Water and Biofuels: Doing More with Less

The drought of 2012 drove home an important lesson: Large-scale production for food, feed, and biofuel gets a lot harder when water is scarce.

According to the U.S. Drought Monitor, 60 percent of the continental United States had experienced moderate to severe drought by the end of the harvest season in October. While the central plains were hit hardest, other parts of the country were parched, too. In the South, 2012 marked the third consecutive year of dry conditions.

Drought has profound effects on food production, especially for grains (such as corn and wheat) and other seeds and fruits that are particularly affected by water stress. Water-stressed plants not only grow less, they are also more susceptible damage from pests and pathogens. Even hardy sources of next-generation biofuels such as wood and grasses suffer in in a drought of this magnitude.

The drought was especially tough on corn. The 2012 U.S. corn crop reached about 11.8 billion bushels, which is down 13 percent compared to 2011 and 20 percent below the early season projections. So far, at least ten ethanol plants shut down as a result of the drought. According to Bloomberg, corn ethanol producers were losing 29 cents per gallon based on contracts for corn in mid-November. Ethanol production fell to 824,000 barrels per day, compared with 910,000 barrels per day in 2011. 

Still, this is far less of a drop than expected. Two possible factors may contribute to continued ethanol production. So far, the demand for ethanol to blend with gasoline has been steady (90 percent of gasoline in the U.S. contains ethanol to boost octane.) Secondly, prices for distiller's grains, an animal feed supplement made during corn ethanol production, have been high, possibly offsetting some of the losses.

In the face of climate change, drought-tolerant crops have become a high priority for the major seed producers. Several genetically modified drought-tolerant varieties of corn first hit the fields in 2011. Decades in the making, Monsanto's “DroughtGard” has received the most press, but seed producers are also in the game.

Pioneer, a subsidiary of Dupont, has developed a line called “AQUAmax,” and Syngenta has a brand called "Agrisure Artesian." Preliminary results of trials with AQUAmax look promising. Monsanto has not released its data on DroughtGuard, but the Union of Concerned Scientists has already come out swinging, contending that the GM lines are no better than drought-tolerant plants developed through conventional breeding. It will be interesting to see whether resistance to genetically modified plants subsides if climate change worsens.

Crop insurance for next generation biofuels?

The next generation of biofuels will largely depend on plants that are very different from the food crops that withered in the 2012 drought.  They will be grown on different lands and in different regions, and they will have very different sensitivity to drought and other stresses. Some also have higher establishment costs and take longer to reach full productivity than typical annual crops (see "Tough Characters," left).  Nonetheless, environmental extremes pose a risk to all types of crops, not to mention farmers and refinery operators. 

What might this future look like?

Let’s consider the big picture: In order to produce enough cellulosic ethanol to meet the Renewable Fuel Standard, more than 200 biorefineries—each consuming 2000 tons per day of biomass feedstocks to produce 70 million gallons per year of cellulosic ethanol—will need to be built by 2022. While this may seem unlikely to many, there are industry insiders who expect this scale to be reached by 2030, if the current economic and policy drivers in place.

Such ambitious goals will require considerable effort, planning, and foresight. Land owners will need to make multiyear commitments (5-10 years) to biomass production and will likely demand multiyear contracts from biofuel producers. This is the current model for biomass electricity production. Long-term contracts mitigate market and capital risks to some extent, guaranteeing that the biorefinery owner will commit the capital and buy the crops that the landowner has promised to produce. 

So how will this symbiotic relationship respond to a drought-driven crop failure or any other crop failure? Mitigating risk in the face of environmental disaster is always tricky. In 2012, crop insurance in the U.S. was estimated at $116 billion. AIR Worldwide, a disaster modeling company, has estimated total crop insurance losses from the 2012 drought at $13 billion. In February 2011, USDA Secretary Tom Vilsack announced efforts to develop crop insurance for next generation feedstocks, but crop insurance was heavily attacked in Senate hearings on the Farm Bill over the summer. In light of the current political tensions, insurance programs for biomass feedstocks will likely have to wait.

Hedging bets

 

Even if insurance that didn’t require government assistance becomes available, some unknown degree of risk would still be passed along to biorefinery operators.  While contracts could include such provisions to protect operators, they may want to hedge their bets by pursuing other sources of feedstocks.  A shortfall of feedstock carries a severe economic penalty for the biorefinery operators. If less than 50 percent of the expected feedstock is available, the owner is penalized in two ways. First, the fixed costs (wages and benefits, taxes, insurance,  maintenance, and so on) and the costs to build the biorefinery must still be paid. The National Renewable Energy Laboratory estimates these costs to be about $42 million per year for a cellulosic ethanol refinery. This alone adds almost 60 cents a gallon to the refining cost.

 

In addition, refineries operate most efficiently at full design rates.  At 50 percent rates, many parts of the plant become much less efficient, if they can be operated at all. This inefficiency alone can increase costs as much as 20 percent, potentially adding another 30 to cents a gallon to the manufacturing cost and raising the product manufacturing cost from an expected $2 to $3 dollars per gallon or more.

It is impossible to predict what the profit margins will be in this industry, but we can speculate.  If we assume a reasonable margin of 50 cents a gallon over manufacturing cost, we can estimate a cash profit of $35 million annually on a production volume of 70 million gallons. In a drought year, production could drop to 35 million gallons, and profit would likewise be cut in half. Faced with such a scenario, many operators will choose to simply idle the plant.

If they want to keep their plant running during a shortage, biorefinery operators may have to rely on alternate feedstock sources. Several alternatives can be imagined:

•          Bringing in feedstock from a wider radius with an increase in logistics costs

•          Collecting other opportunistic lignocellulosic materials, such as agricultural byproducts (e.g. corn stover or wheat straw)

•          Using other types of  lignocellulosic wastes (e.g. wood chips or forestry residues)

Each of these possibilities, of course, has a downside. Opportunistic gathering of forestry or agricultural wastes will require temporary collection systems, which will be inherently more expensive than the dedicated systems for established crops. Biorefineries designed to process grassy feedstocks may need significant and expensive retooling to handle forestry residues or wood chips.  In addition, over-collection of these residues can also deplete the soil of organic carbon.

Bringing in feedstock from a wider radius will only be possible if appropriate feedstocks are being grown elsewhere, and those distant feedstocks will likely already supply other, closer refineries. So, in addition to the higher logistics cost for the greater transportation distance, prices would likely be driven higher by competitive demand from the grower’s local customer. Technologies that pack biomass more densely for more economical transportation and storage or which contribute to flexible processing could help mitigate these supply chain risks but would also increase costs.  To be on the safe side, owners might want to design agreements to ensure alternate supplies of feedstock. While it is impossible to predict now how all these options will play out, one thing is clear: This is a high-stakes, high-risk game.

Reducing water use in bioenergy

Water not only affects biomass feedstocks, it is also required to convert biomass to fuels. It takes 1.5 to 10 gallons of water to process a gallon of biofuel, similar to the water for petroleum recovery and refining. In general, biochemical (fermentation-based) conversion requires more water than thermochemical methods such as pyrolysis or gasification. At the biorefinery, water is needed to remove dirt and debris from biomass before pulping,  to deconstruct the biomass to sugars, and in the fermentation process. Product recovery also requires water for distillation towers and for electricity generation. The biggest use of water is from evaporation in cooling of fermentation vats, distillation columns, and electricity generators.

 

There has been a great effort to reduce water use in biofuel production.  For example, corn ethanol plants have evolved to use less than a quarter of the water they needed two decades ago. More efficient water recovery and recycling, better water treatment, improved energy efficiency and better engineering of heating and cooling in refineries all contribute to reduced water use. New technologies such as air-cooled systems and membrane separations could reduce water use even further.

In the future, production of next-generation feedstocks such as agave may shift biofuel production to semi-arid parts of the country. But even agave needs water. To that end, several companies operating in water-scarce regions have begun projects to use wastewater from cities in their refineries.

Take Diamond Ethanol LLC in Levelland, Texas, and Tharaldson Ethanol LLC in Casselton, North Dakota, which are turning to wastewater from local municipalities. Treating wastewater to the quality needed in the fuel conversion process is expensive, but it may be well worth it.  Almost 15 percent of the water used at the Tharaldson plant is piped back to Fargo as gray water, where it is retreated to drinking water standards. Treating wastewater can provide additional benefits. For example, anaerobic digestion of wastewater can produce biogas (biomethane), which can be used for heat and power. It can also provide water suitable for irrigation and an opportunity to recycle mineral nutrients back to fields.

Water is a unique and essential resource. We must treat it with respect and be mindful that there is no one-size-fits-all solution for crafting a sustainable future. Using biomass that is appropriate to regional resource constraints has to be part of a renewable energy system. By developing water-efficient biomass feedstocks and efficient process technologies—essentially doing more with less—we have the opportunity to maximize water availability for food production while achieving the economic and environmental benefits of biofuels.

 

 

 

 

 

 

 

Number of months during the year in which the blue water footprint exceeds blue water availability for the world's major river basins, based on the period of 1996-2005. (Blue water availability refers to natural flows though rivers and groundwater, minus the presumed environmental flow requirement.)

Hoekstra AY, Mekonnen MM, Chapagain AK, Mathews RE, et al. (2012) Global Monthly Water Scarcity: Blue Water Footprints versus Blue Water Availability. PLoS ONE 7(2): e32688. doi:10.1371/journal.pone.0032688

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