1. Biofuels and Ethanol ETHANOL (ethyl alcohol) is produced by distillation of fermented simple sugars in grains and other plant materials, called biomass. In U.S. about 90% of ethanol produced from corn. Used as gasoline extender, octane enhancer and oxygenate. Feedstocks: Grain, Cellulose Cellulose sources? Corn, prairie grasses, switchgrass, garbage, etc.

2. Debate Concerning Benefits Continues  Energy independence  Carbon/GHG gains?  Food prices: what are the costs of increased biofuel usage?  Other environmental effects? Water quality, habitat

3. Rapid Expansion of Ethanol U.S. production:7 billion gallons of ethanol today, 2 billion gallons in 2002 Corn:Acreage, 78 mil acres in 2006, 90 mil in 2007 (NASS) Prices, historically $2.5-$3/bushel, over $5 now Biorefineries:139 in production, 62 under construction (RFA, Jan. 2008) Energy Bill:mandates 36 gallons from biofuels by 2022, 20 billion from advanced biofuels (EISA)

4. Some Key Policy Drivers of Economics Behind Ethanol Expansion 1975Lead phase-out beginsEthanol becomes attractive as octane booster 1978Energy Tax ActA $0.40 subsidy per gallon of ethanol blended into gasoline introduced 1980- 1984 Energy Security Act, Crude Windfall Tax Act, Surface Transportation Act, Tax Reform Act Insured loans for small ethanol producers, tariffs on foreign produced ethanol, ethanol subsidy increased to $0.50 and then $.60 1992Clean Air Act AmendmentsMandated oxygenates in many locations, MTBEs major oxygenate in use 1985- 2003 Various ActsSubsidy reduced gradually to $0.52/gallon Various states banned MTBE’s 2005Energy Policy ActPhased out MTBEs as oxygenate thereby increasing demand for ethanol 2007Energy BillBiofuels mandate for 36 billion gallons by 2022

5. U.S. Ethanol Biorefinery Locations

6. Carbon/ GHG debate (http://www.hybridcars.com/ethanol/benefits-drawbacks.html) One might expect that by using E85, net carbon dioxide emissions would be almost zero. The crops used to make the ethanol absorb CO2 from the atmosphere during their growth, then this CO2 is put back into the atmosphere when the ethanol is burned in an automobile engine. But, this ignores other GHG emissions in production. Modern farming relies heavily on diesel-powered equipment that emits greenhouse gases. Distilling ethanol is also energy-intensive process and uses electricity from coal. University of California at Berkeley researchers examined six major studies of ethanol production and concluded that using ethanol made from corn instead of gasoline would lead to a moderate 13 percent reduction in greenhouse emissions. More dramatic reductions are possible if technology advances make it economical to make ethanol from cellulosic materials such as switchgrass. Using cellulosic ethanol, they project, could result in 88 percent less greenhouse gas emissions. The UC Berkeley study contradicts a common criticism of ethanol: that it takes more energy to produce it than it delivers as a motor fuel. The study concludes that ethanol made from corn does indeed have a positive “net energy balance,” Pimental: argues net energy balance negative. Land use changes: Recent SCIENCE papers

7. Converting forest and grassland to cropland adds previously unforeseen greenhouse gas emissions to the cost of biofuels, new study says WASHINGTON (February 7, 2008) - A study published today by Science magazine finds that biofuels that use cropland are likely to increase greenhouse gases because previous analyses of biofuels ignored a crucial factor - the use of land. Most prior studies have found that substituting biofuels for gasoline will reduce GHGs. These analyses have failed to count the carbon emissions that occur as farmers worldwide respond to higher prices and convert forest and grassland to new cropland to replace the grain (or cropland) diverted to biofuels. Using a worldwide agricultural model to account for land use change, the new study found that corn-based ethanol, instead of producing a 20% savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gasses for 167 years. Biofuels from switchgrass, if grown on U.S. corn lands, increase emissions by 50%. A separate paper released by two other authors finds that biodiesel from soybeans has similar effects as corn ethanol. Authors: Tim Searchinger, GMF transatlantic fellow and a visiting research scholar Princeton, Ralph Heimlich, R.A. Houghton, Fengxia Dong, Amani Elobeid, Jacinto Fabiosa, Simla Tokgoz, Dermot Hayes, and Tun-Hsiang Yu, Iowa State University, the Woods Hole Research Center, and Agricultural Conservation Economics.