In terms of biofuels, the ugly kid on the street has been and continues to be corn ethanol. Critics lambast its poor lifecycle GHG balance, its low EROEI, and that it competes directly with our food supply, all compared unfavorably with sugarcane ethanol, and even moreso with cellulosic ethanol. As always, however, the picture is definitely not as simple as media make it out to be.
The more I learn about corn ethanol, the more it seems like it will be around to stay for a few generations yet. It has a lot of things going for it that make it more attractive as a source for biofuels and as a valuable product than you might expect. I'm going to try and go over to show how corn ethanol has value, what it's got going for it over sugarcane ethanol, and why it's probably going to stay around to compete with cellulosics.
Before I begin to talk about what corn ethanol has going for it, to be fair, the one thing that critics of corn ethanol have right is the easiest fact to understand: the GHG balance for corn ethanol is abysmal. It depends on the location and the amount of fertilization and the feedstocks for those fertilizers (alas, right now it's all natural gas), but inevitably the carbon balance is no better than 1:1, and usually worse.
The other things that corn ethanol has going for it are much more significant than I had previously realized - even after a few years of classes and reading on the subject.
EROEI vs ROI
EROEI is usually a very good measurement of the margin of a fuel and the overall economic benefit. For decades, the EROEI of oil and oil products was around 40, compared now to an EROEI of tar sands of about 5.2-5.8. Corn ethanol sits pretty at between 0.98-1.2. This is pretty awful. But what I think that number conceals is the reason why corn ethanol has a value proposition at all. Much of that energy input is diesel from farm work, but the vast majority is actually from the embedded energy in fertilizer. Since the Haber-Bosch process, virtually unchanged from the early 1900s, uses natural gas, the energy accounted for in EROEI is of a much lower quality than the transportation fuels coming out of the other end. The way corn ethanol makes a profit is from the value premium placed on a high energy-density transportation fuel.
Speaking from the position of the firm, that value premium is not a very large margin compared to light sweet crude. However, as you might have guessed from the low EROEI of tar sands bitumen, the more marginal producers of liquid hydrocarbons these days don't have it all that much better. So while the firms that find easy-to-extract, high quality crude are making a killing on today's prices, their costs of production are not what is setting the price. When you put corn ethanol against cracked bitumen, or fracked Bakken shale, or deep offshore production, then the profit picture looks rosier.
(It's worth noting that the liquid transportation fuels premium is also why it makes sense to burn a large volume of natural gas for every ton of cracked bitumen; gas in the US now sells for around $3-$4/MMBTU, while a comparative measure for vehicular gasoline is roughly $16-$18/MMBTU)
Food vs Fuel
The other major criticism of corn that I've seen is the food-fuel substitution argument. This argument is one that is powerful, compelling, and prima facie economically sound. It was greatly helped along by the precipitous rise in the price of grain and meat in the run-up to 2008 and their current sustained high prices now. The general theme of these arguments is that by making ethanol from resources that could go into food supply, the price of oil now has a direct mechanism to cause fuel production to be substituted for food production in certain crops. This has knock-on effects on substitutable foodstuffs, like rice and wheat in China, beans and rice in South America, and so on. In turn, the general rise in prices has distributional effects, for example because the poor spend more of their income on food, and, especially outside of the Western world, consume very little petroleum. The conclusions of such arguments usually end on one of two themes: (a) we should not be hurting the world's poor by turning food into fuel and driving up prices of foodstuffs and (b) we should not be putting additional productive farmland into fuel production.
I will readily admit that I think that story has some truth to it. In fact, until I was able to go deeper into the subject in recent months, I believed it to be a nearly airtight explanation for a great deal of food price rises. For things like wheat ethanol, which the French are proud to trumpet as produced from their own country, there's basically no excuse. For corn, on the other hand, there are a few.
Before I say anything else, I have to talk a little bit about why corn ethanol was demonized in the run-up to 2008. The general food price rises in that time were, to a certain extent, a story of rising demand from Asia, contracting supply from multiple crop failures, and biofuels together. Corn ethanol got slapped in the press partially because it was the largest scale undertaking in the world at the time and partially because it is one of the most chemical-intensive crops out there.
Yet it's precisely the scale of the undertaking and the chemical intensity that should clue you in on why corn ethanol has things going for it that sugarcane doesn't have. First and foremost, corn growing in America is likely the most mechanized and mass-production oriented agriculture in the world. American agrobusiness approaches corn production with an eye to the gains that could be made by genetic engineering, automation and information technology. Secondly, the sheer scale of the process means that marginal secondary uses are important, and that with the resources of ethanol producers behind them people have found better things to do with spent fermentation sludge than spread them as fertilizer.
The corn crop tonnage in America has never been higher, but over the past several years an insignificant amount of additional land has been brought into corn cultivation. This is primarily because of the aforementioned industrialization of agriculture: highly automated, GPS-guided mechanized harvesting, GM varieties, and subsoil ammonia deposition are all new techniques that have been widely adopted by the industry over the past few years to boost yields to unheard-of levels. The distribution of crops among prime cropland and the amount under cultivation have barely budged - after all, it's not just corn that's gotten profitable to grow.
This blows much of the steam out of the argument that corn ethanol is causing us to catastrophically increase the amount of cropland under cultivation to unsustainable levels.
The additional bit that often doesn't get said is that, at least for corn, the food vs fuel debate misses that the corn going into ethanol is not actually meant for human consumption. Rather, it is feedlot corn, used for fattening hogs and chickens and often as the sole food source for ruminants, primarily cattle. This makes the food-fuel substitution debate more complicated because to support a strong price effect on non-meat foodstuffs, you have to argue that corn production is driving out other direct-to-food crops, such as wheat, sweet corn, or canola. In America at least, this isn't quite true. Instead, it's mostly the meat that has been affected.
The consequences feedlot corn shortages are muddied further by the co-product of ethanol fermentations. Since what's leftover is highly nutritious (albeit without much starch), it can be used as a feed for chickens, hogs, and cattle. Substitution the non-ruminants can be 10-15% of their normal feed, mainly for nutritional reasons, but cattle can subside entirely on it. The product is called distiller's grains, and is sold in wet form (fed directly to cattle with no humectant needed, called wet distiller's grains or WDG) or in dried form (with some kind of humectant, called dried distiller's grains and solubles or DDGS). The primary difference between them is that WDG tend to spoil within three days, while DDGS can be stored and shipped.
In the early days of corn ethanol, a lot of DDGS went to fertilizer because many feedlot owners were resistant to changing their feeding habits - and the food-fuel argument had correspondingly more traction. These days, however, feedlot owners have embraced DDGS use and are even beginning to build huge animal feedlots outside of corn ethanol plants to take advantage of cheaper WDG, among other innovations.
That said, you get only 17 pounds of DDGS out of every 52 pound bushel of corn sent to ethanol fermentation. The extra nutrition is enough to make a pound of DDGS count for more than a pound of corn, but it still doesn't make up the entire difference. Food-fuel substitution is, I think, still a very strong argument, and definitely occurs, mainly through the actions of substitution effects, but ultimately the effects are much less than you might expect - and are still dwarfed by the effects of rising Asian demand and worldwide crop failures.
What sugarcane ethanol doesn't have going for it
Sugarcane ethanol does have a few key advantages over corn ethanol, these being, in no particular order, that sugar is a luxury product and not a critical foodstuff, that cane sugar is cheap, that bagasse can be burned to fully electrify and provide thermal energy for operation, and that there is a huge and established local market for the product in Brazil. On the other hand, corn ethanol has a few one-two punches of its own.
Sugarcane is harvested for only a small portion of the year, and cannot be stored easily. Consequently, sugarcane ethanol is produced only when the sugar mills run, and shut down the rest of the time. Near as I can tell (I have to admit that I don't pay too much attention), that period is only about 2-3 months. That's a lot of capital equipment sitting around unused for the rest of the year. It should come as no surprise that sugarcane ethanol has one of the lowest effective capital utilizations in the fuels industry. Corn, on the other hand, is easily stored in silage and can be run year-round. As capital is utilized year-round, this makes the necessary capital depreciation on any one batch lower, improving the price point relative to sugarcane.
There's also the fact that sugarcane ethanol's coproduct, which is essentially fertilizer, is not nearly as valuable as DDGS. This gives corn ethanol its biggest competitive edge over sugarcane, and frankly, why I think it'll stay around even without the subsidies to corn or the blend mandate.
What cellulosic ethanol doesn't have going for it
But why would inefficient, low EROEI, taking-food-from-the-mouths-of-babes corn ethanol be around to compete against cellulosics? The answer is, basically, that cellulosics suffer heavily from the toughness and low energy density of their feedstocks.
What you get from a corn kernel is starch. It's easy to digest, easy to extract, liquefy, and dissolve, and breaks down into glucose or fructose, both 6-carbon sugars that can be easily digested by the strains of yeast we've been using in our booze for generations. Corn is simple to grind and therefore easy to make bioavailable through its increased surface area.
Cellulosic ethanol feedstocks, on the other hand, are a mess. Lignocellulosics have to be broken down heavily through harsh treatments, many of which were once developed for the paper and lumber industries. They contain large amounts of pentose sugars from hemicellulose, which require either genetically modified yeasts to break down or exotic anaerobic bacteria that are much less well studied. Lignins inhibit digestion and must be separated. All of the treatments involve heat that partially decomposes some of the lignin and makes some pretty nasty inhibitors for bacterial growth as a result. If you're dealing with biomass, you're also heavily hampered by the fact that your feedstock is meant to be structural, so it's inherently difficult to cut up. Just about the only things that it has going for it in this case is that the feedstocks are cheap and you can burn the lignin associated with the biomass to heat and power your facility - another trick stolen from the paper industry.
Furthermore, what's great about corn compared to biomass is that its energy density is very high. The starch in a corn kernel is packed pretty densely and is composed almost entirely of digestible material. Biomass isn't going to have this level of energy density at all - even discounting the fact that it contains a whole lot of stuff that is not fermentable, it's got a great deal of empty space in it that in a living plant would contain water, cellular structures, and other things. Biomass takes a huge penalty in that respect, since it makes logistics for transporting it to processing a major problem. Some cellulosic ethanol hopefuls have taken to trying for the highest energy density fuels, for example wood, which also usually happen to be the most difficult to process; others have tried to adopt different logistics and distribution models based on lighter but faster-growing feedstocks.
So ultimately in the next few decades I think that corn ethanol will continue to coexist with cellulosic biofuels until cellulosic biofuels become more cost-effective than corn. What will likely be the ultimate arbiter of that change will not be the price of oil but the price of food. While the food-fuel linkage will continue to be important, I think it will slowly go away as food demand from China, India, and Brazil ramping up their consumption of meat and other foodstuffs to rich-world levels drive corn growers to get a higher price for their feed corn at the feedlots.
edit 10/27/11 - I seem to have posted this one day too early for some interesting news to make it in. DDGS nutritional substitution values for corn/soy meal have been measured by the USDA to be roughly 1.22 by weight, supporting what ethanol producers, feedlot managers and others have been saying for a while (and, it should be noted, that the market has been pricing in as well). Next up we can hope that the USDA can confirm the maximum levels of substitution for chicken and hogs.