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The problems with ethanol

By Geoff Ward - posted Wednesday, 14 May 2008


NSW’s variable climate and harvest is the principle factor making a grain ethanol industry impracticable. Iowa’s grain ethanol experience, with its relatively certain climate, is not admissible to the NSW E10 debate. On the other hand, Texas has a more variable climate and it is no surprise that its Governor is calling for relief from the USA ethanol mandate. NSW E10 translates to conversion of 1.5 million tonnes of grain into ethanol. This is about 30 per cent of the NSW harvest in three of the last seven years.

There will be greater movement of grain across the established transport routes which stretch from production areas to the ports. The infrastructure for this freight movement does not exist.

The 1.5 million tonnes of grain required for the E10 mandate will come from decreasing exports, or from increased production. Any decrease in exports will contribute to humanitarian problems in some countries. They will have to increase their production from marginal or new land, both environmentally damaging. Any CO2 release from this must be billed to the grain ethanol industry here in NSW. Increasing production in a drought is not possible underlining the impracticability of the grain ethanol industry in NSW.

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To overcome grain shortages from droughts, grain would have to be stored for up to two years or transported long distances. The provision of infrastructure to store or transport grain would be a significant cost to the grain ethanol industry making it uneconomic compared to sugar ethanol in a more certain climate.

Climate change experts are predicting a hotter, dryer NSW with even greater variability of harvests. It is strange that the NSW Government is, on one hand, building a desalination plant in response to these climatic predictions while on the other proposing a grain ethanol industry whose operation under the same climatic predictions will be even more unworkable.

Grain ethanol plants need water for operation and irrigation water to grow grain to provide some certainty of supply. This water availability is also becoming more variable. Water buybacks for environmental flows, minimum tillage decreasing runoff, and again climate change, all make a grain ethanol industry impracticable.

Grain ethanol is seen as a stepping stone to the eventual implemenation of cellulose ethanol, but it would be better to import the sugar cane ethanol from Brazil and sell our grain. With the price of Brazilian ethanol futures currently at about A$0.30/litre delivered to Paulinia in San Paulo. Carbon credits could make ethanol made from sugar cane and “true” waste economical. This combination of imported, sugar and waste ethanol would offer much better CO2 abatement, less humanitarian effect and nil distortion of NSW agriculture.

The economics and greenhouse gas abatement of a grain ethanol plant are improved if the distillers grain protein byproduct can be used wet in livestock rations. Because of this a grain ethanol plant should be associated with an intensive livestock operation nearby. Cellulose ethanol does not have this protein byproduct and so a change to the preferred cellulose ethanol will compromise the economics and CO2 abatement of the grain ethanol-livestock complex. Also, bearing in mind that the transporting of cellulose feedstock to a plant is a major cost, these grain ethanol plants may not be sited favourably for cellulose ethanol production.

A grain ethanol industry will take the limited resources of arable acres and water from existing industries: any jobs lost must be deducted from those few created by this new capital intensive industry.

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With urban encroachment on arable acres, climate change and increasing demand for grain protein, grain farmers will enjoy moderate increases in grain prices. By increasing demand for grain, the grain ethanol industry has added to the rapidity of these price increases to a level beyond the capacity of world agriculture to respond.

With the variable climate and grain production in NSW, grain ethanol offers little in terms of fuel security. The Victorian Parliamentary Report on biofuels in February 2008 concluded that the use of compressed natural gas offered much greater transport fuel security. This excellent report found against mandating ethanol in Victoria.

The Victorian Parliamentary report was told at an interview in 2007 that about 50 per cent of the NSW ethanol produced at that time came from waste. This means that only 200,000 tonnes of grain was processed in such a way as to leave a “true” starch waste byproduct. Although some ethanol may be produced from sugar waste at Harwood it is clear that 1.3 million tonnes of grain would be used as primary ethanol feedstock.

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About the Author

Geoff Ward was a NSW analysis officer and a concerned citizen.

Other articles by this Author

All articles by Geoff Ward

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