Good news! Ethanol Subsidy Expires

On December 31st, the Federal Government subsidy of 45 cents per gallon given to refiners who blend ethanol into gasoline expired by act of Congress. A rare bipartisan vote, which paired environmentalists (who opposed use of corn for making the alcohol due to heavy fertilizer and pesticide use) with Conservatives (who oppose most subsidies) easily passed Congress. Support for this vote became very popular when it was clear that U.S. agriculture is very healthy and the production of corn-based ethanol is reasonably economical without the subsidy, based on high crude oil prices and strong ethanol demand.  Legislators were pleased to make a small dent in our budget deficit by eliminating a payment to refiners that in 2011 amounted to 6 billion dollars.

Ethanol promotes cleaner-burning gasoline, reducing smog formation from the exhaust. While not as good a fuel as gasoline, the Federal Government set a policy of encouraging refiners to blend up to 10%of ethanol into gasoline to start reducing our nation’s dependency on petroleum imports.  A boom ensued in the construction of corn-based ethanol plants in several Midwest States, made highly profitable by the government subsidy, and the production of ethanol spiked up sharply over the next several years.

There is now a strong push to go to a second generation of ethanol plants, which will be based on “cellulosic” feedstocks, such as switchgrass, corn stalks, wood chips and other waste materials. Obvious advantages are the use of waste instead of food-oriented raw materials, and environmental benefits. One or more such plants are now under construction. Two quite different technologies may be used:

Source: EPA

This process is quite similar to the  technology employed in corn-based ethanol plants. It involves hydrolysis of cellulosics into sugars, separation from the inherent lignin, and fermentation of the sugar solution to make 95% alcohol.

The thermochemical process involves gasification of the cellulosic raw material into carbon monoxide, carbon dioxide and hydrogen, followed by conversion via fermentation into ethanol. Alternately, the so-called synthesis gas can be fed to a catalytic reactor where ethanol and other oxygenates are formed.

The relative applications and economics of these different technologies and raw materials still need to be sorted out.

This entry was posted in Chemical Industry, Energy Industry, Manufacturing and tagged , , . Bookmark the permalink.

4 Responses to Good news! Ethanol Subsidy Expires

  1. PBjacek says:

    Thanks for the concise view on ethanol.
    With current economic/political sentiment, it may be unlikely that ethanol subsidies would come back in th enear to mid term…even with low oil prices.

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