Sit Down with Sabin: Henrik Scheller: Customizing plants for biofuels.

Uploaded on Aug 10, 2011

Henrik Scheller from the JBEI appeared on August 3rd, 2011 for this installment of "Sit Down with Sabin," a conversation in which former reporter Sabin Russell chats with Lab staff about innovative science. They will discuss "Customizing plants for biofuels." During this series of conversations, Russell and Lab staff will explore the ups and downs of pioneering science, all without the aid of PowerPoints.

Tags: genetic engineering, feedstock, mutant, mutation, acetic acid,

From Field to Fuel: The Economics of Biofuel Energy

Ethanol Quota Debated by Corn Farmers and Meat Industry

The following is an excerpt from an article in 

The New York Times
Friday, August 17, 2012

Ethanol Quota Debated by Corn Farmers and Meat Industry

By JOHN H. CUSHMAN Jr.

WASHINGTON — Three big intertwined but rival agribusinesses — corn farmers, meat and poultry producers, and biofuel refineries — are in a political fight to protect their interests as a drought ravages corn producers and industrial consumers alike.

At issue is whether to suspend a five-year-old federal mandate requiring more ethanol in gasoline each year, a policy that has diverted almost half of the domestic corn supply from animal feedlots to ethanol refineries, driven up corn prices and plantings and created a desperate competition for corn as drought grips the nation’s farm belt.

Meat producers are demanding that the Obama administration waive the ethanol quota to ease rising feed prices. But ethanol producers worry that the loss of the quota will undermine the ethanol industry and do little for corn farmers but drive down the price of their stunted harvest.

The meat industry, backed by several governors, lawmakers and even international food agencies, argues that the quota has distorted grain markets by sucking up corn when ranchers can least afford it.

But the ethanol industry says that its corn consumption is down 12 percent since the start of the summer and that weekly ethanol production is at a two-year low. As corn prices have risen, refineries have scaled back production, idled dozens of plants and sold ethanol inventories. As a result, the industry may consume 10 percent less of this summer’s crop than last year’s, government and industry officials said.

“The market is already responding to the reality of this drought,” said Agriculture Secretary Tom Vilsack, a former Iowa governor who supports the quota, citing the recent decline in ethanol production.

Meat and poultry producers countered that the government was still “picking winners and losers,” and urged the Obama administration to “let the market work and embrace free market principles,” as J. D. Alexander, president of the National Cattlemen’s Beef Association, put it when he announced a petition to waive the quota two weeks ago.

For more, visit www.nytimes.com.

The Renewable Fuels Standard, Ethanol, and the U.S. Corn Crop

Press release:

For Immediate Release
August 1, 2012

The Renewable Fuels Standard, Ethanol, and the U.S. Corn Crop

Mr. President,

The President and CEO of Smithfield Foods, Larry Pope, took to the opinion pages of the Wall Street Journal again to blame all that ails him on the Renewable Fuels Standard.

Some may recall that he did the same thing back in April of 2010 when commodity prices were rising.  At that time, he perpetuated a smear campaign and blamed ethanol in an attempt to deflect blame for rising food prices while boosting Smithfield’s profits.  And now he’s at it again.

I may start referring to Mr. Pope as Henny Penny from the children’s folk tale Chicken Little.  Every time Smithfield has to pay a little more to America’s corn farmers to feed his hogs, Mr. Pope starts up with the same argument that the sky is falling and it’s all ethanol’s fault.

Mr. Pope’s opinion piece in the Wall Street Journal might lead some to believe that he’s very knowledgeable about the ethanol industry.  But there are many areas where he’s not.  He continues to perpetuate the myth that ethanol production consumes 40 percent of the U.S. corn crop.  Mr. Pope states, “ethanol now consumes more corn than animal agriculture does.”

Everyone with a basic understanding of a livestock farm, a corn kernel or an ethanol plant knows that’s not true.  According to USDA, 37 percent of the corn supply is used in producing ethanol. But the value of the corn does not simply vanish when ethanol is produced.  One-third of the corn re-enters the market as a high value animal feed called dried distillers grains.

I would imagine that millions of hogs raised by Smithfield every year are fed a diet containing this ethanol co-product.  Mr. Pope appears unaware of its existence.  When the distillers’ grains are factored in, 43 percent of the corn supply is available for animal feed.  Only 28 percent is used for ethanol.

This is the inconvenient truth for ethanol detractors.  They prefer to live in a bubble where they believe that ethanol is diverting corn from livestock use.  That’s just not the case.

Mr. Pope also proclaims, “Ironically, if the ethanol mandate did not exist, even this year’s drought-depleted corn crop would have been more than enough to meet the requirements for livestock feed and food production at decent prices.”

I’d like to ask Mr. Pope, why do you think that is?  Why did farmers plant 96 million acres of corn this year?  Why have seed producers spent millions to develop better yielding and drought resistant traits?  The answer is simple:  Ethanol.

If not for ethanol, farmers wouldn’t have planted 96 million acres of corn this year.  Without ethanol, I doubt we’d have seen investment in higher yielding and more drought tolerant corn plants.

I’m sure Mr. Pope is an intelligent man.  But he’s woefully uninformed on the issue of what the ethanol industry and the demand for corn has done for the size and genetic improvement of the corn crop.

It’s easy to understand Smithfield’s motive.  They benefit from an abundant supply of corn, just not the competing demand for it.  What is Smithfield’s primary problem?  Again, the answer is simple:  cost and profit.  They still want to pay $2 for a bushel of corn.

This is an important point that I hope people understand.  For nearly 30 years, until about 2005, companies like Smithfield had the luxury of buying corn below the cost of production.  Corn prices remained at about $1.50 to $3.00 a bushel for nearly 30 years.  Farmers routinely lost money.

The federal government then provided economic support for the farmers.  Producers like Smithfield had the best of both worlds.  They were able to buy corn below the cost of production, and let the federal government subsidize their business by guaranteeing a cheap supply of corn.

In the view corporate livestock producers, subsidies are just fine if they allow them to buy corn below the cost of production.  Anybody could look like a genius with that business model.

Mr. Pope also continues to overstate the impact of corn prices on the consumer.  Agriculture Secretary Vilsack recently stated that farmers receive about 14 cents of every dollar spent on food at the grocery store.  Of that, about three cents is the value of the corn costs.

A research economist at the USDA recently stated that a 50-percent increase in the price of corn will raise the total grocery shopping bill by about one percent.  To put it in perspective, the value of corn in a four-dollar box of corn flakes is about ten cents.

Mr. Pope also exaggerated the impact of ethanol on food prices in 2010, and he’s doing it again today.  He’s using the devastating drought to once again undermine our nation’s food, feed and fuel producers.  And he’s doing it to make more money.

Repealing the Renewable Fuels standard won’t bolster Smithfield’s profits.  Because of the flexibility built into the renewable fuels mandate, a waiver won’t significantly reduce corn prices.

A recent study by Professor Bruce Babcock at Iowa State University found that a complete waiver of the Renewable Fuels Standard might reduce corn prices by only 4.6 percent.  The report states, “The desire by livestock groups to see additional flexibility in ethanol mandates may not result in as large a drop in feed costs as hoped.”  And, “…the flexibility built into the Renewable Fuels Standard allowing obligated parties to carry over blending credits from previous years significantly lowers the economic impacts of a short crop, because it introduces flexibility into the mandate.”

The drought is enormous in both scale and severity.  But we won’t know the true impact until September, when the harvest begins.  The latest estimates from USDA indicate an average yield of 146 bushels per acre.  That would result in a harvest of 13 billion bushels.  This would still be one of the largest corn harvests.

I would suggest that those claiming the sky is falling withhold their call for waiving or repealing the Renewable Fuels Standard.  It’s a premature action that will not produce the desired result.  And it would increase our dependence on foreign oil and drive up prices at the pump for consumers.

POET & DSM to Make Advanced Biofuels a Reality by 2013

News release from POET, major ethanol producer:

POET and DSM to make advanced biofuels a reality by 2013

Joint venture to commercialize and license cellulosic bio-ethanol

1/23/2012

POET, LLC, one of the world's largest ethanol producers, and Royal DSM, the global Life Sciences and Materials Sciences company, today announce a joint venture to commercially demonstrate and license cellulosic bio-ethanol, the next step in the development of biofuels, based on their proprietary and complementary technologies. POET-DSM Advanced Biofuels, LLC, is scheduled to start production in the second half of 2013 at one of the first commercial-scale cellulosic ethanol plants in the United States.

The two partners will produce cellulosic ethanol from corn crop residue through a biological process using enzymatic hydrolysis followed by fermentation. The first commercial demonstration of the technology will be at Project Liberty, which is currently being constructed adjacent to POET's existing corn ethanol plant in Emmetsburg, Iowa. The initial capacity is expected to be 20 million gallons in the first year, growing to approximately 25 million gallons per year.

POET-DSM Advanced Biofuels, LLC, intends to replicate and license the technology to additional plants to be built at the other 26 corn ethanol facilities in POET's network and license it to other producers in the United States and the rest of the world. The U.S. Environmental Protection Agency (EPA) estimates that in the United States as many as 350-400 new bio-refineries will have to be constructed by 2022 to meet the volume requirement of 16 billion gallons/year of cellulosic bio-ethanol under the Renewable Fuel Standard.

DSM and POET will each hold a 50% share in the joint venture, which will be headquartered in Sioux Falls, South Dakota. The initial capital expenditure by the joint venture in project Liberty will amount to about $250 million. The closing of the joint venture is subject to regulatory approvals and other customary closing conditions.

Both partners in the joint venture bring deep expertise and experience in different areas of cellulosic bio-ethanol. They also share the same vision for a bio-based economy.

Jeff Broin, POET founder and CEO, said: "This joint venture brings together two companies leading the transition from a fossil-based economy to a bio-based economy. The partnership has set an ambitious goal: to make cellulosic bio-ethanol competitive with corn ethanol, which is the most competitive liquid transportation fuel on the market today. We believe that the joint venture positions us well to meet our ambitious cellulosic ethanol production goals."

Feike Sijbesma, CEO/Chairman of the DSM Managing Board, commented: "This cooperation is a milestone in realizing DSM's strategy. By leveraging the unique opportunities in Life Sciences and Materials Sciences we can contribute our heritage of over a century in both biotechnology and chemistry to this joint venture with a biofuels leader. Together we shall deliver the key to unlock the cellulosic bio-ethanol opportunity. As the world is facing unprecedented challenges with a growing population making an ever bigger claim on the planet's resources, we need to accelerate the transition to a bio-based economy and this joint venture is a significant step in that direction."

As one of the world's largest producers of corn ethanol, POET has been actively developing cellulosic bio-ethanol for more than a decade. In November, 2008, the company started operating a cellulosic bio-ethanol pilot plant at its research center in Scotland, South Dakota. For the past five years, POET has been working with farmers to bale, transport and store corn crop residue—the cobs, leaves, husks and some stalk left in the field after the grain harvest.

DSM already has a unique position in the development of cellulosic ethanol as the only company offering both yeast and enzyme solutions to increase conversion rates to make the technology commercially viable. DSM has vast experience in scaling up biotechnological processes and an extensive global footprint and relationships to help accelerate technology adoption in key markets.

Cellulosic bio-ethanol from corn crop residue represents a large opportunity. If the technology is replicated at POET's network of 27 existing corn ethanol plants, it could produce up to one billion gallons of cellulosic bio-ethanol per year.

In an analysis of the Renewable Fuel Standard, the U.S. EPA projected 7.8 billion gallons of cellulosic bio-ethanol coming from corn crop residue by 2022. Beyond that, the U.S. Departments of Energy and Agriculture have estimated that more than one billion tons of biomass is available in America that could produce enough cellulosic bio-ethanol to replace a third of the country's gasoline use.

POET-DSM Advanced Biofuels, LLC, is a 50/50 joint venture between Royal DSM and POET, LLC. Based in Sioux Falls, South Dakota, the company is a cooperative effort of two innovators that provides the key to unlocking the opportunity of converting corn crop residue into cellulosic bio-ethanol. Built on the strengths of both companies the joint venture has a critical mission: to make cellulosic bio-ethanol competitive with corn ethanol, the most competitive renewable liquid transportation fuel on the market today. Drawing on the deep expertise and experience of POET and DSM in different areas of converting cellulosic biomass into ethanol, POET - DSM Advanced Biofuels will have its first commercial-scale plant co-located with POET's biorefinery in Emmetsburg, Iowa. Based on this plant the JV will globally license an integrated technology package for the conversion of corn crop residue to cellulosic bio-ethanol. More information: www.poetdsm.com

After Three Decades, Federal Tax Credit for Ethanol Expires

The following was gleaned from a January 2 New York Times article with the above title.

The New York Times

Monday, January 02, 2012

After Three Decades, Federal Tax Credit for Ethanol Expires

WASHINGTON — A federal tax credit for ethanol expired on Saturday, ending an era in which the federal government provided more than $20 billion in subsidies for use of the product.

The tax break, created more than 30 years ago, had long seemed untouchable. But in the last year, during which Congress was preoccupied with deficits and debt, it became a symbol of corporate welfare. Fiscal conservatives joined liberal environmentalists to kill it, with help from a diverse coalition of outside groups.

In the United States, most ethanol is produced from corn.

Nearly 40 percent of the United States corn crop goes to ethanol and byproducts, including animal feed.

The tax credit, which cost the government nearly $6 billion in 2011, went to gasoline refiners that mixed ethanol with gasoline.

Senator Dianne Feinstein, Democrat of California, said the ethanol industry had enjoyed “a trifecta, a triple crown” of federal support. Federal law requires that certain minimum amounts of renewable fuels like ethanol be blended into gasoline. Refiners received the tax credit for doing so. And the government imposed a tariff on imported ethanol, protecting the domestic industry.

The tariff, like the tax credit, expired Saturday. But the requirement to use increasing amounts of ethanol in gasoline continues.

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