Biofuels in Perspective

Bio-Ethanol Development in the USA 47
Despite the abundance of feedstock, however, early corn ethanol production was at best
a breakeven proposition. Throughout the 1970s and early 1980s, ethanol from corn starch
required at least as much fossil energy to produce as there was available energy in the
finished product. 17 Early biorefineries were inefficient operations requiring large inputs
of heat, water and electricity. Corn farming required large inputs of fossil energy as well.
As a result, federal support for ethanol in the 1980s and 1990s was increasingly seen as a
handout to farmers.
Some skepticism of bio-ethanol remains, but the corn ethanol industry of today bears
little resemblance to the pioneer plants of the 1970s and 1980s. Technological advances
have transformed both corn production and ethanol processing.
Agricultural biotechnology and improved cropping practices have doubled per acre corn
yields since 1970. 11 Corn farmers have also become more efficient in their use of chemical
fertilizers. Since 1985, per acre use of nitrogen, phosphate and potash for corn production
have all declined (by 6 %, 22 % and 39 % respectively through 2000), while fertilizer
production efficiency has increased. 18
Even greater efficiency gains have been achieved through the use of industrial biotechnology
and other new processing technologies at the biorefinery. Two distinct approaches to
corn ethanol production are now in use. Both have benefited from substantial technological
improvements.
The first ethanol refineries were established at corn wet mills, where corn is processed
into its constituent components for animal feed, oils and sweeteners. Ethanol was seen as
a way to add value to the starch stream. In today’s wet mills, the corn is steeped in water
to begin to break down the starch and protein bonds. The mix is ground and screened to
remove the germ and fiber, and the starch is separated from the protein. Enzymes are added
to the starch to break it down via hydrolysis into glucose. The glucose is then fermented in
the presence of yeast to produce ethanol.
Corn wet mills are capital-intensive operations and must typically produce at least 100
million gallons per year of ethanol to justify the necessary capital investments. Most of the
corn wet mill ethanol facilities in the US are operated by large agri-business concerns, led
by Archer Daniels Midland Company (ADM), the world’s largest ethanol producer. Wet
mills have become increasingly efficient over time, but only one wet mill ethanol facility
has been constructed in the US since 1997.
Corn dry milling is now the dominant technology for ethanol production in the United
States. Over 80 % of US ethanol facilities are now dry mills. 19 In dry milling, the corn
kernel is first ground into coarse flour and then cooked in water. Enzymes are added to break
the starch down into glucose in a process called saccharification, creating a mash, which
is cooled and fermented. The alcohol is distilled from the mash and the remaining mash is
dried to produce a high value animal feed known as distillers dry grains (DDGs). Some of the
nutrient-rich liquid is often added back to create distillers dry grains with solubles (DDGS).
Dry mills are far less capital-intensive than wet mills. Modern dry mill capital costs
average as little as $1.00 per gallon of annual production capacity, 20 versus approximately
$2.00 per gallon capacity for the most recent wet mill facilities. 21 This has allowed many
smaller investors to enter the ethanol market. Smaller ethanol producers are also eligible for
a 10 cents per gallon tax incentive in addition to the 51 cent-a-gallon VEETC. As a result,
approximately half of all ethanol biorefineries are now owned by farmer co-operatives.
Nearly all new ethanol plants constructed today are dry mill facilities.