Central Minnesota Ethanol

Source: Energy Digital

Date :8/5/2007 2:54:12 PM

Central Minnesota Ethanol remains at the forefront of efforts to provide clean ethanol fuel for local use

Written and produced by Andrea Orr & Nick Ledue

Surging oil prices, global warming and political instability in the oil-rich Middle East have in recent years brought the search for alternative fuels to the forefront of the national consciousness.

But almost 10 years ago, in a time of much less panic, one Midwestern community realized that alternative fuels could help support a local economy.

In 1998, a group of farmers formed the Central Minnesota Ethanol co-op in Little Falls, Minn., to produce fuel-grade ethanol and animal feedstock from corn produced locally. A year later, they completed construction of a plant that produces 15 million gallons per year of ethanol. In the years since 1999, plant capacity has grown to approximately 20 million gallons per year.

Ethanol is an alternative fuel source that can be produced from a variety of crops, but is most commonly produced from corn through a process in which whole corn is milled, cooled and fermented. The end product has a high-oxygen content that allows automobile engines to combust fuel more efficiently, resulting in reduced tailpipe emissions.

Ethanol has long been touted as a cleaner-burning, homegrown fuel source that could reduce the country’s dependence on foreign oil while also helping clean the environment.

But persistent controversy over the economies of ethanol use has also long limited its production. The Central Minnesota Ethanol co-op provides a useful case study of how ethanol production can be efficient, at least on a local level.

The central Minnesota plant operates as a kind of economic micro-system, which produces fuel from local sources and then returns that product to fuel its immediate community. It buys approximately 7.5 million bushels of corn a year, from close to 1,000 different farmers, all within an 80 mile radius.

Many of those farmers that produce corn for the plant are also shareholders in the project: a setup that helps ensure that the ethanol will be produced in an economic way that is profitable for the farmers.

The co-op says it currently has 860 shareholders, who collectively own

$19 million in shareholder equity.

The co-op says that its presence in the community has helped raise local corn prices by 10 cents to 15 cents per bushel, or approximately $1 million in additional value per year, while also helping stimulate the local economy by increasing trucking and retail activity.

In the years since the Central Minnesota Ethanol co-op was set up, ethanol production has surged around much of the U.S., particularly in the Midwest. The Renewable Fuels Association says that last year there were some 110 ethanol-producing refineries, also known as biorefineries in the U.S., which produced 4.9 billion gallons of ethanol.

Another 73 plants were under construction, offering the potential to add another 6 billion gallons to the country’s supply.

Still, there remains significant controversy surrounding ethanol. One of the most common criticisms is that it requires so much energy to produce ethanol that the resulting savings in tailpipe emissions are negligible.

According to some studies, ethanol made from corn takes almost as much fuel to produce as it provides as a final fuel product. In other words, it can take a lot of dirty fuel to produce clean fuel. Most estimates show that ethanol produces less greenhouse gas emissions than gasoline does, but not a lot less.

Proponents of ethanol use, such as the Central Minnesota co-op, say the challenge is to produce the fuel in a way that guarantees a net reduction in greenhouse gas emissions.

This requires closely watching the relatively slim margin of fuel consumed to fuel produced and being aware of all the factors that may contribute to that desired net reduction in pollution.

One factor working in the favor of the Central Minnesota Ethanol plant is that it sends most of the fuel it produces back into the local community, which minimizes shipping costs.

Within the U.S., ethanol is most widely used in the Midwest because of the proximity to so many ethanol plants. By contrast, it remains a highly controversial fuel in regions such as California that sometimes ship ethanol thousands of miles to get it to the end user, which consumes a lot of fuel in the process.

In another effort to improve efficiency, more ethanol plants such as the co-op in central Minnesota are working to increase production of fuel byproducts, particularly a substance known as distiller’s dried grains with solubles, or DDGS, a high-protein animal feed. In addition to producing 20 million gallons per year of ethanol, Central Minnesota Ethanol yields approximately 60,000 tons of DDGS.

Despite these efforts to ensure it produced ethanol in a cost-effective and fuel-efficient manner, the Central Minnesota Ethanol co-op has at times had a hard time living up to that mandate.

In 2002, three years after the plant began operations, it became the target of an investigation by the Environmental Protection Agency. EPA later sued the co-op alleging it emitted harmful quantities of a number of pollutants from carbon monoxide to sulfur dioxide and particulate matter.

A settlement was eventually reached, but it proved costly for the co-op, which was ordered to install air pollution control equipment to reduce its overall emissions.In addition to about $2 million of new equipment installed under that settlement, Central Minnesota paid at least $29,000 in fines.

Longer term, the co-op may face a different challenge. Because of the persistent controversy over emissions, some environ-mentalists believe that ethanol made from corn will eventually be replaced by cellulostic ethanol, which is made from different plants and crop waste, and burns more cleanly than corn ethanol.