Natural Gas vs. Energy Innovation

By Kate Bechen | December 12, 2011

The production of ethanol is a complex, energy intensive process. Critics often cite the energy usage of ethanol plants and the wastes produced by the production of ethanol, especially corn-based ethanol, as lessening the benefits of ethanol production. But many ethanol plants are challenging these criticisms head on by leveraging efficiencies to reduce water use, utilizing renewable energy sources in production or recovering waste heat. Some ethanol plants are installing (or have installed) biomass boilers, gasifiers, anaerobic digesters or heat reclamation technologies; all with the purpose of reducing the amount of energy used per gallon of ethanol produced.

Ethanol production facilities consume a significant amount of energy. About 90 percent of total energy consumed in the production process is thermal. The steam is needed for the starch conversion process, distillation and evaporation. Typically, the thermal energy is produced from fossil fuels (mostly natural gas but sometimes coal). Given that fossil fuels are not renewable resources, decreasing their use contributes directly to the net energy benefit derived from using ethanol rather than fossil fuels. 

After feedstock costs, energy costs have the greatest impact on the financial viability of an ethanol production facility. In 2009-’10, the energy costs per gallon of ethanol produced were estimated between 15 to 21 cents. But since then the cost of natural gas has decreased significantly. Regardless of whether natural gas prices remain at their current low rates (in fact the U.S. Energy Information Administration expects low rates could continue for the next decade followed by a gradual increase), if the goal (or at least a goal) is to establish a domestically grown fuel without reliance on unsustainable fossil fuels, then technology innovations are needed to wean our ethanol plants off natural gas. In addition, some in the industry simply don’t believe that natural gas prices will remain low for the foreseeable future and are preparing for higher-than-expected prices. Even if natural gas prices remain low, the U.S. EPA and state environmental policymakers may establish sustainability requirements to push ethanol producers to use advanced technologies that require less natural gas. Efforts are already underway in California; and where California goes, often other states follow. Some facilities are hedging their bets by beginning the process of installing alternative energy sources, but doing so over a longer timeframe than they may otherwise have done if natural gas prices had not dropped.

Some energy efficiencies are gained by leveraging opportunities within local markets. Having a wet distillers grain purchaser in the local market significantly reduces energy needed to dry this valuable coproduct. Plants that are located close to an energy feedstock realize significant reductions in transportation costs. Poet LLC, for example, employs a solid waste fuel boiler at one biorefinery that consumes several hundred tons of waste wood chips each day, which would otherwise be headed to a landfill. The boiler also burns methane gas received via a pipeline from a local landfill. Other producers, such as Ace Ethanol LLC, have installed heat exchange equipment to reclaim waste heat.  Recently, scientists from the USDA have used a commercial enzyme developed by Genecor to extract water from distillers grains, significantly reducing the amount of energy and water needed for ethanol production. The study showed that using the enzyme by mixing it with the stillage before entering the centrifuge reduced the energy needed to dry the stillage into suitable DDGS by 14 percent. This is due to the enzyme’s ability to enhance the water extraction process. Further, the scientists estimated that use of the enzymes would reduce water use by 10 percent, electricity consumption by 2.4 percent and natural gas consumption by 12 percent. 

Ethanol facilities are businesses. While being “green” is certainly important to everyone in the industry, staying out of the “red” and in the “black” is also a fundamental concern. The low price of natural gas will likely have an impact on the implementation of technology innovations that reduce energy used in the production process. But given the numerous technology advancements and the national push for a domestic fuel supply that doesn’t rely on fossil fuels, we will continue to see the development and utilization of innovative technology designed to reduce the industry’s reliance on natural gas.

Author: Kate Bechen
Attorney, Michael Best & Friedrich LLP’s
Energy & Sustainability Industry Group
(414) 225-4956
klbechen@michaelbest.com