11.2: Ethanol Production and Economics

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11.2 Ethanol Production and Economics

The major feedstock for ethanol has been coarse grains (i.e., corn). Second-generation ethanol (from cellulosic biomass) is around ~7% of the total ethanol production. Figure 11.1 shows the global ethanol production by feedstock from 2007-2019.

graph of Global ethanol production by feedstock from 2007-2019 as described in the text — Figure 11.1: Global ethanol production by feedstock from 2007-2019.

**Click here for a text alternative to Figure 11.1**

**Global Ethanol Production in billions of liters by Feedstock from 2007-2019. All values are visual approximations**

**Year** **Coarse Grains** **Wheat** **Sugar Cane** **Molasses** **Sugar Beet** **Biomass based (2nd Generation)** **Roots and Tuber** **Other Feed Stocks** **Total**

**2007-2009** 37 1 27 3 2 - - 5 75

**2010** 50 2 30 2 3 - - 6 93

**2011** 54 3 32 4 2 - - 5 **100**

**2012** 56 4 35 4 2 - - 6 **107**

**2013** 59 5 38 3 2 1 1 6 **115**

**2014** 61 6 43 3 2 2 1 6 **124**

**2015** 64 5 45 4 2 3 1 7 **131**

**2016** 65 6 47 5 2 4 1 7 **143**

**2017** 65 6 52 4 3 5 1 7 **153**

**2018** 66 6 53 4 3 8 1 8 **149**

**2019** 61 6 59 3 2 13 1 8 **159**

**Credit:** **The Crop Site**

Year	Coarse Grains	Wheat	Sugar Cane	Molasses	Sugar Beet	Biomass based (2nd Generation)	Roots and Tuber	Other Feed Stocks	Total
2007-2009	37	1	27	3	2	-	-	5	75
2010	50	2	30	2	3	-	-	6	93
2011	54	3	32	4	2	-	-	5	100
2012	56	4	35	4	2	-	-	6	107
2013	59	5	38	3	2	1	1	6	115
2014	61	6	43	3	2	2	1	6	124
2015	64	5	45	4	2	3	1	7	131
2016	65	6	47	5	2	4	1	7	143
2017	65	6	52	4	3	5	1	7	153
2018	66	6	53	4	3	8	1	8	149
2019	61	6	59	3	2	13	1	8	159

In 2013, the world ethanol production came primarily from the US (corn), Brazil (sugarcane), and Europe (sugarbeets, wheat). Figure 11.2 shows ethanol production contributions, in millions of gallons, from all over the world. In addition to Brazil, ethanol production from sugarcane is also being done in Australia, Columbia, India, Peru, Cuba, Ethiopia, Vietnam, and Zimbabwe. In the US, ethanol from corn accounts for ~97% of the total ethanol production in the US.

Millions of gallons: US- 13300, Brazil-6267, Europe-1371, China-696, India-545, Canada-523, Rest-727 — Figure 11.2: World ethanol production, millions of gallons, from various countries for 2013.

Click here for a text alternative to Figure 11.2

**World Ethanol Production**

**Country** **Millions of Gallons of Ethanol**

US **13300**

**Brazil** **6267**

**Europe** **1371**

**China** **696**

**India** **545**

**Canada** **asdf**

**523** **asdf**

**Rest of the World** **727**

*Credit: RFA*

Country	Millions of Gallons of Ethanol
US	13300
Brazil	6267
Europe	1371
China	696
India	545
Canada	asdf
523	asdf
Rest of the World	727

Table 11.2 shows a comparison of costs for first-generation ethanol feedstock along with their production costs. The data in this table is from 2006, but it gives you an idea of why ethanol is made from corn in the US: because it is less expensive and more profitable. However, as seen in the other charts, the use of sugar-based materials like sugarcane and sugarbeets is growing, as well as the use of cellulosic materials.

Table 11.2: Summary of 2006 Estimated Ethanol Production Costs in the U.S. ($/gal)^a
Cost Item	Feedstock Costs^b	Processing Costs	Total Costs
US Corn wet milling	0.40	0.63	1.03
US Corn dry milling	0.53	0.52	1.05
US Sugarcane	1.48	0.92	2.40
US Sugar beets	1.58	0.77	2.35
US Molasses^c	0.91	0.36	1.27
US Raw Sugar^c	3.12	0.36	3.48
US Refined Sugar^c	3.61	0.36	3.97
Brazil Sugarcane^d	0.30	0.51	0.81
EU Sugar Beets^d	0.97	1.92	2.89

a Excludes capital costs

b Feedstock costs for US corn wet and dry milling are net feedstock costs; feedstock for US sugarcane and sugar beets are gross feedstock costs

c Excludes transportation costs

d Average of published estimates

Credit: rd.usda.gov

Figure 11.3 shows the overall process of making ethanol from corn. It also shows the additional products made from corn. If you recall from Lesson 7, DDGS is a grain that can be used to feed cattle. Corn oil is also produced for use. Typical yields of each product per bushel of corn are shown (2.8 gal of ethanol, 17 lbs. of CO₂, and 17 lbs. of DDGS).

Product distribution of corn, see text description in link below — Figure 11.3: Product distribution of corn.

Click for a text description of Figure 11.3

**Corn** **Starch – 73% db**

**Ethanol--0.57 g/g (th)**

**(0.511 g/g glucose)**

**2.8 gal/bu**

**3.0 gal/bu (th)**

**CO2—0.54 g/g (th)**

**~17lbs/bu**

**18.9 lb/bu (th)**

**Yeast**

**Protein, fiber, oil – 27% db**

**DDGS**

**~17lbs/bu**

*Credit: BEEMS Module B5*

So, what are the ethanol revenue streams? Figure 11.4 shows that the revenue streams are ethanol, DDGS, and CO₂. The revenue streams are market driven; ethanol is the plant’s most valuable product and typically generates 80% of the total revenue. The DDGS represents 15-20% of the revenue, and CO₂ represents a small amount of revenue. The revenue margins are tight, however, and sale of DDGS and CO₂ is probably essential for the plant to be profitable.

see long description — Figure 11.4: Ethanol revenue streams. The numbers at the top of each bar are the revenue $ per bushel of corn. The values with the “@” are the values of how each product is sold.

Click for a text description of Figure 11.4

**Ethanol Revenue Streams**

**Product** **Revenue $ per bushel of corn** **Value ($) of how each product is sold**

**Ethanol** **4.05** **1.50/gal**

**Ethanol** **5.40** **2.00/gal**

**Ethanol** **6.75** **/gal**

**DDGS** **0.51** **60/ton**

**DDGS** **1.02** **120/ton**

**DDGS** **1.53** **180/ton**

**CO2** **0.07** **8/ton**

*Credit: BEEMS Module B5*

Product	Revenue $ per bushel of corn	Value ($) of how each product is sold
Ethanol	4.05	1.50/gal
Ethanol	5.40	2.00/gal
Ethanol	6.75	/gal
DDGS	0.51	60/ton
DDGS	1.02	120/ton
DDGS	1.53	180/ton
CO2	0.07	8/ton

Figure 11.5 shows the volatility of the price of corn, the price of ethanol, and the price of gasoline. Notice the price of gasoline and the price of ethanol are highly correlated, at least since 2009. For example, in 2010, the price of gasoline and the price of ethanol were ~$2.00 per gal. However, in recent months, with the price of oil going down significantly, expect that the profitability of ethanol will be less.

Chart of corn, ethanol, and gasoline prices from 2005-2011 as described in the text — Figure 11.5: Chart of corn, ethanol, and gasoline prices from 2005-2011.

*Credit: USDA ERS*

The major cost in producing ethanol from corn is the cost of the feedstock itself. Figure 11.6 shows the cost of feedstock is 55% of the expenses for the production of ethanol from corn, while energy is 21%, materials are 11%, and maintenance and personnel are 13%. If a bushel of corn sells for $4/bu or more, then the percentage for the feedstock price goes to 65-75% of the expenses.

Dry grind ethanol case expenses ($/gal) for 2005 as described in the text above — Figure 11.6: Dry grind ethanol case expenses ($/gal) for 2005.

*Credit: Shapouri, H., & Salassi, M. (2006). The Economic Feasibility of Ethanol Production from Sugar in the United States.*

Another issue with the production of ethanol is that water is used, and water is becoming less available. Water is used for gasoline production as well, but water use is a little higher for ethanol production (for gasoline, 2.5 gallons water per gallon of gasoline is used, while for ethanol it is 3 gallons of water per gallon of ethanol). The extra water use is due to growing the plants for harvest.