University Extension/Department of Economics Biofuels Farm Management In-Service Ames, Iowa Oct. 12, 2010 Chad Hart Assistant Professor/Grain Markets Specialist

University Extension/Department of Economics Ethanol Production Source: EIA 2010 Projection by Hart

University Extension/Department of Economics Biodiesel Production Source: EIA 2010 Projection by Hart

University Extension/Department of Economics Monthly Ethanol Data Source: EIA

University Extension/Department of Economics Fuel Prices

University Extension/Department of Economics Ethanol Penetration

University Extension/Department of Economics Monthly Biodiesel Data Source: EIA End of “Splash and Dash” End of Tax Credit

University Extension/Department of Economics Renewable Fuels Standard (RFS)

University Extension/Department of Economics Renewable Fuels Standard (RFS)

University Extension/Department of Economics Oil Prices Source: EIA for history NYMEX for future

University Extension/Department of Economics Gasoline Consumption Source: EIA, Annual Energy Outlook

University Extension/Department of Economics Ethanol Blends

University Extension/Department of Economics RFS

University Extension/Department of Economics RFS Coverage

University Extension/Department of Economics Ethanol Blending Advantage

University Extension/Department of Economics Co-Product Pricing (Jan = 1)

University Extension/Department of Economics Corn Composition Source: 2009 FEW Conference presentation by Reg Ankrom (CPT) Looking for: Improved efficiency Reduced energy usage Reduced water usage Diversified product stream Why Fractionate?

University Extension/Department of Economics Capital Costs  Range from $10 million to $40 million for a 50 million gallon ethanol plant  The inclusion of corn oil extraction technologies moves costs to the higher end of the spectrum  Most vendors point to a payback period of under 3 years Variable Costs  Decreased energy needs per gallon for:  Liquidification and cooking  Distillation  Drying of distillers grains and solubles  Possible energy generation from bran  Could reduce energy demand by nearly 50%

University Extension/Department of Economics Product Streams Corn costs: $4.98 per bushel, Illinois ethanol plant report (USDA-AMS, as of Oct. 8, 2010) Traditional ethanol plant: 2.8 gallons of $2.01/gallon = $ lbs. of $144.50/ton= $1.28 Revenues per bushel= $6.91 Ethanol plant w/ fractionation: 2.72 gallons of $2.01/gallon = $ lbs. of high protein $154.50/ton= $ lbs. of $158/ton= $ lbs. of $75/ton= $0.11 Revenues per bushel= $7.02

University Extension/Department of Economics Tapping into Many Markets Source: 2009 FEW Conference presentation by Neal Jakel (Delta-T)

University Extension/Department of Economics BCAP  Biomass Crop Assistance Program  To support production of crops for bioenergy and assist with collection, harvest, storage, and transportation of biomass to conversion facilities  Matching payments  $1 for each $1 per ton paid by conversion facility, up to $45 per ton, for 2 years

University Extension/Department of Economics BCAP  Iowa has fewer than 4 contracts, so no payment figures are released. State Contracts Payment Maine408$34,842,076 California291$29,458,438 Alabama586$24,509,263 Georgia354$21,499,949 South Carolina253$14,638,308 Florida134$12,595,046 New Hampshire130$11,822,402 Michigan247$10,268,635 Texas114$ 8,468,858 New York142$ 7,703,127 Source: USDA-FSA

University Extension/Department of Economics BCAP Resources Contracts Payments Bark 1,418 $46,696,187 Fuelwood 744 $34,403,825 Hardwood chips 805 $32,521,203 Forest harvest slash 386 $30,012,559 Forest thinnings materials 399 $27,220,001 Softwood chips 491 $17,661,305 Orchard wood waste 123 $15,000,377 Sawdust 357 $12,400,919 Pellets 70 $ 5,367,939 Non-edible, non Title 1 56 $ 3,226,417 plant processing waste and scraps Corn cobs 15 $ 61,612 Source: USDA-FSA

University Extension/Department of Economics Thank you for your time! Any questions? My web site: Iowa Farm Outlook: Ag Decision Maker: