Biofuels 2006: Production, Supply and Reality

Published by: Soyatech

Published: Sep. 25, 2006 - 94 Pages

Table of Contents

Executive Summary

U.S. Biofuels Overview

Fuel vs. Food

Legislative and Regulatory Issues

Biofuels and Energy Security

Net Energy Balance

Overview of Biofuels Industry

Energy and Automotive Sectors’ Response to Emergence of Biofuels

Cellulosic Ethanol

Distribution Issues

Case Study: Biofuels in the European Union

Case study: Ethanol in Brazil

Appendix 1: Biofuels Primer

Appendix 2: State-Level Legislative Actions

Appendix 3: Current and Under-Construction Biofuel Capacity

Figures

Figure 1: Projected Ethanol Capacity Growth, by Category

Figure 2: Cumulative Ethanol Capacity Build-Out vs. RFS

Figure 3: Ethanol Capacity: 2000-2015

Figure 4: Ethanol Capacity and Production: 2000-2015

Figure 5: Ethanol Production as Percentage of Gasoline Consumption

Figure 6: Cumulative Biodiesel Capacity Growth by Category

Figure 7: Biodiesel Capacity: 2000-2015

Figure 8: Biodiesel Capacity and Production: 2000-2015

Figure 9: Biodiesel Production as Percentage of Projected U.S. Diesel Consumption: 2006-2015

Figure 10: Corn and Soy, Historic Acreage

Figure 11: Projected U.S. Corn Acreage

Figure 12: Projected U.S. Corn Production & Ethanol Input

Figure 13: Biodiesel Inputs

Figure 14: Projected U.S. Soy Production and Crush

Figure 15: Projected U.S. Soybean Production & Biodiesel Input

Figure 16: Projected U.S. Rapeseed Acreage

Figure 17: Projected U.S. Rapeseed Production and Crush

Figure 18: Projected U.S. Sunseed Acreage

Figure 19: Projected U.S. Sunseed Production and Crush

Figure 20: World Vegetable Oil Trade & Total U.S. Imports

Figure 21: Dried Distiller Grains Production

Figure 22: Dried Distillers Grains (DDG) Usage by Species

Figure 23: Projected Low Sulfur Crude Oil Prices

Figure 24: Percentage of Total Proven Light Oil Reserves by Continent

Figure 25: U.S. Corn Yield, 1970-2000

Figure 26: U.S. Soy Yield 1970-2000

Figure 27: U.S. Corn Yield, Historic and Projected, 2000-2015

Figure 28: U.S. Soybean Yield, Historic and Projected, 2000-2015

Figure 29: Fertilizer Usage in U.S. Corn Crop, 1980-2003

Figure 30: Fertilizer Usage in U.S. Soy Crop, 1980-2003

Figure 31: Composition of Studies of Cellulosic Ethanol Energy Inputs

Figure 32: Ethanol Value Chain, Biodiesel Value Chain

Figure 33: E85 Fueling Stations

Figure 34: Share of Brazil’s Overall Transport Market by Fuel

Figure 35: Dry Mill Ethanol Production

Figure 36: Wet Mill Ethanol Production

Figure 37: Biodiesel Production from Vegetable Oil

Tables

Table 1: Ethanol Projection Summary, in MGY

Table 2: Biodiesel Projection Summary, in MGY

Table 3: Ethanol Production Inputs

Table 4: USDA Baseline Projections for Corn, in Million Bushels

Table 5: Summary of Biodiesel Inputs

Table 6: Biodiesel Inputs - Soybean

Table 7: Biodiesel Inputs - Rapeseed

Table 8: Biodiesel Inputs - Sunseed

Table 9: Biodiesel Inputs - Imported Vegetable Oil

Table 10: Oil Use for Biodiesel

Table 11: Feed Inputs by Species, (1,000 tons) for MY 2005/06, estimated

Table 12: Incremental Substitution of Dried Distillers Grains (DDG) for

Corn in Cattle Rations

Table 13: Incremental Substitution of Dried Distillers Grains (DDG) for Corn in Livestock Rations

Table 14: Soy-based Biodiesel Break-evens, Profits and Losses, Based on Petroleum Prices

Table 15: Break-even Prices with Subsidy

Table 16: Break-even Prices without Subsidy

Abstract

According to the landmark report Biofuels 2006: Production, Supply and Reality, produced by Soyatech LLC and HighQuest Partners, U.S. biofuels production is projected to grow to over 16 billion gallons per year by 2015. Ethanol will account for 14.2 billion gallons of this total, increasing from 4.5 billion gallons in 2006. This amount of ethanol will equal just under 10 percent of projected total gasoline consumption. At a projected 2.15 billion gallons per year by 2015, biodiesel will equal approximately 4 percent of total estimated diesel consumption.

The report states that production at these levels will impact not only use of agricultural resources, but is also likely to alter the dynamics of international trade in certain commodities. For example, corn used for ethanol fuel production will come out of stocks now allocated to exports and animal feeds. Since the U.S. supplies more than 60 percent of the international trade in corn, reallocation of this source to fuel will likely translate into higher prices for corn globally.

At the same time, the increase in biodiesel production is expected to have a significant impact on importation of oils. The U.S. is currently a net importer of vegetable oil at approximately 4.8 billion pounds per year. The report projects that these imports will reach 20.5 billion pounds in 2015, an increase of more than three hundred percent and a figure that represents more than 13 percent of world trade in vegetable oils.

Other key findings include:
• The biofuels capacity build out in the U.S. will occur rapidly as refiners race to secure feedstocks and bring production facilities on line.
• Ethanol will increase as a percentage of gasoline consumption throughout the project period, reaching 9.4 percent in 2015. This is important because E10, a mixture of 90 percent gasoline and 10 percent ethanol, can be distributed through regular gasoline pumps and used in regular gasoline-fueled vehicles. The study’s ethanol projections are not dependent on widespread adoption of E85-capable Flex-Fuel Vehicles.
• Although biofuel feedstocks are renewable, there is a limit as to how much can be produced in a growing season, and therefore how much feedstock can be used for biofuel production without causing a disruption in food production.
• In addition to the direct effect of taking corn away from the food processing equation in favor of producing ethanol, which will directly impact the production and cost of foods that contain corn-based ingredients, there is a secondary effect in that corn is a major source of animal feed. Diverting corn toward ethanol production will potentially drive up the cost of meat and dairy products as well and could result in lower livestock production.
• Large scale biofuel production in the U.S. will present a significant logistical challenge as already strained trucking and rail infrastructures will be the primary mode of transportation for biofuels and feedstocks.
• Although significant, the projected ramp-up of biofuels will not make the U.S. energy independent. Liberation of the global economy from dependence on Middle Eastern oil will require technologies other than fuels based on food and feed inputs. Cellulosic ethanol, made from agricultural wastes and low maintenance crops such as switchgrass, may be part of a larger scale solution if technological challenges in its production can be met.

Biofuels 2006: Production, Supply and Reality also provides an analysis of the profit potential for biofuels vis à vis the projected price of oil in the future, the impact on profit from the potential rise in feedstock prices, and the status and impact of new energy efficiency and renewable energy legislation and regulation. The study also includes a Biofuels Primer and analysis of biofuels production and usage in other parts of the world.

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