July 11, 2008
Economist: Take 'stalk' in corn stover as state's ethanol futureWEST LAFAYETTE, Ind. - Cellulosic ethanol made from corn stover and switchgrass could be the next big thing in liquefied energy. The biggest of the big - at least in Corn Belt states like Indiana - would likely be corn stover, a Purdue University study finds.
Corn stover is plentiful in Indiana because of the state's large corn acreage and could be harvested less expensively than switchgrass, said Wally Tyner, Purdue agricultural economist and the study's lead researcher. Also, with high corn prices, corn stover would provide farmers extra profit without planting additional crops, he said. Switchgrass is a primary crop and must be planted separately.
"For cellulosic ethanol in Indiana, corn stover is where it's at," Tyner said. "From a cost perspective, corn stover averages $40 per dry ton delivered to the ethanol plant while switchgrass averages $60 per dry ton. That's a huge early advantage to corn stover.
"Then there's the profit. Farmers would receive an average of $80 an acre extra profit for corn stover and $160 an acre average profit for switchgrass."
Corn stover consists of the cornstalks and other plant material that remains in a cornfield after the ears have been harvested.
Switchgrass is a summer perennial grass native to North America. Depending on the variety and growing conditions, switchgrass plants can reach 12 feet tall. The plant requires little fertilization and is tolerant of poor soils, drought and flooding. Switchgrass reaches full yield potential three years after planting. One or two cuttings are possible each year, using hay or silage equipment.
The Purdue study compared the costs and returns of harvesting corn stover to the growing and harvesting of switchgrass for Indiana ethanol production. Tyner and his research assistants also examined the economic and environmental results of replacing some coal with the two types of biomass at electric power plants.
Using a corn stover yield of 4.25 dry tons per acre from a 160-bushel-per-acre corn crop and a switchgrass yield of 5 dry tons an acre, the study found that in the major corn-growing regions of northern and central Indiana, corn stover was the better cellulosic ethanol feedstock.
The economic numbers were better for switchgrass in portions of southern Indiana where soils are less conducive to growing corn, Tyner said.
"In our study we factored all of a farmer's costs: labor, equipment, seed, fertilizer replacement, twine and net wrap for baling the cellulose, and everything else we could think of," Tyner said. "We also added a profit margin of 15 percent above all costs to provide an incentive to farmers."
With high oil and food prices and momentum gaining for cellulosic ethanol, full-scale production could come sooner rather than later, Tyner said.
"I think it is likely that in the next few years cellulose-based ethanol is going to become viable," he said. "With $6 and higher per bushel corn it is already very close economically. And since the federal Renewable Fuels Standard calls for the production of 36 billion gallons of ethanol by 2022, of which 16 billion gallons have to be cellulose, cellulosic ethanol will advance."
Before cellulosic ethanol can take off a number of issues must be resolved, however, Tyner said.
"The biggest issue is going to be contracting," he said. "With a corn ethanol plant, if there's not enough corn in one county you go to another county to get your corn, or get it from out of state. Corn moves cheaply and easily.
"Biomass, on the other hand, doesn't. Cellulosic ethanol plants will need a local supply of corn stover and switchgrass. An investor isn't going to sink $400 million into a cellulosic ethanol plant until they have a local supply of raw material locked up.
"Conversely, farmers are going to need assurances that no matter what happens in the marketplace - fertilizer prices triple, natural gas and propane prices do this, diesel prices do that, corn prices go up or down - that growing biomass is viable for them. So we still need to develop risk-sharing, long-term contracting mechanisms that will be acceptable to both the supplier and the ethanol producer."
Those contracts will need risk indexes and language spelling out how the farmer and ethanol plant can get out of a contract, Tyner said.
"And then there are policy issues," he said. "If the government really wants cellulosic ethanol to get off the ground, should it intervene with policies that reduce risk for investors, such as subsidies that vary with the price of crude oil?"
The study's findings are contained in a report titled "The Economics of Biomass Collection, Transportation, and Supply to Indiana Cellulosic and Electric Utility Facilities." The report, co-authored by agricultural economics graduate student Sarah Brechbill, is available online at http://www.agecon.purdue.edu/papers/biofuels/
Writer: Steve Leer, (765) 494-8415, firstname.lastname@example.org
Source: Wally Tyner, (765) 494-0199, email@example.com
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