Improving the Prospects for Grain Ethanol

In my previous essay, you probably gathered that I am not enamored with grain-derived ethanol. I consider it to be a kind of fool’s gold that looks nice and shiny to the general public. Considering the magnitude of the subsidies as I showed in the previous essay, the industry is nowhere close to being able to compete on a level playing field. If the industry is to survive, you can count on multibillion dollar handouts – or mandates – as far as the eye can see.

As I write this, the spot price of ethanol is $2.43, versus $1.74 for mid-grade gasoline. Considering that most people don’t buy mid-grade, you can knock another dime or so off the price of the gasoline. As an aside, I will acknowledge that E85 (85% ethanol) is currently cheaper than gasoline. The subsidies bring the cost down, but since gasoline has approximately 1.5 times the BTU value of ethanol, the price for ethanol has to be much cheaper to persuade consumers to buy it. Consider that without subsidies, ethanol at $2.43 means you have to pay 1.5 times that, or $3.65 in order to drive the same distance as you could on 1 gallon of gasoline. In other words, unsubsidized ethanol at $2.43 is just like paying $3.65 for gasoline.

So, presently ethanol is not close being economical without the subsidies. It will take serious improvements in the technology (or more mandates) to enable grain-ethanol to economically compete with gasoline without relying on subsidies. I see 3 possible developments that could close the economic gap. However, none appear to be close to viability. There is also a 4th possibility that would definitely close the gap, but it is not a solution an environmentalist could endorse. I will address these 4 options, and try to summarize the current state of the art.

There are two major energy consumers in the grain ethanol production process – fertilizer and distillation – that contribute to the poor energy balance. While there are gasoline and diesel inputs into the process, the major energy input is natural gas. Fertilizer production is highly natural gas intensive, as is the process of distillation that removes water from the crude ethanol. Eliminating either of these inputs would substantially improve the energy balance, likely increasing the EROI to >2.0.

Nitrogen Fixation

The first potential advance would be to eliminate the need for fertilizer. Of course grain can be grown without fertilizer. That’s not the issue. The grain needs to be grown without fertilizer, while maintaining the fertility of the soil and keeping the yields high. Failure to satisfy these criteria will eventually ensure that the energy balance becomes negative. The potential answer to this problem is corn that can utilize nitrogen from the air. This is called “nitrogen fixation”, and has been called the holy grail of crop science. A detailed explanation can be found here:

Biological Nitrogen Fixation

Here are a few important excerpts:

Synthetic nitrogen use has grown from 3 million to 80 million tons over the last 40 years. This increase occurred in both developed and developing countries. The current annual worldwide expenditure for fertilizer nitrogen exceeds $20 billion-an amount comparable to that for synthetic chemical pesticides. Modern industrial production of fertilizer nitrogen demands large inputs of energy in the form of natural gas, a finite natural resource; fertilizer constitutes a major energy cost in the production of a high-yield corn or rice crop. Moreover, carbon dioxide is released by the consumption of natural gas. Food production may thus contribute indirectly to global warming. Of the fertilizer nitrogen applied to a crop, seldom is more than 50 percent assimilated, and often the efficiency of utilization is much less.

Some species of microorganisms have the ability to convert atmospheric nitrogen into forms that are usable by plants and animals. BNF occurs in bacteria that possess the enzyme nitrogenase. Plants and microbes form symbiotic associations in legumes, lichens, and some woody plants. The system most important for agriculture is the legume-rhizobia symbiosis: the fixation of atmospheric nitrogen occurs within root nodules after rhizobial penetration of the root. Thus, many legumes can grow vigorously and yield well under nitrogen-deficient conditions, and may contribute nitrogen to the farming system in the vegetative residues after grain harvest, or more significantly as green manure incorporated in the soil.

Molecular genetic research has made available the tools for possibly conferring upon cereals and other nonlegumes the ability to fix atmospheric nitrogen. Although realization of this goal represents a long-term endeavor, the possibility of either substantially reducing or eliminating the economic and environmental cost of the use of fertilizer nitrogen justifies the effort. Fundamental knowledge is now in hand to provide the basis for focused efforts on BNF in legumes and cereals. Benefits are expected from research with legumes in the nearer term, whereas benefits from research with cereals could be very large but are in the longer term.

So, the potential payoff is huge, not just for ethanol, but for feeding the world. Unfortunately, as indicated by the last sentence, this is not expected to be realized in cereal grains for some time. However, a number of research groups are working on this problem.

Novel Extraction Techniques

The second potential advance addresses the distillation portion. Crude ethanol contains roughly 8% ethanol and 92% water. It takes an enormous input of natural gas to boil off the ethanol from the water. If an extraction process existed in which ethanol could be pulled from the water, or vice versa, this could dramatically lower the natural gas requirement. This was in fact one area that my research group was investigating in graduate school. Such an extraction technique is described here:

Separating Ethanol From Water Via Differential Miscibility

Some excerpts:

The differential miscibility of castor oil in ethanol and water would be exploited to separate ethanol from water, according to a proposal. Burning the separated ethanol would produce more energy than would be consumed in the separation process. In contrast, the separation of a small amount of ethanol (actually an ethanol/water solution poor in ethanol) from water by the conventional process of distillation requires more energy than can be produced by burning the resulting distillate.

There is very little in the literature on this topic, leading me to believe that research in this area has not been productive. There should be a great deal of incentive to come up with such a scheme, but not a lot of research appears to be taking place in this area.

Don’t Separate the Water

The third potential advance would be to utilize the water/ethanol mixture without separating it. Lanny Schmidt’s group at the University of Minnesota is working on just such a process. I have been familiar with his work for several years, because some areas of my research have been in this area. I have spent quite a bit of time reading papers and patents by Professor Schmidt and his group.

In a 2004 report in Science (1), Schmidt’s group reported that they were able to produce hydrogen from a mixture of ethanol and water via an autothermal reforming process. This is potentially a very significant development, as it would eliminate the single biggest energy input in the ethanol process – energy for distillation. However, there are two concerns. First, the latent heat of water is very high relative to other liquids, so heating up the water will absorb some – and maybe a lot – of the energy that is produced. Second, this will require an entirely new kind of car motor, and those kinds of revolutionary changes don’t take place overnight. But it is a promising development. For more information, Professor Schmidt describes his research in a PowerPoint presentation here:

Renewable Hydrogen and Olefins by Autothermal Reforming

Coal-Based Ethanol

This is an option that most environmentalists will abhor. However, it is the one most likely to take place in the short-term. The natural gas input into ethanol production is a serious long-term threat to economic viability. Since natural gas is a fossil fuel, and supplies are diminishing, it will put upward pressure on the price of ethanol over time. However, if the energy inputs could be produced from coal, ethanol prices would be insulated from escalating natural gas prices.

Using coal might also lessen the significance of the EROEI debate. If you take 1 BTU of (cheap) coal, and you get back 0.8 BTUs of (more valuable, liquid) ethanol, then EROEI doesn’t have the same significance as when you use natural gas to produce ethanol. You converted the BTUs into a readily usable liquid form. This argument may be valid from an economic point of view, but it ignores the fact that coal is still an inherently dirty energy source. If coal remains abundant and cheap, coal economics will beat natural gas economics, but coal will increase the rate at which we put carbon dioxide into the atmosphere. If we come up with a viable method of sequestering the carbon dioxide produced at the power plant, then we might have a temporary economic solution (although we are still using up a non-sustainable fuel in the process).

Interestingly enough, after I had written the previous paragraph, I ran across this story in the March 23rd Christian Science Monitor (2). Apparently, some ethanol producers have already figured out that coal utilization will provide superior economics. Some excerpts from the article:

The trend, which is expected to continue, has left even some ethanol boosters scratching their heads. Should coal become a standard for 30 to 40 ethanol plants under construction – and 150 others on the drawing boards – it would undermine the environmental reasoning for switching to ethanol in the first place, environmentalists say.

“If the biofuels industry is going to depend on coal, and these conversion plants release their CO2 to the air, it could undo the global warming benefits of using ethanol,” says David Hawkins, climate director for the Natural Resources Defense Council in Washington.

It’s very likely that coal will be the fuel of choice for most of these new ethanol plants,” says Robert McIlvaine, president of a Northfield, Ill., information services company that has compiled a database of nearly 200 ethanol plants now under construction or in planning and development.

I have to say that this development is entirely predictable. We have lots of coal, but declining natural gas supplies. Use of coal should make ethanol pricing (without subsidies) more competitive with gasoline. However, there will still be a significant natural gas input for the fertilizer used to grow the corn, so it won’t be entirely insulated from spiking natural gas prices. But this step may provide “shutdown economics” for ethanol plants that use natural gas as their fuel of choice.


Given that we now have a national mandate to use ethanol, it is not going away any time soon despite the poor economics. In the short term, I think coal-based ethanol plants will start to predominate, ending the argument that ethanol is a “green” fuel. In the longer term, cellulosic ethanol has the potential to be an even more viable source of ethanol, but the time frame is unclear. I think biodiesel has the potential to trump all sources of ethanol. I will be writing more on biodiesel and cellulosic ethanol in upcoming entries.


1. G. A. Deluga, J. R. Salge, L. D. Schmidt, and X.E. Verykios, “Renewable Hydrogen from Ethanol by Autothermal Reforming”, Science 303, 993-997 (2004).

2. Carbon Cloud Over a Green Fuel

12 thoughts on “Improving the Prospects for Grain Ethanol”

  1. R-Squared,

    I like your web site — very perceptive comments about ethanol.

    I am with you on making alcohol fuels from the vast reserves of coal we have in Montana and Wyoming. One point though, it is easier to use coal as a feedstock to make methanol than ethanol. The only big disadvantage of methanol is that it is poisonous while ethanol isn’t toxic unless drunk in large quantities.

  2. Yeah, the ethanol lobby would have a field day with methanol. But I think it is simply inevitable that ethanol plants start turning to coal as their fuel source. They will lose a lot of good will with those who now think of ethanol as a green fuel, though.


  3. < As an aside, I will acknowledge that E85 (85% ethanol) is currently cheaper than gasoline. The subsidies bring the cost down, but since gasoline has approximately 1.5 times the BTU value of ethanol, the price for ethanol has to be much cheaper to persuade consumers to buy it. i>


    The equal value price point of E85 is 72% the price of gasoline when both fuels are sold by volume.

    I’ve long advocated that ethanol and gasoline should not be priced by volume, but by energy content — preferably in units of 100,000 Btu.

    Right now in Madison, gasoline is selling for about $2.22 per 100,000 Btu, while E85 is selling for $3.17 per 100,000 Btu.

    That kind of pricing makes it obvious to consumers what they are buying, and allows them to make a wiser choice.

    I’ve seen too many recent examples of the ethanol industry using E85’s lower price per gallon to deliberately mislead people into thinking they are getting a bargain, when in fact by buying E85, they may actually be paying far more for the energy they buy.

    Pricing fuels of differing energy content by volume instead of by the energy they contain only leads to misunderstanding and gives people the opportunity to be deliberately misleading.

    It would take the public some time to get used to, but the benefit would be worth it. Whether buying, ethanol, methanol, biodiesel, petroleum diesel, or gasoline, everyone would know exactly what their dollar was buying if each of those fuels was sold in units of 100,000 Btu.


    Gary Dikkers

  4. One thing about using coal to distill ethanol:  we are already burning a billion tons of it each year, and roughly 90% of it goes to make electricity.  Over 60% of the total heat energy in coal going into an electric plant winds up as low-pressure steam going into condensers.  If that steam was tapped off at a slightly higher pressure and temperature, it could provide all the process heat necessary for mashing and distilling the ethanol while only reducing the efficiency of electricity production by a small fraction.

    Unfortunately, most ethanol is not made that way.  A sane government would ban the use of natural gas and LPG to distill fuel ethanol (as it once banned the use of natural gas to generate electricity), thus forcing producers to solve the problem or get out of the business.

    Unfortunately for us, our government is driven by money, not sanity.

  5. Thought I’d mention one other breakthrough that could swing the equation: The breakdown of cellulose. It would no longer be “grain” cellulose but would allow for production of ethanol from plants needing less nitrogen and even certain nitrogen fixers such as alfalfa.

    To be viable it will probably need an enzymatic or mocrobial method since the current acid pre-treatment doesn’t scale real well cost wise.

  6. Very nice article. One option that is going to be used here in Kankakee, IL is the use of the bi-product of landfills (natural gas) to fuel the Ethanol Processing plants. The landfills are coming and so are the ethanol processing facilities.

  7. Ethanol and Gasoline should be sold with information provided that points to the thermal efficiency of a production line available optimized ICE designed to run on a gallon or liter of each fuel.

    With Pump gas engines making 20% efficiencies and Ethanol engines making over twice that, the price of Ethanol looks quite different.

    In Brazil, E-100 autos get 22% better mpg than pump gas autos.

    Forget about BTU’s per gallon. That short changes the oxygen in Ethanol that BTU’s don’t account for.

    Using BTU’s to measure what either fuel can do in the real world makes about as much sense as telling a hog what time it is.

    Let’s be more honest so the hogs will stop laughing at us.

  8. Yes. I did make a mistake in my previous post. The data is in “Alcohol can be a Gas” by David Blume.

    The latest test engines using Ethanol engines made by VW achieve 46% thermal efficiency. That translates to 22% better mpg than a DIESEL engine.

    Even more against a pump gas engine which maxes out at around 20% thermal efficiency.

    Ethanol E-100 high compression engines in Brazil currently get the same mileage or a bit better than pump gas.

    One interview from David Blume is Here:

    You will need Winamp or VLC Media player.

    Windoze media player doesn’t have an .ogg codec

  9. Blume’s book, written in 1983(!), is back in print, and includes a glowing review courtesy of Larry Mitchell, CEO of the American Corn Growers Association. Kinda says it all, doesn’t it?

  10. So Lame.

    Blume clearly states he sees corn as a starting point.

    Farmers will catch on in time and plant better producers of ethanol.

    There are many crops that double what corn can yield per acre.

    Some that manage 7 or more times the ethanol per acre using waste water for water and fertilizer, cleaning up rivers and oceans as a freebie. What is the crop?

    Cattails. minimum 2500 gpa ethanol and 5000 gpa as methane. These are net figures.

    It’s all in “alcohol can be a gas”

    I see alternatives as a benefit in that they will tend to keep Big Oil Honest.

    It would be nice that subsidies would be eliminated for Alternatives and Big Oil, since Big Oil gets ten times what Ethanol blenders get, which, (Surprise!) is Big Oil in most cases.

  11. Comparing BTUs of ethanol with gasoline is a little unfair to ethanol in that it is a much higher quality fuel. This is why they run race cars with ethanol, it’s octane rating is off the chart. The octane rating gives the fuel’s tendency to diesel. High octane fuel avoids dieseling and so can be used at higher compression. Ethanol is blended with gasoline to raise the octane rating (and hence the price).

    A better description of the price of a fuel would be dollars per mile driven. A car designed for low octane fuel will not give better mileage when fed high octane fuel (because the compression is not changed). But a car designed to run on high octane fuel only, will give better mileage than the same car designed to run with any octane fuel. This comes from the higher compression, which makes for more efficient use of fuel. And better horsepower.

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