Ethanol and Sustainability

Plain Green ConferenceSioux Falls, SD

Brian Jennings, Executive Vice PresidentAmerican Coalition for Ethanol (ACE)

September 26, 2008

About ACE • Public Policy

• Market Development

• Public Relations & Communications

• Grassroots Member Empowerment

Outline• General overview of ethanol production and use.

• Producing and using ethanol in a way that does not compromise the environment or our food supply.

Clean Air Act

RFS &MTBE

Public policies and market forces help drive demand for ethanol.

Clean Air Act Amdts

2005 Energy BillRFS

MTBE

2007 Energy Bill$100 + oil

About 60% of RFS fromadvanced biofuels.

Use of Fuel Ethanol• E10 – path of least resistance.

• E85 – 200 million cars on road, only 6 million FFVs. 1600 E85 pumps, around 170,000

stations.

Once we supply the E10 market…..E85 and…• Other blends - E15, E20, E30, etc? Most pressing

issue facing the ethanol industry today, beyond E10.

Timely Challenges

• Volatility

• PR issues; “food v. fuel,” land use changes, “good v. bad ethanol”

Factors impacting food prices Oil and energy prices – primary culprit - 80 cents of retail food

dollar.

Unprecedented demand (growing dietary needs of China, India)

Crop failures & poor crops (drought)

Speculative investing in commodities

Weak U.S. dollar

Export restrictions (Argentina, Russia, etc)

Price Check: Oil vs. Corn1949 2008 % Increase

Oil $2.54/barrel $125/barrel 4821%

Corn $1.24/bu $6.13/bu 394%

• Oil is in everything.

• Average food item travels 1500 miles before reaching grocery store.

Sources: National Farmers Union, USDA

Record corn exports in 07/08

90% of U.S. corn exports used by other countries to feed livestock.

Distillers grains from ethanol concentrate nutrients for valuable livestock feed

Source: 2008 Feedstuffs Reference Issue; Ingredient Analysis Table. RFA

Year Harvested Acres

Average Yield

Production

1944 85 million 33 bu /acre

2.8 B bu

2007 85 million 151 bu /acre

13.1 B bu

Corn: 1944 vs. 2007

Nearly 400% increase in production without increasing acres in last 60 years.

Source: NCGA

More corn per acre…

…and doing so with less fertilizer.

0%

10%

20%

30%

40%

1990 1992 1994 1996 1998 2000 2002 2004 2006

31.50%

26.50%25.30%24.60%21.60%20.90%21.20%

15.20%

7.40%

NO-TILL ACRES AS % OF REPORTING ACRES

% o

f Rep

orte

d A

cres

Conservation practices on the rise

Source: Conservation Technology Information Center

U.S. cropland erosion

Source: NRCS

Ethanol’s Decidedly Positive Energy Balance

Btu of ethanol minus fossil energy used to make the ethanol

Ethanol’s Decidedly Positive Energy Balance

Btu of ethanol minus fossil energy used to make the ethanol

Wan

g

GR

EET w

/Pi

men

tel

Assu

mpt

ions

Climate Change Legislation to reduce

Source: Global Insight

Energy includes transportation, coal (electricity), and othermanufacturing.

Contributing to Global Warming?• Accusing ethanol of Brazil deforestation and global warming.

• Amazon clearing decreased 67% since 2004, while U.S. ethanol production doubled in the same time.

• In 2007, U.S. ethanol production reached all-time high while Amazon clearing fell to 20-year low.

Causes of Amazon deforestation*:Brazil cattle/meat industry 60%Subsistence agriculture 30%

*Source: Natl Institute of Space Research

U.S. ethanol production hasgrown since 2004….

and deforestationin Brazil has declinedduring the same time

Ethanol replaces the incremental gallon of fuel, increasingly from environmentally damaging sources…

Research indicates that tar sands oil generates 150 to 300% more GHGsthan corn ethanol.

Ethanol Efficiencies• Energy use decreased 21.8% from 2001 to 2006.

• 37% of the dried distillers grains with solubles (DDGS) was sold as wet feed which reduces heat demand in the plant between 2001 and 2006.

• Water consumption decreased 26.6%.

• One bushel of corn yields about 3 gallons of ethanol today.

Source: Argonne National Lab, based on RFA survey.

20%Reduction 28%

Reduction

52%Reduction

86%Reduction

Gasoline

NaturalGas

BiomassCurrentAverage

CellulosicEthanolCorn Ethanol

BiomassPetroleum

Sources: Wang et al, Environ. Research Letters, May 2007; Wang et al, Life-Cycle Energy Use and GHG Implications of Brazilian Sugarcane Ethanol Simulated with GREET Model, Dec. 2007.

Greenhouse gas reductionassumptions from DoE

In conclusion…

• It is inescapable; our status quo reliance on fossil & foreign fuel is not a viable option.

• Ethanol is part of the solution. Homegrown. Better for Environment. Ready Now.

• No silver bullets.

www.ethanol.org