“Did you see the movie Greedy Lying Bastards?” Ken Field, the jovial founder and chair of Canadian ethanol producer GreenField Specialty Alcohols, asks me the question during our four-hour train ride from Toronto to Chatham, Ontario. We’re on our way to GreenField’s Chatham plant, which turns 19 million bushels of corn annually into ethanol fuel. Down the street is the company’s R&D facility, another stop on my tour.
At 70 years old, Field is as passionate a businessman as anyone could ever meet, and on this day he’s eager to show what his private company has been up to over the past few years – innovation he suggests has “cracked the code” on the future of sustainable ethanol production.
I hadn’t seen Greedy Lying Bastards, a 2012 documentary about the oil industry’s attempts to fuel climate change denial, but Field’s mention of it meshed with the tone of our discussion. In his view, the oil industry is alarmed more than ever by the potential of biofuels – particularly ethanol – and has methodically spread misinformation about the fuel’s environmental benefits, social costs and technical limitations.
“They’re smart. They’ve had 100 years of moulding the system to their benefit,” he says. (The irony, Field acknowledges, is that it was a major order from Sunoco in the late 1990s that launched GreenField into the ethanol business, and to this day the company counts all of Canada’s major oil companies as key customers.)
Corn ethanol certainly has its critics, and its presence in the renewable energy mix has created a rare situation where the oil industry and many environmental groups find themselves on the same side of a nasty debate that threatens to undermine U.S. ethanol policy. From his perch in Canada, Field is following events closely. An astute business leader, having previously founded and led one of Canada’s largest real estate developers, he knows well that what happens south of the border usually trickles north. “We’ll see how it plays out. We’ll see who wins,” he says.
U.S. environmental groups, supported by major restaurant and food associations, continue to argue that existing ethanol mandates have driven up food and animal feed prices by boosting demand for corn, a greater portion of which is being grown and sold as an input for ethanol production. It’s not the sweet corn we eat at family barbecues, but a type of corn used to feed animals, make corn syrup for food products, and produce alcohols for use in liquors, personal care products and household cleaners.
The argument is that higher demand leads to higher corn prices and encourages farmers – if not domestically, then in other countries – to convert grasslands, forests and other “carbon stores” into farmland for growing more fuel crops.
Such land-use changes, as well as the increased use of fertilizer and fossil-fuelled machinery, result in emissions of greenhouse gases and other pollutants. Environmentalists cite numerous studies showing that corn ethanol, when emissions and pollutants are taken into account throughout the entire farm-to-wheels lifecycle, can be worse for air quality and climate change than burning gasoline.
When Associated Press published a scathing report last November on U.S. ethanol policy, one environmental group quoted called the situation an “ecological disaster.”
Energy secured
The oil industry has been piling on, but for other reasons. Never a fan of federal ethanol mandates – in the form of a Renewable Fuel Standard established under the Energy Independence and Security Act of 2007 – the big oil companies didn’t complain as much when gasoline demand was high and domestic oil supply was low.
But times have changed. Electric cars are taking market share. Americans are driving less and the vehicles they drive have become much more efficient, meaning domestic gasoline consumption has been declining over the past few years. During this same period, U.S. tight oil and shale gas production has boomed as a result of advances in hydraulic fracturing.
The International Energy Agency recently predicted that the U.S. is poised to surpass Russia and Saudi Arabia as the world’s top oil producer by 2015. America could even be energy self-sufficient within two decades, the agency suggested. This is why the American Petroleum Institute (API) is lobbying the Obama administration to ease up on what it calls “obsolete” crude oil export restrictions that have been in place since the 1973 oil crisis.
All of this means that the highly political energy security concerns that drove America’s ethanol mandates no longer exist, at least not to the same degree. Faced with falling gasoline consumption, rising oil supply and an ethanol content mandate that keeps rising, the oil industry has decided to draw a line in the sand.
The federal fuel standard, as currently written, requires that 14.4 billion gallons of conventional, mostly corn-based ethanol be blended with gasoline in 2014. Under a scenario where gasoline consumption is rising, that would mean ethanol would represent roughly 10 per cent of the gasoline mix – a blend called E10.
But declining gasoline consumption means the mix in 2014 would have to exceed 10 per cent to accommodate mandated ethanol volumes. That’s a problem, the oil industry argues, referring to what it calls the “ethanol blend wall” – the point beyond which ethanol fuel mixes can begin to degrade rubber, plastic and metal parts in car engines.
Moving past the blend wall to levels such as E15 “could leave millions of consumers with broken down cars and high repair bills,” said API spokesman Bob Greco last June after the institute asked for intervention from the U.S. Supreme Court. Under pressure from API and citing such “practical limits on ethanol blending,” the U.S. Environmental Protection Agency proposed last November to cut the 2014 mandate to 13 billion gallons.
Playing defence
The ethanol industry isn’t going down without a fight. It argues that the blend wall is an artificial limit – after all, cars in Brazil use 100 per cent ethanol – and that the purpose of the fuel standard was to encourage oil refiners and automakers to accommodate higher blends over time.
The Renewable Fuel Standard “wasn’t meant to be convenient for ExxonMobil,” Bob Dinneen, president and chief executive of the U.S. Renewable Fuels Association, reportedly told an industry conference in January. “It was intended to make ExxonMobil invest in higher blends, to invest in infrastructure to allow E15, E20, E30 to be sold.”
Many of the major automakers appear to be on board. All new Ford model vehicles, for example, can operate on an E15 blend of gasoline, and many are now “flexible fuel” vehicles that can operate on up to E85. To a large degree, the same can be said for newer models from General Motors, Honda, Volkswagen, Mercedes-Benz and Jaguar.
But Chrysler, Nissan, Mazda and others are still holdouts, telling drivers of their vehicles to use E15 at their own risk. And questions still remain about the impact of higher ethanol blends on vehicles purchased before 2012. Even if the risk of using E15 is low, will consumers take a chance if it means possibly voiding parts warranties?
Worries about the impact of higher ethanol blends will dissipate over time as older vehicles are retired and the auto industry moves toward newer, more efficient vehicles designed for higher-octane fuels such as E15 and E30. It may be, say ethanol advocates like Field, that the blend-wall scare tactics are hiding a deeper fear within the oil industry – that as oil gets more expensive and dirtier to produce, corn ethanol production costs will continue to fall and the fuel itself will get cleaner to make.
“Where’s their industry going? Deep-sea drilling. Arctic drilling. Shale drilling. Those are tough places to find oil,” says Field, noting the U.S. oil industry still enjoys a tax subsidy after 100 years, while the subsidy for U.S. ethanol producers permanently expired in 2011.
Ethanol is already less expensive than gasoline, even considering its lower energy content, and more recent studies of the fuel suggest that corn ethanol may not be as bad as some environmental groups contend – at least when scrutinized as a climate solution.
For example, researchers at the U.S. Department of Energy’s Argonne National Laboratory published a peer-reviewed study in December 2012 looking at the full life-cycle carbon footprint of ethanol made from corn and a variety of grasses and crop wastes.
Citing advances in technology and improved productivity around corn farming, the researchers concluded that even taking land-use changes into account – one of the biggest concerns raised by environmentalists – the use of corn ethanol instead of gasoline as a transportation fuel cut greenhouse gas emissions by 34 per cent.
The figure takes into account the production of distillers grains, a high-protein byproduct of ethanol production that is sold as livestock feed. It presumes that distillers grains would offset the energy and emissions needed to grow feed corn directly.
Best practices
“We’re a relatively new industry, and we’re better at what we do now than we were,” Field says as he walks me through his plant. “We’ve reduced energy and water use, we’ve increased corn yields, and we’ve reduced the amount of enzymes and yeast we use. Every single year we look at the chart and can show an improvement. The whole industry is doing this.”
The extent to which ethanol producers are embracing best practices depends on a number of factors, including geography, but GreenField stands out as a good case study.
At the company’s Chatham facility, most of the water used is recycled and all distillers grain is sold as feed to livestock farmers locally and overseas. “We feed lunch to 20,000 animals every day,” says Field.
The company recently installed a combined heat and power plant, which uses natural gas to efficiently supply both process heat and electricity to the operation. Soon, low-grade heat and carbon dioxide from the plant will be piped across the street to a new 22.5-acre cherry tomato greenhouse.
The tomatoes thrive off the CO2, while the heat will allow the greenhouse to operate through colder weather without needing to fire up its own natural gas-fuelled boilers. “For us, this is a real cost saver,” says Jared Atkinson, project manager at Truly Green, the owner of the greenhouse. Click here to learn more about this example of industrial symbiosis.
As Chatham plant manager Angelo Ligori says, “We don’t leave any meat on the bone.” GreenField, he points out, even extracts the oil from the corn it processes and sells it to biodiesel producers.
The more than 1,000 farmers supplying GreenField’s Chatham plant, meanwhile, are doing their part. Many embrace low- or no-till farming to reduce soil erosion and help fields retain nutrients and water, and grow drought-resistant crops. They’ve managed to increase corn yields per acre – from 95 bushels two decades ago to 150 today.
“There were about 2 million acres of corn grown in 1981. It’s about the same amount of acres in Ontario now,” says Henry Van Ankum, chair of the Grain Farmers of Ontario. “To say that industrial demand for commodity corn has influenced the number of acres grown is a misconception. It’s more that extra bushels are being grown on roughly the same acre based on better technologies and improved efficiency.”
The efforts of GreenField and the farmers who supply it point to a trend that, to some degree, is being experienced across the industry. At the same time, Field recognizes that corn can no longer be relied on if the industry is to expand.
Innovation delayed
What he’s referring to is cellulosic ethanol, an advanced biofuel that can be made out of wood waste, fast-growing grasses, and crop residues. They don’t compete for food or require prime farmland. They also don’t need additional energy, water or fertilizer to grow.
This dramatically changes the equation for ethanol. According to the Argonne study, using a wild grass such as switchgrass or miscanthus to make ethanol reduces GHG emissions by 88 per cent and 108 per cent, respectively, compared to gasoline. Ethanol from corn stover results in a 96 per cent reduction.
The problem is that it’s difficult to economically access the sugars locked inside the fibrous cellulosic structures of these plant materials, a challenge scientists and entrepreneurs have been working on for more than three decades.
In 2007, the introduction of federal ethanol mandates created a much-needed incentive by requiring 100 million gallons of cellulosic biofuel to be blended with gasoline in 2010, rising to 1.75 billion gallons by 2014. Reality struck, however, when it became clear supply still couldn’t meet the regulated demand. In response, the EPA has lowered the quota several times.
“For four years running, biofuel producers have promised high cellulosic ethanol production that hasn’t happened,” API’s Greco said in a statement in late January, shortly after the EPA said it would once again consider lowering the target.
The fact the EPA may reduce both conventional and cellulosic ethanol quotas concerns observers like Field, who say the agency is being pushed to pull back just when cellulosic ethanol is finally, after years of delays, ready for prime time.
Chemical giant DuPont, for example, is building a $225-million cellulosic ethanol plant in Iowa. Abengoa Bioenergy and POET also have plants under construction that will make ethanol out of corn stover or wheat straw. DuPont senior vice-president Jim Collins has called the EPA’s move misguided because it sends a chill to potential investors just when the industry needs capital.
“It took some time, but the oil industry now sees cellulosic ethanol plants being commercialized by big companies like DuPont,” explains Field. “So if you’re the oil industry, you’re saying ‘Holy shit, if this stuff gets built we’re going to be in trouble, because the government will like it and the people will like it.’ So they want to kill it now. That’s what this fight is about.”
Beyond corn
In Canada, GreenField is deeply involved in its own efforts to economically produce cellulosic ethanol, largely from corncobs but also potentially an invasive grass species called phragmites. After years of research, it has come up with an innovative, low-cost way of pre-treating cobs and grasses that doesn’t require toxic acids and ammonias or energy-intensive steam processes.
As we walk through the company’s R&D facility, chief scientist Regis Benech points to a device called a modified twin-screw extruder that is surrounded by a block of super-thin stainless steel plates. He tells me the plates act as a fine filter and that, when combined with the extruder, GreenField is able to shred, pressurize and squeeze liquid sugars out of the corncobs at 40 per cent less cost than other pre-treatment methods.
If the company can scale the process up as planned, it could produce 310 litres of ethanol out of every ton of corncobs, versus 410 litres from a ton of corn kernels. Add in other biomass sources, such as phragmites grass or corn stover, and volumes rise substantially. Not only would the company use the approach itself, it plans to license it to other ethanol producers and industries.
So for GreenField, like Dupont and others, weakened U.S. ethanol mandates couldn’t come at a worse time. Ethanol politics in the U.S. don’t directly affect the Canadian company today, but that could change tomorrow.
