Ethanol industry still recovering from COVID hit

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When people hunkered down this spring and stopped driving, it had an impact on corn growers, livestock farmers, meatpackers, food and beverage processors, wastewater treatment plants and chemical manufacturers.

That’s all because of ethanol and its many byproducts.

Twenty years ago, ethanol was a blip on the radar in terms of corn usage. Now about 30% of corn produced in the U.S. is made into ethanol.

“It’s an environmentally friendly solution to the fuels market … and it benefits rural America,” said John Linder, an Ohio farmer and president of the National Corn Growers Association.

Ethanol production dropped in April to record lows. When stay-at-home orders were in place, people stopped driving. Demand for gasoline dropped by half, and with it so did demand for ethanol.

Most gasoline in the U.S. has 10% ethanol blended into it, so what happens to gas happens to ethanol. The Renewable Fuels Association, an ethanol trade group, reported in April that 73 plants had idled production.

Production has climbed back up slowly since the spring, but 2020 production levels are projected to be below 2019 levels, according to U.S. Energy Information Administration estimates.

A recent study conducted by economists from the University of Florida and Arizona State University found ethanol producers will experience about an $8 billion loss this year, due to the COVID-19 pandemic’s impact on world fuel markets.

Local impact

“We’re down to about 65,000 bushels a day now,” said Rick Fox. He’s the manager of POET Marion, in Marion, Ohio. The Marion plant is the largest ethanol plant in Ohio.

“When the plant is running at full rate, we’re closer to about 150,000 bushels a day,” he said.

The Marion plant expanded two years ago, doubling its capacity. When the pandemic hit and everything slowed down, they shut down the new plant. They didn’t lay anyone off, but they didn’t backfill positions that became open.

Some good came out of the slowdown, though. Fox said they used their plant to make purified ethanol — the stuff that’s put into hand sanitizer or used as a cleaning product.

The plant is producing between 25,000 and 28,000 gallons of purified ethanol a day. Some of it is sold to be put in hand sanitizer, and some was donated to local first responders and schools.

All the other stuff

One bushel of corn gets turned into 2.92 gallons of fuel ethanol, according to the Renewable Fuels Association. That one bushel of corn also creates 15.86 pounds of dried distillers grains, .80 pounds of corn oil and 16.5 pounds of carbon dioxide.

“Nothing gets wasted,” Fox said. “It all goes back out to the market as a good product.”

The grain is used in livestock feed, as is the corn oil. The oil is also used in biodiesel. The carbon dioxide is captured and used in a variety of ways. It’s used as a refrigerant, as a stunning system for pig slaughter and in the production of soft drinks, beer and sparkling water. It’s also used in wastewater treatment plants, Fox said.

When ethanol production slowed earlier this year, it created shortages of all those byproducts that many industries had become reliant on.

Media reports have even speculated that the distribution of a COVID-19 vaccine could be delayed if pharmaceutical companies can’t get enough carbon dioxide to create dry ice to keep the medicine cold during transport.

A little history

Ethanol isn’t new. Its resurgence began in the 1980s, following a decade of energy crises in the U.S. Ohio actually produced more than 42 million gallons of ethanol a year from 1984 to 1994, according to U.S. Energy Information Administration data.

The real boom came after the Renewable Fuel Standard came to be in 2005 and was updated in 2007. It mandated that transportation fuels contain increasing volumes of renewable fuels.

Ethanol is an octane booster in gasoline. It oxygenates the fuel, which reduces air emissions and increases engine efficiency. A U.S. Department of Agriculture study released in April 2019 found greenhouse gas emissions from corn ethanol to be about 39% lower than gasoline.

Ohio’s ethanol plants were built between 2007 and 2008. That year, state ethanol production increased from 1.7 million gallons in 2007 to 333 million gallons in 2008. It’s steadily risen since then.

In 2018, Ohio produced about 581 million gallons, according to U.S. Energy Information Administration data.

“If I look at my plant, we’re buying 50 million bushels a year, and we buy corn from a 50-60 mile radius around the plant,” Fox said.

To put that in perspective, Ohio produced 421 million bushels of corn in 2019.

There are seven ethanol plants in Ohio, although one has been shut down since late last year. The Three Rivers Energy plant in Coshocton, idled in October 2019, due to “the current political climate and an unsure corn crop,” according to the Coshocton Tribune. The plant employed about 40 people.

Up to the challenge

America’s 201 ethanol plants now have the capacity to create just over 17 billion gallons a year. But that doesn’t mean 17 billion gallons of ethanol is actually created.

In the final rule for the 2020 RFS, the EPA calls for 20 billion gallons of renewable fuels — 15 billion of which should come from conventional biofuels or corn ethanol — to be blended into transportation fuel.

Small Refinery Exemptions have cut into that 15 billion gallon mandate. Oil refineries can ask for a waiver by claiming it would be a financial hardship to comply with the RFS. The number of waivers granted during President Donald Trump’s administration increased significantly.

In 2016, the EPA granted 19 small refinery waivers. In 2017, 35 were granted and 31 were granted in 2018. Rulings haven’t been made yet for waivers requested for 2019 and 2020.

“A lot of our struggles are within the U.S. EPA,” said Tadd Nicholson, executive director of the Ohio Corn and Wheat Growers Association.

It’s hard to say what the future holds for ethanol during a pandemic, when the rules keep changing. Some people point to exports as the way to expand U.S. ethanol production.

“Building a world market for ethanol is where our attention is now,” Nicholson said.

Ethanol exports fell in 2019 for the first time in four years, despite increasing the number of export destinations. Linder said in a press conference when he began his role as the National Corn Growers Association president on Oct. 1 that the organization is working hard to increase sales of higher ethanol blends and expand ethanol exports.

Fox says the way to increase demand is to get higher ethanol blends at the gas pump here at home. The EPA approved the year-round sales of gas blends with up to 15% ethanol. What’s holding the industry back is the retailers who sell gasoline.

Nationally, there are 2,200 E15 fueling stations. Gas stations need to put in infrastructure like new pumps that have an E15 option, or allow 15% ethanol to be blended into their base gasoline option, Fox said. Sounds easy enough, but they’re fighting a lot of misconceptions about ethanol and vehicle engines.

Vehicles built after 2001 have the capability to run E15 gasoline, and that makes up about 95% of all cars on the road today, according to Growth Energy, a biofuel trade association.

(Reporter Rachel Wagoner can be contacted at 800-837-3419 or rachel@farmanddairy.com.)

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Rachel is a reporter with Farm and Dairy and a graduate of Clarion University of Pennsylvania. She married a fourth-generation beef and sheep farmer and settled down in her hometown in Beaver County. Before coming to Farm and Dairy, she worked at several daily and weekly newspapers throughout Western Pennsylvania covering everything from education and community news to police and courts.

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