFS • Oklahoma Bioenergy Center • Sun Grant Initiative • Aventine • Coskata (licensed technology)