Background

The ethanol industry has expanded dramatically in the last two decades. The majority of this expansion has come from investment by farmers, interested in margin enhancement through cooperative ownership. Today 41% of the industry capacity is controlled by farmer-owned operations. The industry absorbs almost 10% of the US corn production.

Despite its success, many speculate that the industry's future is not assured. The worry is that it cannot be cost-competitive without government subsidies. Bottom line is if the ethanol industry is to become economically sustainable, it must first achieve more efficient conversion of corn to fuel energy.

Efficiency in ethanol production has improved dramatically due to research and design investment. Because of improvement in process engineering and mechanical design, production costs today are about 50% less than in the early 1980s. During this same period, ethanol yields have increased by more than 22%, from 2.2 to 2.7 gallons of ethanol per bushel of corn. Capital costs to construct an ethanol plant have also decreased from more than $2.00 per gallon of annual production capacity to less than $1.50 per gallon.

More innovation, however, is needed and developments in the life sciences could provide the needed improvements. For example, in corn based ethanol systems, various biotechnologies like plant genetics and enzyme and fermentation technologies hold great promise. Biotechnology research is beginning to yield crops tailored to the needs of the ethanol industry via both traditional genetic and transgenic approaches. The first ethanol-specific corn varieties are being commercially released this year (2004).

Purpose & Objectives

The project will evaluate and optimize the impacts of three early corn biotechnologies on the ethanol industry, prior to physical adoption. Specifically, the project will:

1. Identify current and emerging technologies relevant to the production of ethanol and synthesize their costs and benefits.
2. Create hybrid simulation models of wet and dry ethanol facilities allowing for biotech corn trains to be quantitatively evaluated.
3. Evaluate the economics of High Extractable Starch and Highly Fermentable Corn and High Amylase Corn in the ethanol industry.
4. Describe segregation and coordination schemes and their economics that may be implemented by users of HES/HFC/HAC.
5. Describe and evaluate the potential economic impact of each biotechnology innovation on ethanol production.
6. Compare the impacts of technologies on differing production platforms.
7. Measure the economic impacts of all technologies using as a baseline current economic/technological conditions of ethanol production.

Impact

In the case of the US ethanol industry, relevant system analysis is important to be carried out at early stages. This is necessary for proper alignment of biotechnology research, hybrid development, scale up in seed production and capital investments in processing assets, along with various regulatory and other government policies.

These all take time and involve significant lags. Accordingly, each analysis can inform public and private decisions makers and assist with the optimization of biotechnologies in US ethanol production.