Environmental Protection Agency rules ethanol is green

Thursday, February 11, 2010

by BETTER FARMING STAFF

A U.S. decision that endorses corn-based renewable fuel as an environmentally friendlier alternative to fossil fuels is a shot in the arm for corn ethanol, say those involved in Ontario’s biofuels industry.

But don’t expect its impact to directly affect corn ethanol production here, they caution. “I think that’s an important ruling,” says Tom Cox, of the U.S. Environmental Protection Agency’s inclusion of corn ethanol in its new rules concerning alternative fuel production, released last week. “There were certainly some critics of ethanol that wanted to claim that it was not better at all (than fossil fuels), which I don’t think is reasonable.”

The agency justified the inclusion with studies showing corn ethanol generates more than 20 per cent less greenhouse gas than fossil fuel. Cox is chairman of the Integrated Grain Processors Co-operative, which owns a corn ethanol plant in Aylmer.

Cox says the decision won’t have as much impact on Ontario’s industry as the agency’s expected ruling on whether to increase maximum blending rates for ethanol to 15 per cent. Currently, 10 per cent is the maximum in the United States. Increasing the maximum would create greater demand for ethanol, he says.

The agency was scheduled to release the new rules in December but has delayed them, he says. Bob Gallant, president and CEO of GreenField Ethanol says the inclusion recognizes “that grain-based or corn-based ethanol does provide the GHG (greenhouse gas emissions) benefits etc., versus gasoline that we claimed that it did.”

Won’t Affect Hensall

He doubts it will affect the company’s plans for a plant in Hensall in Huron County. He says construction on the plant was sidelined because of the world financial crisis, and a downturn in the ethanol industry for which negative publicity may have been partially to blame. “You just couldn’t borrow money,” he says.

The agency’s ruling, “is a small first step” in changing the perception of ethanol, but the banks also have to start lending again. “Both of those are really preconditions to our being able to go forward with any project, not just Hensall.”

He says the company remains committed to establishing a plant at Hensall, noting that GreenField has already invested nearly $20 million in the site. “So believe me, we want to be there.” But with advances in renewable fuels over the past decade, the company is exploring other technologies for the site.

The company is piloting a process in Chatham that uses corncobs to make cellulosic ethanol. It is searching for a location to establish the next step: a commercial demonstration plant. Construction is expected to begin in the spring. “We’re looking at it (the Hensall plant) as the potential hub for a bio-refining capability and grain-based ethanol will be the start point of that,” Gallant says.

Blended Fuel

Gord Quaiattini, president of the Canadian Renewable Fuels Association, says the introduction of a five per cent federal blended transportation fuel requirement is likely to have a greater impact on renewable fuels production than the American agency’s ruling. Yet the industry already produces 1.5 billion litres of the two billion that it’s estimated will be needed to meet the new requirement, he adds.

Quaiattini says it’s hard to say if the Ontario government will introduce a higher blending rate because of the national mandate. He notes that because Ontario is the largest transportation market, the industry may concentrate its blending compliance efforts here. If that happens, the province may achieve a 10 per cent blending rate by default, he says.

Al Mussell, a senior research associate with the George Morris Centre, a Guelph-based agricultural policy think tank, however, wonders if the EPA decision will influence a Canadian federal government assessment of the ecological impact of biofuel production facilities.

In January, Environment Canada published a call for proposals for the $65,000 study setting a completion target of March 31. There is “a need for the development and provision of information from a Canadian context to enable Environment Canada scientists to better understand the environmental performance from liquid biofuels production,” the notice states.

Mussell adds that it’s unlikely the U.S. agency’s targets will stimulate demand for ethanol because the industry is already well on its way to reaching the amount of production targeted for grain-based ethanol by 2022.

The agency has set a production target for renewable fuels of 36 billion gallons for that year, of which 15 billion can be produced from grain-based feedstock. For 2010, the agency has set out the required production volume of renewable fuels at 12.95 billion gallons, a nearly two billion gallon increase over 2009 levels.

Displacing Food

The agency’s conclusions about corn ethanol’s impact on indirect land use — the crop’s potential to displace food-based agricultural production and trigger the conversion of other land to agricultural use — have provided an out for the industry.

Mussell explains previously, the industry had troubles defending against criticism connected to ethanol’s impact on indirect land use. Initially, the agency had also questioned corn-based ethanol’s environmental benefits.

Analysis supporting its new rules, however, indicated that: corn yields per acre are higher than expected, leading to less land needed for biofuels expansion; there’s greater efficiency in using distillers grains and solubles as animal feed than previously anticipated; and there is less conversion of marginal or forested land into agricultural use than the EPA originally projected.

Cox, however, questions if the agency “got it quite right” for calculating corn ethanol’s indirect impact on land use. “It’s an area of study in its infancy,” he says, pointing out that it’s hard to quantify a direct relationship between deforestation rates and expansion of crops to fuel ethanol production.

The analysis shows that removing indirect land use from the equation boosts corn ethanol’s greenhouse gas reduction rate to more than 50 per cent compared to fossil fuels, he adds. That’s the minimum standard the agency requires other renewable fuels to meet.

‘The Next Gallon’

Gallant says the analysis did not use the same measures applied to ethanol for gasoline. Moreover, such analysis should really compare renewable fuels to the “next gallon” of crude oil or gasoline to be extracted.

“The reason it matters is because these are becoming more and more difficult to extract,” he says.

Roger Samson, executive director of REAP-Canada (Resource Efficient Agricultural Production – Canada), calls the agency’s emission reduction target for corn ethanol “marginally beneficial when you can have, let’s say a 90 per cent offset with something like a pellet fuel substitution.”

Samson says the Canadian government needs to revisit its rationale for developing the grain-based and cellulosic ethanol sector. It’s expensive and, in the case of cellulosic ethanol, taking a long time to make viable. If the government regards grain ethanol as an incentive to help the farm sector, it’s not working because “we’re importing that corn” and it has been shown to harm livestock producers.

Greg Stewart, the Ontario Ministry of Agriculture, Food and Rural Affairs’ corn specialist, notes that 30-35 per cent of grain corn produced in Ontario now ends up in an ethanol plant. In 2009, growers in the province harvested 176 million acres of corn with an average yield of 142.6 bushels per acre. BF