Ethanol to come mainly from corn in 2015-Deere
By Lisa Shumaker
NASHVILLE, Feb 29 (Reuters) - More research and development needs to be done on producing ethanol from cellulosic material such as switchgrass, which means most ethanol will still come from corn in 2015, said experts from agriculture equipment maker Deere & Co (DE.N) on Friday.
"Cellulose has some promise but we're also pretty sure there's a lot left to discover and invent," said Don Borgman, Deere's director of agriculture industry relations at the Commodity Class, a U.S. grain conference.
Ethanol is gaining traction as an alternative energy amid growing concerns about carbon emissions linked to global warming, record oil prices and instability in crude oil producing regions such as the Middle East.
Ethanol is made primarily from corn in the United States, and is added to gasoline in blends up to 10 percent. However, companies are researching other sources given concerns about using food to produce fuel when many are going hungry around the world.
At the moment, there is no U.S. commercial production of ethanol from cellulose -- woody plant materials such as grass and agricultural waste.
Capital costs for building an ethanol plant that uses cellulosic material is about four to five times the cost of an ethanol plant that runs on corn, Borgman said. In addition, the industry is still divided on whether enzymes or thermochemical processes are the best way of turning material such as corn stalks and switch grass into alternative fuel.
The cost to grow and transport cellulosic material to an ethanol plant is also much higher than corn.
An Iowa State University study estimated it would cost $110 per tonne to grow, store and transport switchgrass to an ethanol plant based on each acre of land yielding 6 tonnes of material. Feedstock would represent $1.50 per gallon of ethanol, Borgman said.
Corn would have to cost $6.60 per bushel for a starch feedstock to cost $1.50 per gallon of ethanol.
Chicago corn futures closed at $5.46 on Friday after having risen about 25 percent during the past year.
Deere and and other farm equipment makers are enjoying record demand for their products thanks to rising farm incomes from the surge in investment in biofuels as well as increased consumption of grain in the developing world.
The E10 wall
While demand for ethanol has grown rapidly, the United States could soon hit an "E10 wall," where production capacity exceeds demand, said Borgman and principal scientist John Hickman at Deere.
U.S. ethanol production capacity has already topped 8 billion gallons a year and is forecast to rise to 9 billion gallons by the end of this year, according to the Renewable Fuels Association.
The industry could hit "the wall" when production reaches between 11 billion to 15 billion gallons, they said. To keep demand growing, the United States needs more flexible fuel vehicles that can run on up to 85 percent ethanol.
Of the 230 million vehicles on the road, only 6 million are flexible fuel cars and trucks, they said.
Most U.S. cars and trucks can only run on blends that contain no more than 10 percent ethanol. (Editing by Carol Bishopric)
