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Extension and Outreach/Department of Economics Economics of Ethanol Production: Iowa’s Strengths and Weaknesses Deerfield Retirement Center Urbandale, Iowa Aug. 30, 2011 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911
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Extension and Outreach/Department of Economics Oil Prices Source: EIA for history, NYMEX for future
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Extension and Outreach/Department of Economics Population 2011 2030 2050 (billion) World6.946World8.323World9.441 China1.337India1.461India1.657 India1.189China1.391China1.304 U.S.0.311U.S.0.366U.S.0.423 Indonesia0.246Indonesia0.289Nigeria0.402 Brazil0.203Nigeria0.264Indonesia0.313 Pakistan0.187Pakistan0.243Pakistan0.291 Nigeria0.166Brazil0.240Ethiopia0.278 Bangladesh0.159Bangladesh0.211Brazil0.261 Russia0.139Ethiopia0.162Bangladesh0.250 Japan0.127Philippines0.138Philippines0.172 Source: U.S. Bureau of the Census, International Data Base
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Extension and Outreach/Department of Economics Liquid Fuel Usage 200720152020202520302035 (Million Barrels Oil Equivalent per Day)(Percent of 2007 Value) United States20.698%100%102%104%107% Canada2.396% 100%104% Mexico2.1105%110%114%129%138% Europe15.392%88% 89%90% Japan5.084%86% 84%82% China7.6132%153%178%201%222% India2.8114%129%139%154%168% Africa3.1113%116%126%135%148% Central and South America6.0110%112%117%125%133% World86.1103%107%113%121%128% Source: Energy Information Administration
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Extension and Outreach/Department of Economics Ethanol Production Source: EIA, 2011 Projection by Hart
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Extension and Outreach/Department of Economics Ethanol Plant Locations Source: Ethanol Producer Magazine
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Extension and Outreach/Department of Economics Monthly Ethanol Data Source: EIA
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Extension and Outreach/Department of Economics Ethanol Penetration
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Extension and Outreach/Department of Economics Nearby Futures (Jan. 3, 2011 = 1)
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Extension and Outreach/Department of Economics Fuel Prices
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Extension and Outreach/Department of Economics Ethanol Margin Source: CARD
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Extension and Outreach/Department of Economics Ethanol Blending Advantage
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Extension and Outreach/Department of Economics Ethanol Stocks Source: DOE, EIA
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Extension and Outreach/Department of Economics Location and Products
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Extension and Outreach/Department of Economics Tapping into Many Markets Source: 2009 FEW Conference presentation by Neal Jakel (Delta-T)
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Extension and Outreach/Department of Economics Fuel Comparison
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Extension and Outreach/Department of Economics Gasoline Consumption Source: EIA, Annual Energy Outlook
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Extension and Outreach/Department of Economics Ethanol Blends
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Extension and Outreach/Department of Economics Renewable Fuels Standard (RFS) 60% GHG Emission Reduction 50% GHG Emission Reduction 20% GHG Emission Reduction If construction started after Dec. 2007
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Extension and Outreach/Department of Economics Countries Pursuing Biofuels US Brazil Argentina Colombia Paraguay Canada Uruguay Mexico Thailand New Zealand South Africa South Korea Philippines Indonesia Pakistan China India Malaysia Australia Japan EU Russia Not a complete list
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Extension and Outreach/Department of Economics Renewable Fuels Standard (RFS)
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Extension and Outreach/Department of Economics RFS Coverage
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Extension and Outreach/Department of Economics Government Policies for Biofuels Ethanol Ad valorem tariff of 2.5% Import duty of $0.54 per gallon Volumetric Ethanol Excise Tax Credit (VEETC) $0.45 per gallon Biodiesel Biodiesel Mixture Excise Tax Credit $1.00/0.50 per gallon Cellulosic Cellulosic Biofuel Producer Tax Credit $1.01 per gallon
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Extension and Outreach/Department of Economics Biomass Crop Assistance Program To support production of crops for bioenergy and assist with collection, harvest, storage, and transportation of biomass to conversion facilities Excluded materials Farm program crops, animal byproducts, food waste, yard waste, algae
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Extension and Outreach/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
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Extension and Outreach/Department of Economics Currently Available Biomass Source: NREL, 2005
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Extension and Outreach/Department of Economics Spectrum of Biofuels Source: NREL, 2006 Grain/Sugar Ethanol Biodiesel Green Gasoline/Diesel Cellulosic Ethanol Butanol Pyrolysis Liquids Syngas Liquids Most Mature Least Mature
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Extension and Outreach/Department of Economics Biofuel Challenges Production costs Conversion, ag. production, etc. Infrastructure barriers Developing supply chain for biomass Continued development of biofuel distribution system Growth in biofuel-compatible vehicles
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Extension and Outreach/Department of Economics Biofuel Challenges Investment risks Higher capital costs, emerging technology Biomass production shifts Inducing farmers to produce new crops Consumer understanding About the fuels About the tradeoffs
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Extension and Outreach/Department of Economics Thank you for your time! Any questions? My web site: http://www.econ.iastate.edu/~chart/ Iowa Farm Outlook: http://www.econ.iastate.edu/ifo/ Ag Decision Maker: http://www.extension.iastate.edu/agdm/
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