We at Great Valley Energy appreciate the tremendous support from the communities of Hanford and Wasco for our state-of-the-art, renewable energy ethanol projects.
I am a founder of Great Valley Energy, an air quality engineer and a resident of the Central Valley living in Bakersfield.
With the passage of the new energy bill, we have witnessed the greatest energy and environmental legislation over the past 30 years.
From an air quality perspective, with mobile sources making up more than two-thirds of ozone forming nitrogen oxides, increasing car and truck mileage standards by 40 percent will go far to decrease pollution in the Central Valley.
Those efficiency gains along with increasing ethanol in the California gasoline pool to comply with the low carbon fuel standard under AB 32, means that California has taken an important step toward decreasing greenhouse gas emissions, 40 percent of which come from transportation fuels.
As we have talked with people about these two ethanol projects, we have encountered some misconceptions about the projects and the California ethanol industry. Here are a few of the points I would like to clarify regarding our projects:
* None of California projects are "giant" in relation to ethanol plants being constructed in the Midwest or other transportation fuels producers. Rather, at maximum capacity of about 4,300 barrels per day, they are average-sized ethanol plants and each is one of the smallest transportation fuels producers in the state. (See
www.ethanol.org and
www.energy.ca.gov/oil/refineries.html).
* "Power plants and refineries" is not an apt description of an ethanol plant. Rather, our dry-mill plants can be more appropriately described as highly-efficient breweries and distilleries. In fact, to prevent human consumption, we are required by the Bureau of Alcohol, Tobacco and Firearms to add 5 percent gasoline to our ethanol because it is the same ethanol you find in wine, beer and distilled spirits. (See
http://www.ethanolrfa.org).
* Replacing incremental gasoline production with California ethanol production will decrease smog in the Central Valley. On a per gallon basis, California ethanol producers will emit five times less VOC and 15 times less NOx than California gasoline producers. (See
www.arb.ca.gov/app/emsinv/facinfo/facinfo.php, search on SIC 2911).
* Using California ethanol will decrease greenhouse gas emissions even more than Midwest ethanol. From a fuel lifecycle perspective, ethanol has a lower carbon footprint than gasoline and California ethanol has a lower carbon footprint than Midwest ethanol from a field-to-wheels perspective. So increasing California production will decrease greenhouse gases produced from a global perspective. The difference is that the California plants are very near the end users of our distillers grains product so it doesn't have to be dried by burning fossil fuels before shipment. (See the documents at
www.energy.ca.gov/low_carbon_fuel_standard/).
* California plants are being developed and built by California companies that are owned by Californians. That means that the economic benefits will stay in California. We believe we are aware of all our competitors in the Valley, and to our knowledge, Archer Daniels Midland or another large producer is not investing in or building any ethanol plants in California and will not make a killing from our plants or any others (see
www.admworld.com).
* Ethanol development in California is better planned that in some parts of the country due to extensive review that a project receives. The list of widely-publicized ethanol projects in the Central Valley will differ substantially from those actually built. This contrasts with the large numbers of Midwest plants that received quick regulatory approval and financing in a rush to meet a rapidly changing market only to find that market very different once operations began.
* The state made the right decision to use ethanol as an oxygenating agent. The only other current economic choice for oxygenate is MTBE, a product of petroleum that is toxic, biologically persistent and was banned because it has contaminated so much of California's (and the nation's) groundwater. (See www.eia.doe.gov/oiaf/servicerpt/mtbeban). The use of oxygenates in gasoline has been used to help gasoline burn cleaner for decades.
* Ethanol helps gasoline burn cleaner and reduces emissions. The American Lung Association, whose mission is "Improving Life One Breath at a Time," endorses the use of alternative fuels including ethanol, recognizing its ability to reduce vehicle emissions. (See
www.lungusa.org).
* Modern California ethanol plants are clean energy producers. Emissions from the California plants are so tightly controlled that they will be an order of magnitude cleaner than most plants in the U.S. Comparing these brand-new California plants to those older plants operating in other states is just not a good basis for decision about local or regional impacts.
* The energy balance of ethanol is positive. Every modern study of the ethanol production energy cycle shows a significant energy gain with two exceptions. At our ethanol plants, we will produce nearly four times the amount of ethanol energy than fuel we put into it. The National Resources Defense Council, arguably one of the most credible environmental organizations in the U.S., argues that the production of ethanol is "Energy Well Spent" (see
www.ethanolrfa.org/objects/documents/572/energywellspent.pdf).
* Ethanol is not a "magic bullet" energy solution to foreign oil. However, biofuels and other forms of renewable energy all contribute to displacing our reliance on foreign oil. In 2006, the production and use of ethanol in the U.S. reduced oil imports by 170 million barrels, saving $11 billion from being sent to foreign and often hostile countries. (Source: LECG, LLC December 2006,
www.ethanolrfa.org). We also believe if we are going to enjoy the cake (ethanol), we should make it in our own kitchen (California).
* Energy will get more expensive to produce in the future. In July 2007, the National Petroleum Council with former Exxon Chairman Lee Raymond as Chair, published "Hard Truths: Facing the Hard Truths about Energy." The report to the Department of Energy concluded that we need all energy sources, including ethanol, to mitigate the "accumulating risks to continuing expansion of oil and natural gas production." (See
www.npc.org).
* Producing ethanol is a good use of corn starch. Regarding the food vs. fuel debate, the ethanol industry uses only the low-value starch portion of the corn kernel, returning the protein and nutrients (18 pounds out of every 56 pound bushel) out to the animal feed markets. Ethanol is produced from field corn which is fed primarily to livestock and is indigestible by humans in its raw form. By far and away, the tripling of the cost of oil has contributed most of the rising food costs. (See
www.ethanolrfa.org). Consider that a 16-ounce box of corn flakes contains less than 8 cents worth of corn.
* The plants in California will not affect the price of corn coming out of the Midwest. At full build-out of the industry, all of California plants together will produce approximately 3 percent of the nation's ethanol and will use approximately 1 percent of the corn grown in the U.S.
* Ethanol is economically viable as a petroleum replacement when oil is over $60 per barrel, regardless of the blending tax credit. The industry is currently producing ethanol at approximately $1.50 per gallon without any help from the government. Gasoline is being sold by the oil companies to California drivers for over $3.30 per gallon (which is well below its true cost). Incidentally, it is currently the gasoline blenders taking the 51-cent-per-gallon tax credit against the gasoline excise tax, not the ethanol producers. The century-old oil industry benefits from tens of billions of dollars in subsidies, which had to be added back to the new energy bill to break a filibuster and get it through the White House.
* Ethanol is important to meet climate change goals and to wean California off foreign oil. With a blending demand in 2010 of 1.7 billion gallons of ethanol, all of the California plants in permitting, construction and operation in California will produce about 30 percent of the state's demand. Refer to the State Alternative Fuels Plan (see
www.energy.ca.gov/ab1007).
The recently-signed energy bill has reinforced the U.S commitment to ethanol as a transportation fuel. The bill provides for the use of 36 billion gallons of ethanol, of which 21 billion gallons will come from next generation, cellulosic feed stocks.
While cellulosic ethanol is not currently cost competitive, a tremendous amount of innovation is occurring in the industry with the current corn-fed plants serving as the foundation of future energy infrastructure. With the build-out of California's first generation corn to ethanol plants, we will be building the cornerstone of our energy future.
Pellens is executive VP and COO of Great Valley Energy,
(Dec. 22, 2007)
