Because grain-based ethanol is currently the USA’s only major source of biofuels, and because the magnitude of increase in grain-ethanol production is expected to have a large impact on commodity prices, agricultural profitability, and global food security, this Commentary focuses on the key issues concerning corn-based ethanol production systems over the next 5 to 10 years.

Much of the discussion also is relevant to fostering development and sustainability of other biofuels systems, including ethanol from sugar crops and ligno-cellulosic biomass, and biodiesel from oilseed crops.

—Task Force Chair Dr. Kenneth G. Cassman, University of Nebraska, Lincoln

The CAST authors expect that the rapid expansion of ethanol production currently under way will easily pass the 7.5 billion gallons per year mandated by the Energy Policy Act of 2005, and will thus require greater amounts of corn than previously predicted.

A capacity of 10 billion gallons by 2010–2011 is more likely. Some in the corn industry believe it will be possible to produce 16 billion gallons of ethanol by 2015 while also meeting corn grain requirements for human food and livestock feed.

Corn yield trends (bushels/acre) in the US from 1966–2005, and the technological innovations that contributed to yield increases. Rate of gain is 1.8 bushels per year (R2 = 0.80). Click to enlarge.

Corn production in the United States increased from 4.17 billion bushels in 1966 to 11.11 billion bushels in 2005, with approximately 80% of the increase resulting from higher crop yields and approximately 20% from expansion of crop area. During that 40-year period, corn yields rose at a linear rate of 1.8 bushels per acre per year (see chart at right).

The rate of gain in corn yields ultimately will determine the ceiling on grain-ethanol production capacity that can be sustained without causing global food deficits, high corn prices, and pressure to expand corn production onto marginal land.

For example, a 9.7 billion gallon annual production capacity in 2010–2011 would require 28% of US corn production, assuming a harvested area of 79.9 million acres and a trend line yield of 156.4 bushels per acre.

Increasing the rate of gain in corn yields above the current trend line will be required to expand ethanol production substantially beyond this target without major perturbation to national and global corn markets and other industries that rely on corn.

The authors note that a key factor in determining the net impact of ethanol use (full life cycle) on greenhouse emissions is the overall energy efficiency of the grain-to-ethanol-and-coproduct utilization life cycle.

Nitrogen fertilizer alone represents about one-half of all energy input to rain-fed corn production because nitrogen fertilizer production requires large fossil fuel energy input. In addition, the use of nitrogen fertilizer results in the release of nitrous oxide, itself a potent GHG, in rough proportion to the amount of fertilizer used.

Improvements in nitrogen fertilizer efficiency thus leads directly to increased energy efficiency and a decrease in GHG emissions. Improved nitrogen efficiency also reduces the risk of nitrate leaching or runoff, which have deleterious effects on ground and surface water quality.

The authors identity five primary research needs:

• Increase grain production substantially while protecting environmental quality and avoiding conversion of fragile Conservation Reserve Program (CRP) land for crop production. Research should emphasize accelerating the rate of yield gain, improving soil and water quality, and decreasing GHG emissions. Both agro-ecological systems research to develop improved crop and soil management practices and genetic improvement of complex traits such as yield potential will be required.

• Quantify the environmental costs and benefits of grain-ethanol systems based on a full-cost, life cycle accounting approach. Whereas previous studies have focused on the current “average” methods for corn production, ethanol conversion, and coproduct use, future studies should evaluate state-of-the-art systems with best management practices, as well as improved technologies that promise greater efficiencies and a more positive environmental impact.

• Understand the impact on US food prices and on the livestock and poultry industries of diverting a much larger proportion of the corn crop for ethanol production. A steady increase in corn used for ethanol will result in higher corn prices, which likely will decrease profitability of livestock and poultry operations. Production and demand shocks (e.g., drought and unexpected purchases from foreign buyers) also will result in abrupt fluctuations in corn price and hence the profitability of livestock production—especially for poultry and swine operations.

• Improve knowledge of optimal, most cost-effective diets for each species of livestock and poultry, given the new realities of higher corn prices relative to other crops and a wider variety of coproduct feeds.

• Predict the impact of increased corn use for fuel production on US corn exports and global corn prices, especially in populous developing countries that sometimes rely on grain imports.

CAST also suggests two policies for the industry:

• Modify the current federal tax credit ($0.51 per gallon ethanol) to be counter-cyclical, such that it applies only when the price of ethanol falls below a threshold somewhat above the breakeven cost of production, and use a sliding scale to provide a larger credit as prices fall further below the breakeven point.

• Provide incentives to replace natural gas and coal used to produce energy in ethanol plants with biomass, which would decrease the use of fossil fuels and GHG emissions. Sources of biomass could include crop residues and crops specifically grown to produce biomass for fuel.

Ensuring the economic and environmental sustainability of the corn-ethanol industry is a critical foundation to support development of a viable cellulosic ethanol industry.

Resources:

• Convergence of Agriculture and Energy: Implications for Research and Policy