The Corn Latitudes

This examination of the State of Illinois's attempts to turn its cornfields into another Saudi Arabia was one installment of the five I contributed to a multi-author series on Illinois energy issues.  For the others—pieces on energy-efficient buildings, on government's role in transportation, on synfuels, and a big-picture introduction—see "Illinois Issues energy series" here.

 

I did a great deal of such work for Illinois Issues in the 1980s. Reporting like this is hard work, which was why I did less of it as I found other ways to make a living.

 

Illinois Issues introduction: Replacing imported oil is the nation's No. 1 energy priority. And few alternative fuels are more appealing than ethanol, derived from corn or other renewable sources. But there is no single replacement fuel. Ethanol, like other alternatives, can provide a modest but very significant part of our nation's liquid fuel diet. Illinois, the crucible of the nation's ethanol activity, is where the nation will learn if this resolutely American fuel is technologically, economically and politically feasible.

 

* * *

 

Illinois may be the Land of Lincoln to tourists, but to alternative energy advocates it is the Land of Ethanol. Until recently, Americans who used to put ethanol only into their cocktail glasses—ethanol is another name for the familiar grain alcohol used in beverages—have begun to put it into their gas tanks as well, in the form of the 90-10 gasoline-ethanol blend marketed as gasohol.

​

No less than half of the fuel ethanol being made in the U.S. for gasohol blending is made in Illinois. There are commercial distilleries in 18 Illinois counties, with smaller on-farm stills in another 21. Thousands of Illinois motorists regularly run their cars on gasohol—including the State of Illinois, which in September announced that it had converted its 10,000-vehicle fleet to gasohol.

​

Two years ago, however, scarcely anyone in Illinois knew what fuel ethanol was. Ethanol is merely another name for ethyl alcohol, one of a chemical family that has many members. Clear and sweet-smelling, ethanol can be made not only from grains such as corn but from beets, potatoes, corn stalks, wood chips—virtually any organic matter. In its pure form (200 proof anhydrous ethanol, which contains no water) ethanol can be blended with gasoline to make gasohol; in less pure forms (down to 160 proof, which contains 20 percent water) it can be burned by itself in specially modified engines. It is cleaner burning than gasoline, although it delivers less energy per gallon. Its most admired virtue, of course, is that it can be made from renewable resources.

​

In the U.S., ethanol is being made from corn (Brazil, the largest producer of ethanol, uses sugar cane), which is processed using technology borrowed from distillers and sold using the existing distribution and sales systems of gasoline suppliers. The ethanol bandwagon has been rolling at top speed only since 1975, when the Nebraska legislature reduced its state gasoline tax on gasohol. Early gasohol boosters there, and later in the rest of the Midwest, were  farmers.  Their enthusiasm was both patriotic and pragmatic: not only would gasohol help reduce the nation's dependence on foreign oil, but it would open a new and potentially vast market for their farm products.

​

Because of farmer advocacy, early sales of gasohol in Illinois were made almost exclusively in rural areas, and the first voice raised in the state bureaucracy on the new fuel's behalf came from an unlikely part of the choir occupied by the state Department of Agriculture's Division of Marketing and Agricultural Services. Major oil dealers did not begin selling gasohol until the summer of 1979 (Amoco was the first, in the Chicago area). Except in the work of crusading columnist Jack Mabley of the Chicago Tribune, who has written some 35 columns about gasohol and its parent ethanol since 1978, gasohol was a word seldom heard in Illinois cities. By commuters, oil companies and car manufacturers, it was dismissed as merely another rural curiosity, like the beefalo or burgoos.

​

The Archer Daniels Midland Co. (ADM) of Decatur was more attentive. One of the world's largest grain processing firms, ADM had sensed a potential market for fuel ethanol as a gasoline substitute. By May of 1978 it had added an ethanol distilling plant to its existing wet corn milling plant at Decatur. The new plant was capable of producing 15,000 gallons a day of 200 proof ethanol for gasohol blending.

​

Land of ADM

 

The opening of ADM's plant was a seminal event in the gasohol movement in Illinois and in the nation. For a time virtually every gasohol pump in the nation was being filled with ADM's "power alcohol." Indeed, it has been claimed that the example of ADM's success in producing commercial quantities of fuel ethanol at a profit was crucial to U.S. energy secretary Charles Duncan's success in 1979 in persuading President Carter of the feasibility of a fuel ethanol industry. Since then capacity has been steadily increased, and now stands at more than 150,000 gallons a day, or more than 50 million gallons a year. It might be more accurate to describe Illinois not as the Land of Ethanol, but the Land of ADM.

​

Although the motoring public and most of the auto industry remained skeptical, the U.S. Congress became seriously interested in ethanol about three years ago. Prodded by farm state constituencies and faced with the urgent political necessity of doing something about energy, many members of Congress quickly became gasohol converts. As early as 1977 Congress had authorized the U.S. Department of Agriculture (USDA) to spend up to $60 million for four demonstration ethanol plants. In 1978, Congress set up a 19-member National Alcohol Fuels Commission. And, most important, Congress included in its Energy Tax Act of 1978 a provision exempting gasohol from the 4-cents per gallon federal gasoline excise tax. Sponsored by Illinois' Charles Percy in the Senate and 20th District Rep. Paul Findley in the House, this exemption is credited by ADM spokesmen with having made gasohol competitive enough at the pump to warrant that company's initial investment in production facilities.

​

Indeed, Illinois's Percy emerged from the conservative sweep of the U.S. Senate as perhaps alcohol fuels' best friend in Congress. At his urging, the U.S. Postal Service chose Springfield as the site of one of two pilot projects (the other is in Denver) during which the Springfield post office will drive ten vehicles powered by 100 percent ethanol and another ten powered by 100 percent methanol. And although staff members say it is too early to know, speculation in Washington is that Percy is a likely choice to take over the chairmanship of the National Alcohol Fuels Commission being vacated by Indiana's Birch Bayh.

​

The executive branch made a less graceful jump onto the gasohol bandwagon. President Carter's energy speech of 1977 (the "moral equivalent of war" address) did not even mention alcohol fuels. It was not until the spring of 1979 that Carter began hinting of White House initiatives to expand ethanol use in the form of gasohol. The administration continued to regard ethanol as merely one of a variety of substitutes for imported oil, and not necessarily the most important one; in his national address in April 1979, Carter outlined his much-awaited "windfall profits" tax, but devoted only a single sentence to gasohol.

​

But in 1979, the pressure was on Carter from oil companies who resisted ethanol and gasohol as competitors to their own products. It was oil companies who advanced the argument that it takes more energy to produce ethanol than ethanol returns when burned in an engine. But Carter did change his mind, a conversion dating roughly from the departure in 1979 of James Schlesinger, a vocal gasohol skeptic, from the directorship of the Department of Energy (DOE).

Still, it was not until January of 1980 that Carter unveiled his ethanol plan for the nation. Eighteen months in the drafting, the plan set a goal of 500 million gallons of ethanol per year by the end of 1981, looking toward an annual production by the mid-1980's of some two billion gallons, which is six times the January 1980 output. Two billion gallons is enough to replace two percent of the current annual demand for gasoline nationwide.

​

To do this, Carter proposed a multifaceted package of loan, tax, and pricing measures. He proposed the permanent exemption of gasohol from the federal gasoline excise tax. (Originally due to expire in 1981, Congress had already extended the exemption to 1984; Congress ultimately agreed to extend it again, until 1992.) Carter wanted a 40-cents per gallon production tax credit for alcohol made for direct consumption, mainly on farms; congressional compromises led eventually to a credit for gasohol blenders, but the net effect of the credit was substantially as Carter wished. Carter also proposed a $3 billion, 10-year loan and loan guarantee program to be administered by DOE and USDA for the construction of ethanol plants; this part of the package later wound up in more modest form as Title II of the Energy Security Act.

​

In addition to ratifying most of Carter's initiatives, Congress added several of its own. The result was that by midyear in 1980 farmers, cooperatives, and commercial ethanol manufacturers could choose from a smorgasbord of federal assistance. Eight major agencies in five cabinet departments now have some ethanol programs. The fiscal 1980 budget for the Federal Non-nuclear Energy Research and Development Act of 1974, administered by DOE, alone provided for more than $3 billion in loans and guarantees for feasibility studies and construction. The U.S. Department of Agriculture (USDA) and its Farmers Home Administration (FmHA), the Economic Development Administration of the Department of Commerce and the Small Business Administration all had something to offer ethanolics. Even the Internal Revenue Service got into the act. At Congress's request, the IRS began offering a 10 percent "energy investment" tax credit in addition to the existing 10 percent investment tax credit on the purchase of equipment to make or use alcohol fuels.

​

Hodgepodge of programs

 

There have been complaints that  the rush to make the world safe for ethanolics led to a hodgepodge of programs rather than a policy. Calmer observers complained that details were often lacking, that agency functions overlapped. and that the allocation of resources to small, farm-size units made more political sense than production sense. As Richard Lyons of the New York Times noted when Carter unveiled his gasohol plan, "The Administration can punish the Soviet Union by withholding grain while keeping domestic grain prices high, thus placating the Farm Belt in an election year."

​

There was more to come, courtesy of the oil companies. Congress and Carter collaborated on the biggest alcohol fuels development program to date, the Energy Security Act of 1980, the so-called synfuels bill. Title II of that act set an annual goal of 900 million gallons by 1982. To accomplish this goal it allocates $1.45 billion over two years for the development of fuel alcohol from corn, garbage and other biomass sources.

 

DOE and USDA, which have never quite agreed whether agriculturally derived alcohol is a farm-based energy program or an energy-related farm program, each got a piece of this new federal pie: DOE has $850 million to fund projects which will produce more than 15 million gallons (including plants using municipal garbage as feedstock). USDA has $600 million to finance projects producing less than 15 million gallons annually (mostly from farm and forest feedstocks). The act also set up a new Office of Alcohol Fuels in DOE—a symbolically significant step—and extended the federal excise tax exemption for alcohol-blend motor fuels until 1992. Even so, the feds' bet on alcohol is modest compared to the $80 billion authorized for the development of synfuels from coal, tar sands and oil shale.

​

Illinois ethanolics, however, have claimed that the federal alcohols effort has been crippled by bureaucratic bumbling and partisan politics. So numerous were the complaints that Sen. Percy convened the subcommittee on investigations of the Senate's Committee on Governmental Affairs at the Illinois State Fair last August to learn more. Illinois agriculture director John Block testified that federal delays had so slowed domestic production that suppliers were importing needed ethanol from Brazil. Of the millions in loan funds available from FmHA, only one loan had been made in Illinois for ethanol production, and it was a routine farm operating loan, not one of the newly authorized alcohol loans. Concluded Block, "Just think how far Illinois could go if we really had help from government agencies."

​

Of the $56 million DOE awarded for alcohol projects under the 1974 synfuels development act, only $25,000 will be spent in Illinois (by the Rochelle Energy Development Co. for an ethanol plant in Ogle County). Of $25 million available for cooperative construction projects under the same program, none had been spent in Illinois; nor had the USDA yet awarded any of its money to state projects. The Illinois Institute of Natural Resources (IINR) is paying for its own modest alcohol fuels program with $23,000 it got from DOE's Energy Extension Service bank account, but by late summer that was practically the extent of federal investment in the Land of Ethanol. Al Mavis, the Rochester farmer who is the president of the not-for-profit National Gasohol Commission, testified at the Percy hearing that the government's help was like a mechanical rabbit at a dog race. "It's out there to be seen, but it's always out of the reach of those trying to get their hands on it," said Mavis, the "Ambassador of Gasohol" who left the Illinois agriculture department to help run his own ethanol equipment company.

Since August the federal spigot has been opened up, and more and more money has been dripping out of it. The FmHA released a $20 million loan guarantee for a plant to be built in DeKalb County by Ethanol Motor Fuel Associates of Waterman, and DOE announced grants worth a total of $186,100 to six small-scale projects around the state. These announcements were all made within the final four weeks before the crucial fall elections— timing which few observers considered to be coincidental.

​

Politics of the brew

 

The feds, then, have become more generous. But the fact remains that the federal effort so far has been characterized, on the one hand, by the excessive haste of politicians eager to demonstrate their commitment to renewable energies, and, on the other, by the excessive caution of agencies which must administer programs which are ill-conceived or duplicative. In the rush for federal dollars some dubious schemes are certain to be advanced, and as one DOE consultant recently told a reporter, "We don't want too many Golden Fleece Awards just by handing out money right and left." The alcohol fuels effort at all levels of government is only now being set up, which is in part responsible for delays in processing of applications and issuing of guidelines. The very nature of bureaucracy is a further obstacle: one DOE application required 17 copies, each in a different color.

​

But politics also is an ingredient of the ethanol brew. During the Carter administration, for example, Illinois was "the most toothless state in Washington when it comes to [ethanol] funding," according to one unhappy Illinois Farm Bureau staff member. Sen. Percy and Rep. Findley have been eloquent ethanol boosters, but their eloquence could not talk away the fact that they were Republicans in a Democratic administration. And the state's ranking Democrat, retiring Senator Adlai Stevenson III, has long been a gasohol unbeliever, dismissing it (with uncharacteristic hyperbole) as "the most inefficient and expensive means of energy production ever contrived."

​

Partisan affiliations apparently have an effect on policy. In October the Chicago Sun-Times reported that the FmHA had unexpectedly dispensed $341.6 million in loan guarantees for 15 alcohol projects, most in key electoral states, less than a month before the elections. (The list included the $20 million guarantee to the Ethanol Motor Fuel Associates.) Whether the 1980 elections will put teeth back into Illinois's congressional delegation remains to be seen. It seems likely. Not only are Republican ethanolics like Percy likely to get a more sympathetic hearing from a Reagan administration, but Stevenson's successor, Alan Dixon, is a gasohol booster.

​

Efforts by the state

 

While Illinois farmers and business-people chafed at federal delays, the State of Illinois has been taking steps, albeit halting ones so far, to catch up with its sudden reputation as the Land of Ethanol. The state has converted its own auto and truck fleet to gasohol—a decision announced by Gov. James R. Thompson in the fall of 1979 at an "Alcohol Fuels Day" in Springfield described by one observer as an "orgy of promotion." More recently, three ethanol projects worth a total of $294,000 were funded out of the fiscal 1980 appropriations from the Illinois Coal and Energy Development Bond Act. The state, acting through the IINR, has also funded two other alcohol research projects—a statewide biomass inventory and a pilot ethanol plant using corn stover as a feedstock.

The IINR in fact was named in May as the state's lead agency for alcohol fuels, but bureaucratic responsibility for such fuels remains as diffuse in Springfield as it is in Washington. It was to give more coherence to the state's efforts that the General Assembly approved a resolution directing the governor to set up an eight-member Interagency Alcohol Fuels Committee which meets monthly to (as one spokesman put it) "develop an appropriate role for the state" in the field.

​

But the state's programs have been more successful at producing headlines than in producing ethanol. As of late 1980 Illinois's official alcohol fuels program, for example, still consisted of a single person on the IINR's payroll whose job consists mainly of providing information and technical assistance to mostly small-scale producers. Illinois, unlike neighboring states like Iowa which have exempted gasohol and/or ethanol from their state motor fuel taxes, has not committed its taxpayers to similar subsidies of ethanol producers.

​

The explanation again is politics. The state is committed to the exploitation of its huge coal fields through construction of plants to synthesize gas and refineable liquids from coal, a commitment that goes back to the Ogilvie and Walker administrations. Coal synfuels are in many ways less desirable fuels than ethanol. As ecologist (and lately Citizens Party presidential candidate) Barry Commoner notes in his book, The Politics of Energy, "Producing synthetic fuels from coal would graft onto the Illinois economy a huge new but financially risky industry that would last only 25 years before the coal ran out. The alternative—producing ethanol from crops—would integrate the production of this fuel into the state's existing, well-established system of agriculture." Commoner, however, carries less weight in Springfield than the coal lobby.

​

It is also true that while farm groups and businesses like ADM are able to set their respective alcohol policies according to the single end—to sell more product—government must set its alcohol policy to meet a confusing profusion of ends. More than a dozen fuel alcohol bills emerged from the General Assembly last spring but only two minor ones were signed into law. Gov. Thompson vetoed two sales tax exemption bills because the lost revenue would leave a pothole in the state's road fund. One, S.B. 1810, would have exempted alcohol equipment. The legislature overrode his veto of the other bill, S.B. 1518, which temporarily exempts gasohol from the four-cents-per-gallon state sales tax. The tax will be phased back in, however, at the rate of a penny a year, beginning July 1, 1982, so that the entire tax will be in effect again by July 1, 1985. The exemption cost the state an estimated $4.5 to $4.8 million in fiscal 1981.

 

Economics of ethanol

 

The government may propose, but in the end, it will be the marketplace that disposes. Economists have been arguing since the mid-1970s about how many ethanol plants would fit on the head of a pin. Calculating the probable effects of a sizable ethanol industry on grain prices, tax revenues, oil imports, and pump prices at either the state or federal level is rather like calculating the cost of a cross-country jet airline ticket a few months after Kitty Hawk.

​

One of the few things that is certain about the economics of ethanol is that production for the next few years will be limited by distillation capacity and raw materials rather than consumer demand. It would take 2,000 plants the size of ADM's Decatur plant to make enough ethanol to replace all the gasoline now burned by Americans every year, plants which would cost up to $20 million each to build. And if every kernel of Illinois's record 1979 corn crop were converted into ethanol, it would make 3.4 billion gallons of ethanol, enough to slake only 3.4 percent of the nation's annual 100 billion gallon thirst for gasoline. That fact alone will keep ethanol production—as long as it is based on grain—far below demand. New processing breakthroughs and the use of other raw materials may change that picture in the future. But right now, ethanol, like synfuels and other substitutes for imported oil, cannot provide the much desired single quick-fix substitute for cheap liquid fuel to run our cars and trucks.

​

What ethanol can provide is a modest but significant part of the nation's liquid fuel diet. That, at any rate, is the apparent conclusion of the private sector. In addition to boosting capacity at its Decatur plant tenfold since 1978, ADM bought and converted the Hiram Walker distillery in Peoria and added an ethanol plant to its Cedar Rapids, Iowa, wet corn milling plant. The new plants will bring ADM's total production capacity to 250 million gallons a year. CPC North America, makers of Mazola Oil and the nation's largest corn processor, has joined Texaco in converting CPC's Pekin corn processing plant into a 60-million-gallon a year ethanol factory, and Midwest Solvents has bought the closed American Distilling plant in Pekin and plans to have it running as a 18-million-gallon a year ethanol maker by next summer. In addition to these giants, there are a half-dozen other major ethanol plants going up in Illinois. Being built by private entrepreneurs in Milledgeville, DeKalb, Christian County, and East St. Louis, these plants will have annual capacities ranging from five to 12 million gallons, and will add another 23 million total gallons to the state's total capacity.

​

All the ethanol from these new plants will find its way into gas tanks as gasohol. Because Illinois does not exempt gasohol from its motor fuel tax, its price remains several cents higher than the price of unleaded gasoline. Further, the number of sales outlets remains relatively small, especially in urban areas. Companies such as Texaco which promote gasohol report that it sells well; Texaco has 300 stations selling it in Illinois, where it accounts for 15 to 18 percent of Texaco's retail sales in Illinois. However, most major oil companies (most of which have extensive holdings of coal from which they hope to extract synthetic gasoline or methanol, ethanol's more volatile cousin) have been reluctant to handle gasohol. Comprehensive data for gasohol sales in Illinois is not available, but the IINR estimates that gasohol accounts for only about five percent of all gasoline being bought in the state.

​

Critics complain that even with corn prices at low levels, government subsidies were required to make gasohol competitive; the four-cents per gallon federal excise tax exemption on 10 per-cent-ethanol gasohol is the equivalent of a 40-cents per gallon subsidy of ethanol. State tax exemptions such as Iowa's may add the equivalent of another 80 cents, or a total of $1.20 per gallon. An exhaustive USDA analysis shows that corn price is the biggest single determinant of ethanol production costs. Consequently the price of ethanol fluctuates with the price of corn which has been going up in the fall of 1980 due to a thin harvest.

​

The most cost-effective way to make 200-proof ethanol is in a large plant (up to 20 million gallons) which is part of a corn processing operation. Large plants can process and market all byproducts, from carbon dioxide to leftover mash. Barring a breakthrough in production technology, the economics of smaller plants producing 200 proof ethanol for gasohol blending are much less certain. Nick Hall, manager of the IINR alcohol fuels program, reports that in recent months, there are "more people getting out than are going in" projects for plants producing less than five million gallons a year—a factor which Hall suspects may explain some of the feds' reluctance to fund them.

​

Debate over corn

​

The impact of using corn for fuel instead of food has been a subject of continuing dispute among economists and ethanolics. Details differ, but analyses tend to reflect the general conclusions of a recent report of the Congressional Research Service (CRS). Though warning that its estimates were only tentative, the CRS estimated that a rate of growth high enough to push the state's ethanol production to 1.25 billion gallons a year by 1985 (roughly 20 times the 1979 output) would help double corn prices (to $5 a bushel) and double farmland prices (from $1,988 per acre to nearly $4,000). (All cost estimates presume an annual inflation rate of 9.7 percent.) CRS estimates that annual farm income in Illinois would jump (up by 166 percent) as would corn production (up 84 percent) as farmers began farming now-marginal land or switched from the cultivation of less profitable crops to corn. A benefit would be the creation of between 7,000 to 13,000 new jobs, most of them off the farm. But the rise in corn prices would help push gasohol prices to $2.42 a gallon even if the price of the gasoline component of the blend remained at 1980 levels.

​

A big ethanol industry clearly would be good for farmers, but Illinois ethanolics argue that an ethanol industry would be good for everyone. This is partly because the ethanol would displace imported oil and partly because—and this is an argument so far seldom heard outside farm circles—using grain for ethanol is a more efficient use of that commodity. Illinois ag director John Block has noted that 30 percent of Illinois's 1979 corn crop alone would produce nearly twice the 500 million gallons of ethanol set as a target by President Carter for 1981—900 million gallons to be exact, worth $1.6 billion. That corn also would produce by-products worth another $600,000: 576 million pounds of oil and protein leftovers. Adding the value of the 900 million gallons, or about 21 million barrels, of imported oil which this ethanol would displace, Block concluded that this corn would be worth $2.8 billion, or $1.7 billion more than if it were simply sold at prevailing prices as animal feed.

​

The broader economic effects are less clear. What about the effect of diversions of huge amounts of grain on export markets and domestic food prices? Ethanolics reply that U.S. farmers will no longer require massive exports to sustain prices if they can sell their grain at home. And while it is true that farm exports help balance the nation's yawning trade deficit, this deficit is caused in large part by imported oil, which would be reduced by the conversion of domestic grain into ethanol. Folke Dovring, a professor of agricultural economics at the University of Illinois, has calculated that in today's market (with oil selling at $28 a barrel and corn at $2.50–$2.75 a bushel) a bushel of corn sold for export "buys" less energy than it yields when it is converted into fuel ethanol.

​

Competition for feedstocks between food and fuel might drive up corn prices (although the feed value of corn used for ethanol production is not wholly lost), but since farm prices account for such a small fraction of supermarket prices, any increase in consumer prices is likely to be modest. A study by the respected agricultural consulting firm of Schnittker Associates, commissioned by the National Alcohol Fuels Commission, concluded in September that domestic ethanol production from corn could be increased as much as 30 times present levels (up to four billion gallons a year by 1990) and still push up food prices only about 6.5 percent over the decade.

​

Boosts in corn prices probably would encourage farmers to grow less soybeans, Illinois's other staple crop. U of I economist R. B. Schwart has predicted a bean-to-corn switch of some 25 million acres nationwide, or 35 percent. Ordinarily such a reduction in supply should boost prices of the remaining bean crop. But the massive production of ethanol would create equally massive quantities of cheap distillers' dried grains, which would capture much of soybeans' market as a protein feed supplement. Illinois farmers have survived such shifts in planting patterns before, and indeed have thrived on them. It should be recalled that for each acre of soybeans planted in Illinois 50 years ago, there are 43 acres planted today.

​

Strain on corn

 

A tougher question is whether farmers could keep up with the demand for corn. A couple of years ago, a General Motors executive implausibly warned that a switch to gasohol would require that three-fourths of the land of all the U.S. be planted in corn. So it might, if gasohol were to replace all U.S. gasoline and if all that gasohol were to be made from corn, neither of which is being advocated by responsible ethanolics. Still, the strain on corn supplies of even a modest gasohol boom would be substantial. Assuming that corn remains the principal ethanol feedstock and that the U.S. meets the goal of four billion gallons of ethanol per year by 1990 set by the National Alcohol Fuels Commission, economist Dovring calculates that corn plantings would have to be increased 36 percent. Extrapolating, that means that Illinois farmers would have to plant nearly four million new corn acres.

​

Before coming to conclusions about any of the effects—good and bad—of an ethanol revolution, it should be recalled that ethanol still is what the IINR has officially dubbed an "emerging technology." Most bets on ethanol should be considered provisional. Only the most rabid ethanolic suggests that ethanol might soon supply all U.S. motor fuel needs. Most ethanol backers stress instead that corn ethanol is merely a transitional fuel until more efficient processes using non-grain feedstocks are perfected. They also assert that the food v. fuel objection is based largely on a misunderstanding of science, and that, in any event, it is no more immoral to use corn to run a car than it is to use it to fatten Western Europeans on beefsteak. An ethanol industry actually would make it easier to export American protein, by leaving its starch at home. The potential for instability in global export markets is no greater than the instability caused by the massive exports of dollars for oil. Finally, if an alternative to petroleum fuels must be found, the environmental and economic costs of ethanol are far less expensive than those of coal synfuels and oil shale.

​

Whether or not ethanol transforms the global food economy or America's energy habits or even the Illinois farm economy, it already has transformed the way people think about agriculture.

​

People now realize that farming produces more than food. It produces energy, of which food is only the most familiar form. Illinois agriculture is a vast solar energy collection system, and beef cattle, corn sweeteners and ethanol are all merely ways to convert that energy into usable forms. How efficiently it can be converted is one of several questions that will await further technological developments. All that can be said with certainty is that Illinois is likely to be the place where such questions will find answers. ●

Sidebar: Balancing Btu 9s: Depends Who's Counting

 

In one sense, ethanol makes sense only if it provides a substitute for foreign oil and gas. Some of the bitterest skirmishes of the ethanol revolution are being fought on the question of whether ethanol production uses more energy (in the form of fuel oil, diesel fuel, fertilizers, and farm chemicals) than it returns as fuel.

​

Both sides have their partisans, with ethanol producers like Archer Daniels Midland Co. (ADM), the Decatur-based grain processor which is the nation's biggest producer of agriculturally derived ethanol, aligned on one side, and oil companies aligned on the other. The federal government is poised uncomfortably in between. One reason they can't agree on the net energy balance of ethanol is because each is talking in a slightly different mathematical dialect. Calculating the energy balance of ethanol from production to ultimate use is vastly complex, and it should be no surprise that each side tends to use formulas which lend support to its case.

​

For example, in addition to the energy needed to cultivate, harvest, dry, and ship grain feedstock (whose total varies according to the crop and the quality of soil), energy balance varies according to whether one takes credit for the energy value (measured in Btus) of byproducts. It also varies according to how that value is calculated; feed grain values are typically expressed in Btus, but some energy economists argue that the Btus needed to produce those by-products by other means is a fairer measure. The result is much higher byproduct values, which push ethanol well into the black, energywise.

​

Whether the drying of stillage is considered a part of the ethanol production process and how stringently the ethanol is refined is another complicating factor. Though the raw energy content of a gallon of ethanol is commonly accepted to be about 76,000 Btus (compared to 117,000 for gasoline), the effective energy may be greater because of increased mileage with gasohol (a disputed point) or improved engine efficiency. If the gasoline with which gasohol is mixed is refined to a lower octane (because of the octane-boosting effect of ethanol), as much as 0.36 gallons of gasoline can be saved at the refinery for every gallon of ethanol used, according to one calculation. And by-products earn producers an energy credit as well as a financial one: by lowering the amount of grain that must be grown for animal feed, feed byproducts reduce the net farm energy required to grow ethanol feedstocks.

​

Perhaps the single most critical factor is the energy used to transform feedstock into ethanol. According to a widely quoted 1979 study by the congressional Office of Technology Assessment (OTA), a distillery making nothing but ethanol (unlike ADM's Decatur plant, which makes ethanol as part of a larger corn processing operation) might consume the equivalent in fuel oil or natural gas of as much as 0.6 gallons of gasoline for every gallon of ethanol produced, just to run the plant. "To maximize the displacement potential of ethanol it is therefore essential that distilleries use abundant or renewable domestic energy sources such as coal, biomass, and/or solar heat," according to the report.

​

These points are of more than academic interest. Many federal projects insist that alternative fuels like ethanol be energy-efficient to qualify for funding. Under the U.S. Department of Energy's (DOE) crude oil entitlements program, refiners buying expensive foreign oil are entitled to cash payments from refiners buying cheaper, controlled domestic crude. The program is intended to equalize crude costs to refiners regardless of their source of supply. In 1979 DOE ruled that ADM also was entitled to such payments because ADM's ethanol was a petroleum substitute. At stake are payments amounting to five and a half cents per gallon, which would earn ADM nearly $3 million a year at current production levels.

​

The Amoco Oil Co., however, disputed the ruling, insisting that ADM's ethanol was not energy-efficient. (Amoco has since filed suit against DOE seeking a reversal.) Amoco said that its figures showed that it takes 2.2 times more energy to make ethanol than it returns, and that ADM achieved its energy balance only by inflating the energy value of by-products and of the ethanol itself. ADM has replied that DOE itself has certified its Decatur plant as energy-efficient—although, significantly, DOE figures show an energy gain that is much more modest than that claimed by ADM. A new study by TRW, the high-technology and research conglomerate and released in October, stated that ethanol can displace more than six times the crude oil equivalent in energy needed to make it, a conclusion which supports ADM's assertions.

​

The brouhaha over ethanol's energy accounting obscures a broader point. The marketplace assigns values to fuels not just according to their efficiency but by their efficacy. As Al Mavis, president of the National Gasohol Commission, has noted, "How many farmers can go to the field tomorrow with a tractor and a coal bucket?" The electric utility industry, for example, is an energy wastrel, delivering less than ten percent of the potential energy in coal to consumers as work. The rest is lost through waste heat at generating plants, transmission losses, and the mechanical inefficiency of electrical appliances. Even gasoline requires energy to refine. Ethanol is merely a way to convert available energy from one form—solar biomass—into the more convenient and usable form of liquid motor fuel. A more familiar transformation occurs when an electric generating plant converts coal into light.

​

The critical issue is not whether ethanol takes more energy to produce than it returns, but what kind of energy it consumes. As the CTA concluded last year, "If distilleries are fueled with coal and solar energy (including biomass) . . . the energy balance is far more attractive." ●

Sidebar: Waste Not a Cob or Therm

 

If necessity is the mother of invention, its father is profit. Innovations in ethanol technology have been outrunning policy-making and continue to gather momentum. To make ethanol from corn, ground corn is cooked at about 300 degrees Fahrenheit (to solubilize starches) then broken down by enzymes into simpler sugars. (Corn is roughly one-third starch by weight.) Next comes fermentation, as the sugars in the mash are converted by yeasts into dilute (roughly 10 percent) ethanol. Distillation is next, during which the ethanol is progressively concentrated by evaporation into a solution of 95 percent ethanol and 5 percent water, and impurities are removed. Finally, in plants making 200 proof ethanol for gasohol blending, the ethanol is dehydrated, leaving waterless, or anhydrous, ethanol.

​

It is commonly thought that this conversion of corn into ethanol destroys the corn. But fermentation consumes only the starch in corn, leaving behind in the stillage the original oils and proteins and some of the fiber. These can be processed as distillers' dried grains (DDG). Scraping the bottom of the barrel in this way accounts for much of the economic and energy accounting in ethanol production, which is why the most efficient plants, such as those of leading ethanol producer Archer Daniels Midland (ADM) of Decatur, are run in conjunction with wet corn milling plants. ADM calculates that every 56-pound bushel of corn that passes through its Decatur plant yields 1.7 pounds of corn oil (enough for more than two pounds of margarine), three pounds of corn gluten meal (60 percent protein, used by poultry feeders as a feed supplement), 14.5 pounds of corn gluten feed (21 percent protein, enough to feed three frying chickens), 15 pounds of carbon dioxide, and at least 2.5 gallons of 200 proof ethanol.

​

Research is underway to improve virtually every stage of this miraculous transformation, all with the aim of improving the energy budget and thus the cost-efficiency of ethanol production. Many energy gains have come from fairly straightforward mechanical adjustments; one is the switch to a continuous fermentation process that ADM made at its Decatur plant.

​

The final dehydration stage consumes a great deal of energy. Ethanol dissolves in gasoline but water does not, and using ethanol containing as little as five percent water in gasohol can lead to so-called phase separation, as the parts of the blend separate into layers, especially as temperatures decline. Research at Purdue University suggests that filtering "wet" ethanol through ordinary corn meal might, through selective adsorption, capture the unwanted water. Other drying agents being tested include gasoline, fiber bundles, zeolite crystals, and chemical membranes that act as molecular sieves. Some researchers are looking for a chemical additive which will prevent phase separation and make it possible to mix even 160 proof ethanol with gasoline.

​

Energy inputs may also be reduced by using vacuum fermentation (which, because it allows ethanol to evaporate from fermentation vats as it is formed, reduces subsequent distilling steps) or thermophilic yeasts (which, because they thrive in warmer temperatures, reduce the cooling requirements of the fermentation process).

​

But for ethanol to become a genuine substitute for imported oil and not merely another consumer of it, ethanol plants will have to be run on solar power, coal, geothermal energy, or plant matter (either burned directly or converted into methane). Two of the three projects funded out of Illinois's 1980 alternative energy bond funds are testing the feasibility of such renewable energy sources. ADM and the University of Illinois at Chicago Circle got $180,000 for a joint test of solar-powered boilers, while Southern Illinois University at Edwardsville was awarded $360,000 to test a system to convert livestock waste into boiler gas.

​

The search for richer feedstocks is being pursued with equal imagination. Corn is the most available feedstock but not necessarily the best one. An acre of Illinois corn in 1979 (average yield a record 128 bushels an acre) would have returned some 320 gallons of ethanol. But other crops can do better. In 1979, three Illinois farmers each planted three-acre test plots of sweet sorghum, a corn-like plant grown in the South for molasses, as part of a three-state test funded in part by the U.S. Department of Energy. Yields averaged 41.3 tons per acre, which is enough to make 482 gallons of ethanol, and is roughly half again as much ethanol as would have been produced per acre of corn, even in the bumper year of 1979.

​

Even more exotic plants may find their ways into gas tanks in the 1990s. Many plants have high concentrations of fermentable carbohydrates, but those riches are locked up in the form of cellulose. Breaking down tough cellulose fibers would make it possible to use wood (including sawdust and newsprint), weeds (like giant ragweed), and even corn plant residues (such as cobs, broken kernels, and shucks which could yield 20 gallons per acre). Enzymes, bacteria, and acids are all being tested to find the key.

​

The search for energy efficiency is leading industry down some novel paths. ADM—again the innovator—is considering adding a hydroponics greenhouse to its Decatur facility. Warmed by waste heat from the plant and grown in soil-less plots, greenhouse crops of lettuce, tomatoes, and cucumbers could be grown using a new Japanese technique in which carbon dioxide is sprayed directly onto plant leaves to stimulate growth. The carbon dioxide would be captured from fermentation vats at a rate of 15 pounds per bushel of corn.

​

In addition to new ways to make ethanol, tinkerers are finding new ways to use it. Agricultural engineers at the U of I have successfully converted diesel-powered farm tractors to burn ethanol. In July, the Farmers' Service Feed Research Center installed a small still near Lexington in McLean County to produce 180 proof ethanol to supply experiments in "aquahol," an ethanol-water mixture which is injected into diesel turbochargers to boost power. Another U of I professor is testing "diesohol" (90 percent diesel fuel, 10 percent ethanol) in standard farm equipment. And in what may be the final ratification of the fuel ethanol, entrepreneurs such as M & W Gear Co. of Gibson City have begun marketing do-it-yourself conversion kits for both diesel and gasoline engines.

​

The most exotic of the new ethanol applications may be "ethacoal." It is ethanol in which pulverized coal has been mixed in suspension in roughly a 1:2 ratio. Ethacoal may be burned by itself (reportedly reducing the sulfur emissions which would ordinarily come from the coal if it were burned alone). It may be used as a transport medium to ship coal via pipelines, after which the component fuels can be separated and used. In September, the Southern Illinois University Board of Trustees approved funding for a $123,000 pilot plant to continue tests on ethacoal begun at SIU's Coal Research Center in early 1980.

​

Ethanol also may prove to be an economical substitute for petroleum in the production of butadiene, the principal component of tire rubber; the Goodyear Tire & Rubber Co. is exploring the use of ethanol to save some of the approximately five gallons of petroleum it now takes to make one tire. In addition to butadiene, there are dozens of chemical feedstocks now extracted from petroleum which also can be extracted from ethanol.

​

The future would seem to promise some new sights and smells for the Illinois countryside, what with ADM's carbon dioxide tomato factories and acres of sweet sorghum waving in the breeze being cultivated by tractors spewing sweet-smelling exhaust. Strange? No stranger, ethanolics insist, than today's technology would have looked 20 years ago.

The possible environmental impacts of greatly expanded ethanol production and use have received relatively little attention. Generally speaking, they are considered significant but controllable. A sizable distillery uses as much energy as a small power plant, for example, and if that distillery is run on coal or plant residues, its boilers will emit particulates which may have to be captured and disposed of as in any other industrial facility. The waste water from corn-based plants can be processed to recover either distillers' dried grains (DDG) or fuel feedstock. But plants using other feedstocks such as cannery wastes may have to clean their waste water.

​

Studies of car emission have shown they vary depending on the models and engine adjustments used. Generally, in unadjusted engines burning gasohol, there is an increase in evaporative emissions and emissions of aldehydes and nitrous oxides while there is a drop in carbon monoxide and exhaust hydrocarbons. The net effect, however, is considered neither particularly beneficial nor particularly harmful. And unlike fossil fuels, ethanol combustion does not add carbon dioxide (CO2) to the atmosphere (contributing to the so-called "greenhouse effect") because the CO2 returned by burning is the same originally taken up by the living plant from which the ethanol was made, thus achieving a balanced CO2 exchange.

​

The most troublesome environmental impacts will be on the land. A major ethanol industry will encourage expansion of cultivation into marginal and forested lands. Such cultivation (especially of such annual row crops as corn) will almost certainly increase soil erosion (and consequent sedimentation) and pollution of water supplies by farm chemicals, even with strict conservation farming techniques. ●

Sidebar: On the Farm: The Proof Is in the Still

Commuters aren't the only people who worry about the cost and availability of liquid fuels. About three percent of the gasoline and diesel fuel burned in the U.S. each year is burned on farms. In Illinois the figure is estimated to be higher—four percent. But it is a crucial four percent.

​

Farmers used to grow their own fuel, of course, in the form of the oats and hay which were fed to draft animals. Today a farmer can feed corn and other grains and crop residues to his tractors and trucks in the form of ethanol. On-farm stills are small, ranging from tiny "pot" stills yielding less than 5,000 gallons a year to units yielding up to 500,000 gallons. Some are homemade, direct descendants of moonshiners' stills, while others are being sold as kits by new firms such as Springfield's Agri-Stills of America. On-farm stills typically make ethanol in concentrations from 160 to 190 proof; omitting the final dehydration step means savings in energy and plant costs, but it also means that the result can't be blended with gasoline but must be burned "neat" in appropriately modified engines. Process heat is provided by diesel fuel, fuel oil or, ideally, crop residues. Stillage is not necessarily dried into distillers' dried grains (DDG); instead it can be fed wet to the farmer's own livestock. Dr. William Scheller of the University of Nebraska (the man who coined the term "gasohol") notes that the average farmer could make 6,000 gallons of 190 proof ethanol, which is enough for his needs, by running a still part-time over the slack winter months using only about five percent of his corn crop.

The on-farm ethanol movement, however, has some elements of a fad. Many farmers embraced it with more enthusiasm than expertise. In 1979 the Bureau of Alcohol, Tobacco and Firearms (BATF) received some 6,000 requests for still licenses nationwide, and with the urging of the farm bloc Congress authorized nearly $2 billion in recent years in assorted loans and loan guarantees for construction of small- and medium-sized on-farm stills.

​

Red tape has been a problem. BATF was slow in shifting from the official discouragement of small alcohol plants to their encouragement, but recently devised a simplified permit for farmers who wish to make ethanol for their own consumption.

Even though farmers are expected to produce no more than one percent of the nation's ethanol in the 1980s, they are to receive a substantially bigger share of federal ethanol funds; of the $600 million allocated to the U.S. Department of Agriculture (USDA) for alcohol fuels under the Energy Security Act, one-third is to be spent on plants producing less than a million gallons a year.

​

But fads fade. On-farm ethanol is not cheap to make. Although cost estimates vary widely, all tend to agree that it is impossible to make ethanol cheaply enough in small plants to compete with gasoline or even diesel fuel. The USDA estimated that costs per gallon in 1979 range from $1.13 for a larger unit to $1.63 a gallon for a smaller one; the American Farm Bureau Federation has concluded that a 17,500-gallon a year unit could produce 160 proof at $1.32 a gallon—but it notes that price would be as much as 50 cents higher were it not for the sale of feed by-products. For farmers, however, cost is less a factor than assured supply.

​

There are other problems. Stillage causes handling and storage problems; it spoils quickly if left wet. Every bushel of corn fermented per day will produce enough stillage to feed up to three beef cattle, but  many farmers no longer keep enough livestock to consume all that stillage. Nor is stillage wholly suitable feed for some animals; because of its high water content, some animals suffer from excessive urination or bloating.

It is also a fact that ethanol cannot now replace all farm energy needs. It can be burned directly as a gasoline substitute, but roughly 60 percent of the farm equipment in Illinois is diesel-powered. Although ethanol can be used as a fuel supplement in such engines, it can replace only about 35 percent of diesel fuel.

​

Finally, the technology is trickier than many farmers supposed. A half-dozen Illinois community colleges have conducted workshops in alcohol fuels production as part of a 36-state program paid for by the U.S. Department of Energy, and private consulting firms have sprung up to offer further assistance. But much of the advice available to the novice is inaccurate, out of date, or irrelevant. To supply this vital ingredient in the on-farm ethanol recipe, the Illinois Energy Resources Commission is considering recommending a state alcohol fuels technology center. Predictably, some of the claims being made by still manufacturers have not been borne out in the field. Yields per bushel tend to be significantly lower unless stills are run under ideal conditions of the sort that are rarely present on a farm. Warns the Illinois Farm Bureau, "The fast-talking salesman who tried to peddle defective lightning rods to Illinois farmers in the 1890s has a grandson who's trying to unload questionable stills."

​

Because of these problems, Nick Hall of the Illinois Institute of Natural Resources' alcohol fuels program thinks that interest in smaller on-farm stills in Illinois has begun to peak out. Farmers' needs may be better met by larger, cooperatively owned stills. With capacities up to five million gallons a year, such stills could be run in conjunction with local grain elevators. Local farmers could trade grain for wet ethanol for their own fuel needs or for wet or dried stillage for their livestock. Whatever plant output couldn't be sold or traded to farmers could be resold to other distillers for further refining into 200 proof ethanol. In the future, technical improvements may make it economically possible for co-op stills to make their own 200 proof for gasohol blending. At this time, the economics of larger scale plants are still more attractive. ●

​

​