RedHerring has a nice piece on a meeting of Midwestern state governors (and the Premier of Manitoba, Canada).
An out-take:
The Midwestern alliance is the first major group to set specific targets for E85, the fuel made from a blend of 85 percent ethanol and 15 percent gasoline. By 2025, they want 33 percent of gas stations, or around 9,700 locations, in the region to offer E85. They also want at least 50 percent of all transportation energy consumed in the region to be supplied by locally produced biofuels, such as ethanol fuel or biodiesel, by 2025.
This is an interesting article, not because of its relevance to the biofuels development to the region.
And just for the sake of rigor, let’s see what impact these suggestions would have:
- 27% of greenhouse gas emissions are from this region which we’ll assume correlates to 27% of U.S. gasoline consumption: 140 Bil gallons X 27% = 37.8 Billion Gallons of annual demand.
- E85, then, would require ethanol production of 85% * 37.8 Bil Gal/yr = 32.13 Billion Gallons of ethanol/yr.
- We currently produce around 7 Billion gallons in 200 plants. We would need the equivalent of 4.59X the number of plants we have now (around 900+ equivalent plants, which includes expansion of current facilities).
That’s a lot of ethanol. It’s debatable that the U.S. could produce that much ethanol as it is (meaning, cellulosic would be mandatory just to serve the Midwestern states, let alone the coasts).
The Midwestern states are in bad shape. Michigan and Ohio are particularly in a bad way. I’ve been in Detroit the last month visiting family for the holidays and the environment is more depressed than I’ve ever seen. There are “For Sale” signs everywhere. Hardly anyone at the local malls doing holiday shopping. And Quicken Loans moving into downtown Detroit lead the evening news and the national new (such a small event got so much attention). The city counts new job creation just as closely as gas price changes. And it’s not getting better.
This big push for expanded biofuels production is really a bet by local government’s on developing the region’s economies. The front line of all of the country’s bad news is in this Midwestern states (real estate, health care, job losses). While there are many who object to the subsidies (corn and blending), and the energy inefficiencies of ethanol, all that doesn’t matter to people with no jobs. Last I checked, Michigan’s unemployment rate was north of 7%. That’s Baghdad crazy. An emerging biofuels industry would be a great boon for the area.
It would also be well deserved. Much of the Big 10 and other local area schools are really pushing some great research into new advanced materials, catalysts, bio-feedstock technology development. Northwestern, Michigan, Michigan State, Iowa, and Wisconsin are all doing breakthrough research. Even schools like Purdue, Ohio State and Penn State have made some very significant break-throughs.
But this desire may be misplaced. The detriments to ethanol as a biofuel (not just its current impact as a fuel additive) are real. The economics aren’t really that good right now due to a variety of factors. So while it would be great to make the midwest a haven for biofuels production, betting on biodiesel or E85 might be misplaced. Most notably, there may not be enough ethanol production capacity to meet the desired goals. But more so, the fuel industry is truly a global one. Making a bet on one local market that, unlike petroleum, doesn’t utilize the same infrastructure is a tough one for the industry to undertake. And that may be the real end to these governors’ stories.
