The Corn Ethanol Evolution and Transformation

The corn ethanol industry is at a very exciting and scary point.  We know the capacity is nearing the 10% blend wall but we also know that the blends can be increased over time.  (Brazil)  We know there are better renewable alternatives to ethanol but they have not obtained commercial scale production.

What will the future look like for these companies and their facilities?  It depends on many factors but they will have one thing in common.  These facilities will be producing products for many years to come.  It may not be ethanol from corn.  It may not be ethanol at all.  But it will be renewable fuel, chemicals, and other products.

Let's just take a look at corn ethanol.  Not so many years back a typical ethanol plant was located with reasonably priced corn, steam energy, electricity, water, transportation, etc.  The plants were designed to make ethanol and either wet or dried distiller's grains.  The plant may or may not have captured the CO2 depending on the local market.  It was a pretty standard model duplicated some 150+ times across the US.
The ethanol plant today is affected by GHG emission legislation, indirect land use, water use, and increasing economic pressures.  The corn ethanol plant of today uses advanced equipment to reduce energy consumption, water usage, is developing other valuable products, and is investing in upgrades to improve their efficiency.  Water recycling, oil extraction, anaerobic digestion, and other changes are helping to increase the value these facilities are extracting from each bushel of corn and do it more efficiently.  This is a sign of an industry which is maturing.  It is a good and necessary evolution for the industry .

The refining industry did not just appear and operate at their current efficiencies.  It has taken many, many years of distillation improvements, bottleneck elimination, and many other developments in the refining industry to get where we are at today.  They are still improving!  Why would we expect corn ethanol to be any different?

Now let's look to the future for these facilities.

Corn ethanol production stated simply is converting carbohydrates into sugars and turning these sugars into ethanol through fermentation.  Why do we use corn?  It is an inexpensive source of sugars and has a well established supply chain.

Anyone who has done a nickel's worth of research on cellulosic ethanol knows the first hurdle is getting the sugars released from the material so you can use them.  The second hurdle is getting the ethanol produced and extracted at a competitive price to corn ethanol.  When these factors are overcome for cellulosic ethanol and other products there is going to be a dramatic change in the ethanol industry.

The production of cellulosic ethanol, biobutanol, and many other products actually use the same types of equipment in many processing steps.  When these products are made at an existing corn ethanol facility it makes things very interesting.

Imagine an integrated biorefinery which has the ability to change feedstock AND final products based on availability and pricing.  When you combine the flexibility on feedstock and final product you have created a model which allows each facility to take an individual approach to their feedstock and final product choices to maximize their profits based on their specific opportunities.  This is an industry transformation which is getting closer every day.

The "Second Wave" of renewable energy development

     The years have taught us all a great deal about renewable energy.  One of the things I noticed is if you follow the investments and the press releases you begin to see that a good portion of the investment money follows the best promoters.  I will not name any company in specific since there are more than a handful of companies who fall into this category.  Some of which I believe will be gone in the near future because they have not developed viable technologies.  In the end deep pockets do not make a technology viable.
    I think we should brace ourselves for the renewable energy fall out we are going to see in the next several years.  There are many companies which have hyped their way to large high profile investments.  They have secured large government grants, loan guarantees and still not met their milestones for technology development.  In the end viable processes and technology is necessary for success.
     In the background far removed from the press and high profile investments are companies that are beyond announced milestones and working hard to refine their technologies and scale up their processes.  I believe that some of these companies will lead what I call the "second wave" of renewable energy development.  These are the companies which have developed frugal ways to utilize capital, feedstock, and existing infrastructure to develop truly viable options for our future.  These companies have quietly developed economically viable processes and are ready to scale.
     What does this mean for advanced fuels development?  I think it means we will not see significant production for at least 5 more years.  The key word in this is "significant".  This is because the remaining high profile and second wave companies need to get their technologies into commercial scale and this is not going to be an easy process.  Some high profile companies are going to fall flat on their face.  Investors are going to be wary of putting good money after bad.  The normal technology challenges of scale will also be encountered.  There will be success stories.
     In 2 years there will several companies producing advanced renewable fuels at prices competitive to the market.  There will be demonstration and commercial scale operations.  There won't be significant amounts in overall terms but these companies will have scale facilities which can develop into significant production over time
     We will be at a significant point in advanced fuels development.  We could be entering into a build out phase which could provide the investment, employment, and environmental opportunities we have envisioned for many years.