Friday, January 05, 2007

Fuel for Fuel

One of the sideswipes made by detractors of the ethanol industry is that none of the producers use ethanol as their own power source. The logic is that if ethanol from corn is such a good value proposition, ethanol should be good enough to run the ethanol production process. Of course, this is short-sighted argument as it oversimplifies the equation.

This addition to the Biofuels Series takes a closer look at the processes used to produce biofuels, the required energy or power sources and what this means in terms of profit margins. Keep in mind that in all cases the biofuel objective is to release the solar energy stored in the organic material by reformatting and concentrating. The earth took care of this process eons ago, turning great masses of leaves and grass into coal. If humans are to do the same job in a short period of time it takes a power source.

Power requirements are as diverse as the processes - fermentation (ethanol), anaerobic digestion (methane), and transesterification (biodiesel) - but in the end it is just another direct cost on the P&L.

A close look at the P&L effects as well as the science of fermentation should answer the question of why ethanol is not used as a fuel for ethanol production. The
American Coalition for Ethanol provides an excellent overview on the ethanol production process, including the liquefaction step that involves heating the feed stock (usually corn) to temperatures as high as 150 degrees Celsius (302 degrees Fahrenheit). Accordingly, natural gas is a favored heat source but coal has been used as well. The U.S. Department of Energy supports the use of lignin, a wood by-product, to power ethanol plants.

Methane production is much more straightforward and less costly since it relies of bacteria, called anaerobes that live in environments where there is no oxygen. Keep the temperature and pH levels stable and the fresh manure coming in and they will work for free without rest breaks! Keeping temperatures near 35 degrees Celsius (95 degrees Fahrenheit) does require energy, but clearly far less than those required in the ethanol process.

Some argue that since vegetable oils have good ignition characteristics as they are, it is unnecessary to undertake costly refining steps. Unfortunately, vegetable oils are gooey and oxidize quickly, making transport and handling costly as well as just plain unpleasant. The method of choice to clean up vegetable oils is transesterification.

The energy requirement for the production of biodiesel from oils using transesterification varies depending upon the chemical process. For example, one version called glycerolysis requires cooking the mixture at fairly high temperatures (200 degrees Celcius). Acid catalysis is successful at far lower temperatures (60 degrees Celcius) but the transesterification process can take up to two days.

There are also some energy requirements in the transesterification process for cleanup and purification such as water washing, distilling, vacuum drying and filtration. Indeed, there are a number of handling, transporting and containment steps for both ethanol and methanol that also require power sources. At the next step in exploring biofuel production costs, we will look more closely at these and other plant costs.

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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