Biofuels Update

Farm Journal, Feb 1, 2008 by Jeanne Bernick

Energy Bill Impacts Farm Prices

The new energy bill passed by Congress ramped up biofuel mandates, which could result in higher corn and soybean use for fuel, say economists at the University of Missouri (MU).

Production of corn-based ethanol increases 24% and soydiesel increases 89% under one analysis of the Energy Independence and Security Act of 2007, reports the MU Food and Agricultural Policy Research Institute (FAPRI).

"Increased biofuel use results in higher prices for corn, soybeans and other crops," says Pat Westhoff, senior analyst at MU FAPRI. The energy bill will result in a 17% increase in average wholesale prices for corn-based ethanol and a 37% price increase for biodiesel.

MU FAPRI used an implied mandate of 15 billion gallons of corn ethanol and 1 billion gallons of soydiesel for this analysis. Mandates for other fuels like cellulosic ethanol are in the bill but were not analyzed.

Westhoff says many assumptions are necessary for any analysis of the energy bill. "The biggest unknown is price of petroleum," he says. "If oil remains above $80 per barrel, corn-based ethanol production might exceed 15 billion gallons even without a mandate."

If oil prices fall, market demand for ethanol could drop, he says. Mandates would have a big impact on commodity prices.

"The energy bill signed into law will have greater impact on farm commodity prices than any farm bill being considered," Westhoff says.

The report is available at www.fapri.missouri.edu.

GM Partners With Ethanol Maker

GM is so sold on ethanol that the automaker bought an undisclosed stake in Coskata, a private Warrenville, Ill., company that claims it has developed an advanced process to make ethanol from practically any renewable source, including garbage, old tires and plant waste.

GM announced the move Jan. 13 at the Detroit Auto Show. GM and Coskata say that the company's highly efficient methods for making ethanol can take away many of the production problems that have kept the fuel on the back burner.

First, they plan to use agricultural waste and household garbage to make ethanol, which means fuel production wouldn't push up food prices. Second, Coskata claims it will be so efficient that it will produce ethanol for less than $1 per gallon--about half of today's cost of producing gasoline.

According to Argonne National Laboratory, which analyzed Coskata's process, for every unit of energy used, it generates up to 7.7 times that amount of energy and reduces carbon dioxide emissions by up to 84% compared with gasoline. Coskata's process also uses less than 1 gal. of water to make 1 gal. of ethanol, compared with 3 gal. or more for other ethanol processes.

GM will receive the first ethanol from Coskata's pilot plant in late 2008. The fuel will be used in testing vehicles at GM's Milford Proving Grounds.

E85 Brochure Available

The 2008 E85/flexible fuel-vehicle (FFV) brochure includes frequently asked questions on E85 and FFVs. The inside of the quad- fold brochure includes a matrix-like listing of FFVs offered since 1995. Cost for the brochures produced by the National Ethanol Vehicle Coalition is 33cents . To order, go to https:// e85fuel.securesites.net/orders/promo_orderform_nonmember.php.

Indy Pace Car Goes Green

History will be made at the 2008 Indianapolis 500 when a distinctive Corvette model highlighting Chevrolet's commitment to fuel solutions serves as the official pace car.

The pace car is a customized Corvette Z06 E85 concept that operates on E85 ethanol fuel. "Although it is not a production flex- fuel vehicle, the Corvette Z06 E85 is a high-performance example of Chevrolet's gas-friendly to gas-free initiative, demonstrating viable fuel solutions," explains Ed Peper, Chevrolet general manager.

The 92nd Indianapolis 500 takes place on Sunday, May 25, 2008. It will be the Corvette's 10th appearance as the official pace car--a record that is unmatched by any other vehicle.