Southeastern Regional Center Tennessee Agricultural Experiment Station Kelly Tiller Agricultural...

Southeastern Regional CenterSoutheastern Regional CenterTennessee Agricultural Experiment Tennessee Agricultural Experiment StationStation

Kelly TillerAgricultural Policy Analysis Center

The University of Tennessee

Tennessee’s Tennessee’s Bioenergy Bioenergy

Future:Future:Opportunities and Opportunities and

ChallengesChallenges

Burley Stabilization CorporationBoard Meeting

January 15, 2007


U.S. Corn Ethanol ProductionU.S. Corn Ethanol Production

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Mill

ions

of

Gal

lons

of

Eth

anol

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

0

3,000

6,000

9,000

12,000

15,000

Mill

ions

of

Gal

lons

of

Eth

anol

1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

Source: Renewable Fuels Association

2012 RFS: 7.5 B gallons Total Capacity (as of 11/27/06) = existing + under construction +

under expansion

There’s a limit to the amount of corn-based

ethanol we can sustainably produce

without disrupting the ag sector

Could potentially double corn-ethanol capacity

Tennessee crop farmers benefit from corn-ethanol, wherever plants are located


U.S. Energy ConsumptionU.S. Energy Consumption

Biomass Consumption Million dry tons/year

Forest products industry Wood residues Pulping liquorsUrban wood & food & other process residuesFuelwood (residential/commercial & electric utilitiesBiofuelsBioproducts

TOTAL

44 52 35 35 18 6

190

Source: Energy Information Administration (EIA), 2006


Transportation Fuel FocusTransportation Fuel Focus

Today, 97% of our transportation fuel

comes from petroleum sources


Energy In vs. Energy OutEnergy In vs. Energy Out

5.3

1.40.8

0.4

0

1

2

3

4

5

6

Fos

sil E

nerg

y R

atio

=

(En

erg

y D

eliv

ere

d to

Cu

sto

me

r / F

oss

il E

ne

rgy

Use

d)

Cellulosic EthanolBiorefinery

Corn Ethanol Gasoline Electricity

Source: J. Sheehan & M. Wang (2003)

The road to petroleumdisplacementis paved with

cellulosic biomass

* Some newer estimates of cellulosic FER >10

*


Cellulosic Ethanol: Good to GoCellulosic Ethanol: Good to Go

We can make lignocellulosic ethanol today– Proven at a laboratory scale

– For $3.00/gallon or more (> double corn-to-ethanol cost)

There are no commercial facilities operating in the U.S. today– Abengoa facility near completion in Spain, expected to produce 54 MGY from

wheat straw

– Iogen test plant running on wheat straw in Canada, commercial facility planned in Idaho

– Broin corn stover & grain facility near groundbreaking (Iowa)

– Several planned or under consideration• e.g., DuPont, Mascoma, Potlatch, Xethanol

Making cellulosic ethanol economically feasible is a major part of the President’s Biofuels Initiative– DOE projects cellulosic ethanol at $1.07/gallon by 2012


Our Comparative AdvantageOur Comparative Advantage

Logging & ResiduesLogging & Residues

SwitchgrassSwitchgrass(2014, at $50/dt)Switchgrass Production, 2014

Dry Tons of Switchgrass

Zero

Zero to 300 thousand

Up to 1 million

Up to 2 million

Over 2 million

Ugarte, et al. 2006 (forthcoming). Economic Implications to the Agricultural Sector of Increasing the Production of Biomass Feedstocks to Meet Biopower, Biofuels and Bioproduct Demands.

Perlack, R.D., et al. 2005. Biomass as Feedstock for a Bioenergy and Bioproducts Industry: Technical Feasibility of a Billion-Ton Annual Supply.


TN Bioeconomy VisionTN Bioeconomy Vision

Produce & consume at least 1 billion gallons of cellulosic ethanol, at $1.20 per gallon wholesale

10+ new biorefineries operating in Tennessee, employing 4,000 and supporting 12,000 rural jobs

– At least 4 of the biorefineries owned and operated by local farmer cooperatives, retaining an additional $40 million in local communities

Satellite co-product plants creating an additional 3,000 jobs and $2 billion in revenue

More than 20 thousand farmers growing dedicated energy crops, adding $100 million in new farm revenue


Believable 10 Years Ago?Believable 10 Years Ago?Corn-Ethanol Biorefinery Locations (October 2006)

Source: Renewable Fuels Association


The Issue At HandThe Issue At Hand

Sufficient, economical, sustainable supplyof cellulosic raw material (biomass)

Efficient, profitable, low-risk fuelproduction capacity

Sufficient, stable, local demand foralternative liquid fuelsS

imul

tane

ous

Dev

elop

men

t


The Tennessee Biofuels InitiativeThe Tennessee Biofuels Initiative

• Construct a demonstration-scale cellulosic ethanol facility in Tennessee

– Utilize 170 tons per day of locally produced switchgrass and wood

– Work with partner industries to generate 5 million gallons of ethanol annually for local distribution

– Refine the process for local resources to reduce costs, improve process, scale up to commercial

– Deploy the model throughout the state


Facility SitingFacility Siting

Proximity to researchers(UT and ORNL)

Availability of feedstock

Transportation infrastructure

Proximity to distributors

Local cooperation & incentives


The Cellulosic Ethanol ProcessThe Cellulosic Ethanol Process1. Preprocessing: Wood chips and switchgrass are delivered for storage, grinding, drying, and classification.

2. Pretreatment: A solvent fractionation process is used to separate the chemical components of the biomass (this step is specific to lignocellulosics).

3. Hydrolysis: Enzymes are used to break down the carbohydrates to their fermentable sugars (5C & 6C)

4. Fermentation & Distillation: Yeast converts the sugars to ethanol (or related alcohols), and water is removed to further concentrate the product.


Lignin and solid residue will initially provide heat and energy for the process

Product diversification is considered important to economic viability of the biorefinery

Research will address development of chemical building blocks and novel, value-added products

Coproduct utilizationCoproduct utilization


Grassoline™ Feedstock NeedsGrassoline™ Feedstock Needs

• Requires 62,000 tons of biomass annually• Feed plant 170 tons per day

• Could be supplied with 8,000 acres of switchgrass• Grown by about 200-400 farmers within a 50 mile radius of

plant

• Easily supplied by a few surrounding counties• From land currently idle or in hay or pasture• Without reducing other crop or livestock production

• Forest biomass (up to 100 M tons) readily available within transport range, important for smoothing seasonality of feedstock


Switchgrass SuitabilitySwitchgrass Suitability

Well suited to the Southeast– Currently, ~6 tons/acre in TN– Potential for 12+ tons/acre

Warm season, native, perennial grass

Highly resistant to many pests and plant diseases– Low use of chemicals or fertilizers

Tolerates poor soils, flooding, drought

1-2 year establishment, replant year 11

Production/harvest practices similarto hay– Working toward multiple harvests

per year

UT has long history of switchgrass production and market research


TN Switchgrass PotentialTN Switchgrass Potential

549,299

915,552

374,957735,734

233,421

670,125

by 2012

by 2025

• Dry tons of switchgrass

• Assuming $40 dt at the farm gate

• Assuming yields around 6 dt/acre

• Without disrupting sector balance

2,343,861

4,268,894

2,037,264

3,964,812

2,652,494

3,595,344

Tennessee could produce enough switchgrass by 2025

to produce more than a billion gallons of ethanol annually


A Profitable AlternativeA Profitable Alternative

At current yields (6 tons/ac) and $40/ton, competes with corn, cotton, soybeans for acreage

Significantly higher returns than hay, on similar acreage

With yield improvements, returns potentially more than double traditional row crops

Specialty crops can return $1,000+/acre, with significantly higher risk, limited opportunities

$263

$193

$103

$34

$97

$94

$81

$25

$0 $50 $100 $150 $200 $250 $300

S'grass(3)

S'grass(2)

S'grass(1)

Hay

Corn

Soybeans

Cotton

Wheat

Returns above variable costs, Tennessee, 2006

(2): 6 dt/ac, $55/dt

(3): 10 dt/ac, $40/dt

(1): 6 dt/ac, $40/dt

Source: UT Extension Crop Budgets, 2006


Economic BenefitsEconomic Benefits

• Each commercial facility:– Directly employs 200– Supports 1,400 jobs indirectly– Increases Gross State Product

by $223 million– Generates $40 million in new

tax revenue

• Ownership of a facility by a local cooperative retains an additional $10 million per year in the local economy

• For a billion gallons of ethanol production, TN gets:

– 10,000 to 20,000 new jobs– $400 million dollars in new state &

local taxes

Cellulosic bioeconomy is an opportunity to:

– Create rural jobs, development, and wealth

– Keep money in the state that is spent today but currently flows out-of-state


A Synergistic FitA Synergistic Fit

• Builds on the UT/ORNL partnership• Unparalleled capacity for discovery and implementation

through science, engineering, and outreach• Improves competitiveness of GTL Bioenergy Center Proposal

• Southeastern Sun Grant Center is hub for regional biofuels/bioproducts research

• Significant UTIA internal redirecting and expansion in this arena

• Significant/driving issue in several policy arenas2007 Farm Bill, EPAct, states


The opportunity is today!The opportunity is today!• Cellulosic ethanol represents the foundation for

a new industry sector with value-added processing of Tennessee raw materials

• The pilot-scale facility will:– Address the nuances of the feedstock and optimize

the process– Enable research to expand the biorefinery products

and markets– Resolve regulatory and logistical concerns– Streamline the processing system– Lead the commercial deployment of Tennessee’s

bio-based economy

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