According to this 2006 report on the economics of biofuels from the USDA, ethanol and biodiesel production have increased significantly in recent years and are expected to continue increasing substantially.
About 14 percent of the U.S. corn crop was used for ethanol in 2005/06 and USDA projects nearly 20 percent of U.S. corn production will be converted into ethanol in 2006/07.
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In 2000, about 1.6 billion gallons of ethanol was produced in the United States. By 2005, about 4 billion gallons of ethanol was produced, a 150 percent increase in 5 years. In 2006, nearly 5 billion gallons of ethanol is expected to be produced, a one-year increase of 20 percent. There are now 101 ethanol plants with total capacity of 4.8 billion gallons operating in 20 states. The Renewable Fuels Association reports that there are 39 ethanol plants under construction and another 7 facilities expanding with total capacity of 2.6 billion gallons per year. When that construction and expansion is completed, ethanol capacity in the United States will be 7.4 billion gallons per year.
A number of factors have contributed to the rapid increase in production, including the 51 cent per gallon tax credit provided to blenders, high and volatile oil prices, low corn prices, the Renewable Fuels Standard (RFS) under the Energy Policy Act of 2005, and the elimination of ethanol’s main oxygenate competitor, methyl tertiary butyl ether (MTBE).
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Various industry analysts suggest that there are another 60 or more ethanol plants under different stages of planning, and these plants are in addition to those currently under or approved for construction. The expectation is that production capacity could rise well above the current 7.4 billion gallons level of plants that are now operating or are under expansion or construction. New facilities under construction or in development tend to be large, with production capacity in the range of 50 to 100 million gallons per year. Ethanol production capacity could increase to 7.5 billion gallons by 2008-9 and more than 10 billion gallons by 2012.
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U.S. biodiesel production remained very small and flat until USDA created the Bioenergy Program in Fiscal Year (FY) 2000 that encouraged biodiesel production through cash payments to producers. Mostly as a result of this program, biodiesel production jumped from 500,000 gallons in 1999 to 28 million gallons in 2004. In 2005, 91 million gallons of biodiesel were funded by this program. However, the Bioenergy Program authorization ends in FY 2006. Even so, with high diesel prices and new tax incentives, USDA forecasts biodiesel production will reach 245 million gallons in 2006, a 170 percent increase year over year and a 490-fold increase since 1999.
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Judging from the capacity that is currently being built by investors, biodiesel production is expected to continue growing rapidly over the next few years. With over 100 plants expected to be on-line by the end of 2007, the biodiesel industry is well on its way to becoming a major provider of renewable fuels. Data on production reported for 2006 through June indicate that about 90 million gallons of biodiesel have already been produced, about equal to 2005’s total production. If monthly production were to continue at about the same level achieved in June, total annual production would reach about 200 million gallons by the end of 2006. Thus, compared to 2005, biodiesel production could more than double in calendar year 2006. Growth seems likely to decline as base production reaches a higher level, so biodiesel production is expected to be sharply higher but below 400 million gallons in 2007.
What are the environmental impacts of the increases in corn and soybean production necessary to supply biofuel energy sources? According to this Science Daily article, Researchers Identify Energy Gains And Environmental Impacts Of Corn Ethanol And Soybean Biodiesel (emphasis mine) there are environmental costs. However, they are not easily quantified.
Science Daily — The first comprehensive analysis of the full life cycles of soybean biodiesel and corn grain ethanol shows that biodiesel has much less of an impact on the environment and a much higher net energy benefit than corn ethanol, but that neither can do much to meet U.S. energy demand.
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The study showed that both corn grain ethanol and soybean biodiesel produce more energy than is needed to grow the crops and convert them into biofuels. This finding refutes other studies claiming that these biofuels require more energy to produce than they provide. The amount of energy each returns differs greatly, however. Soybean biodiesel returns 93 percent more energy than is used to produce it, while corn grain ethanol currently provides only 25 percent more energy.
Still, the researchers caution that neither biofuel can come close to meeting the growing demand for alternatives to petroleum. Dedicating all current U.S. corn and soybean production to biofuels would meet only 12 percent of gasoline demand and 6 percent of diesel demand. Meanwhile, global population growth and increasingly affluent societies will increase demand for corn and soybeans for food.
The authors showed that the environmental impacts of the two biofuels also differ. Soybean biodiesel produces 41 percent less greenhouse gas emissions than diesel fuel whereas corn grain ethanol produces 12 percent less greenhouse gas emissions than gasoline. Soybeans have another environmental advantage over corn because they require much less nitrogen fertilizer and pesticides, which get into groundwater, streams, rivers and oceans. These agricultural chemicals pollute drinking water, and nitrogen decreases biodiversity in global ecosystems. Nitrogen fertilizer, mainly from corn, causes the ‘dead zone’ in the Gulf of Mexico.
Thus, while biofuels may reduce our dependance on imported oil and produce less greenhouse gases; do we really understand their overall impact on the environment and our economy? What are the true costs?
I’m not opposed to biofuels, however I don’t believe they are the panacea that many environmentalists or ‘green-thinking’ people make them out to be. We do need to reduce our dependancy on imported petroleum. Buring fossil fuels is bad for the environment. However, we need to recognize the true costs of alternatives that, according to researchers, will never meet our energy needs.