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Ethanolby Dr Saroj Mishra, Winrock International India
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Ethanol in the US: An Overview History.... In the United States, the use of ethanol can be traced to the Ford Model T during the year 1908. Henry Ford, a supporter of homegrown renewable fuels, started a trend by designing his Model T in such a way that it could run on either gasoline or pure alcohol. Due to several efforts to promote and sustain a US ethanol program, this trend made a successful transition into the 1920s and 1930s. By 1938, mainly as a result of the efforts of several companies like Ford, an alcohol plant in Atchison, Kansas was producing 18 million gallons of ethanol (the highest volume produced at the time) each year. This plant supplied more than 2,000 service stations throughout the Midwest. However, this success was short-lived. After World War II, the interest in using agricultural crops in the production of liquid fuels diminished. The economic incentive for the production of liquid fuels from crops vanished with the availability and low cost of fuels from petroleum and natural gas. As a result, many of the ‘wartime distilleries’ were dismantled and Federal officials were no longer eager to invest in promoting the use of alcohol fuel production. The interest in ethanol was reborn in the 1970s due to concern over oil disruption in the Middle East and the subsequent rise in the price of gasoline at the pump. The phasing out of lead also encouraged the promotion of ethanol. The American Oil Company (AMOCO) together with several others began to endorse ethanol as a gasoline extender and an octane booster as replacement for lead. The most popular technique was to blend ethanol directly with gasoline in the ratio of 10:90 - this new blend was called gasohol.
The National Energy Act, approved by Congress in 1978, exempted gasohol from Federal Tax. The introduction of a Federal subsidy on ethanol made gasohol economically acceptable as a gasoline-blending component as the cost of ethanol was reduced. The success of ethanol was greatly encouraged by way of State tax incentives to ethanol producers. By 1980, the success of ethanol was very apparent; 25 States had exempted ethanol for part, if not all their gasoline excise taxes. Due to the high demand, ethanol production increased from 10 million gallons in 1979 to 175 million gallons in 1980. In addition, Federal and State tax incentives made ethanol economically attractive in the Midwest (where most of the ethanol was produced). However, due to the difficulty and expensive transportation of ethanol, penetrating into other markets was challenging. Today... Ethanol production within the US has increased by 12% annually, reaching 1.4 billion gallons in 1998. In 1990, Congress recognized the benefits of ethanol by passing the Clean Air Act Amendments (CAAA90). The CAAA90 basically mandated usage of oxygenated fuels in various parts of the US, specifically during the winter months in the hopes that it would reduce carbon monoxide. It was found that the two most effective ways of increasing the oxygen level of gasoline was to either blend it with methyl tertiary butyl ether (MTBE) or with ethanol. Since ethanol has a higher volume of oxygen than MTBE, only half the volume of ethanol is used to meet the oxygen requirement giving a competitive edge over MTBE despite its higher price. Unfortunately, due to the high volatility of ethanol, which is measured in Reid vapor pressure (Rvp), its usage is limited during cold weather as high temperatures cause evaporative emissions contributing to ozone formation. Resources Specific varieties of yeast produce the fermentation of sugar by enzymes that form ethanol. The five-carbon xylose and arabinose, the six-carbon glucose, galactose, and mannose are used in the production process. Traditionally, fermentation is dependent on the yeast that converts the six carbon sugars into ethanol. Today, glucose is preferred as it is found both in carbohydrates and cellulose. Due to the fact that it is easier to convert carbohydrates (in comparison to cellulose) to ethanol, corn, which is high in carbohydrates, is a preferable choice in the US. Technology Trends There are two major stages that are involved with the transformation of biomass to ethanol. The first is pretreatment - basically pretreating waste so that the transformation process is successful. The biomass is first subjected to cutting, milling, and washing, then to physical, chemical, or biological treatment (or a combination of all three). The goal is to make the biomass digestible. The second stage is acid hydrolysis. Here, a dilute pretreatment is used to separate the hemicelluloses and cellulose. After the biomass has been given sufficient time to dry, concentrated sulfuric acid is added. This is then diluted with water and heated to release the sugar. Once the diluted and pretreated biomass is heated, it turns into a gel, which can then be separated from the residual solids. Dilute acid hydrolysis is the oldest and most sought after process for converting biomass to ethanol. However, this approach as well as the concentrated acid process (which uses dilute acid pretreatment to separate hemicellulose and cellulose) has several drawbacks. Dilute acid hydrolysis results in a large amount of byproducts, whereas, concentrated acid hydrolysis forms fewer byproducts. Both approaches use sulfuric acid, which adds to the complexity of the process and is highly corrosive, which makes handling difficult. Handling sulfuric acid requires high temperatures (100 to 200ºC) which degrades the sugars, resulting in the reduction of the carbon source. This ultimately reduces the ethanol that is produced and compromises efficiency. In order to improve the process of transforming biomass to ethanol, a new approach is currently being considered - countercurrent hydrolysis. This requires two stages. First the cellulose feedstock is led to a horizontal co-current reactor, which has a conveyor. Steam (not acid) is used to raise the temperature. After this process having a fairly short residence time, 60% of the hemicellulose is hydrolyzed and the feed exits the reactor. In the second stage, the 60%-hydrolyzed hemicellulose enters a vertical reactor with temperatures set at 225ºC. Then diluted sulfuric acid is added at a minimal which results in the remaining hemicelluloses and cellulose to be hydrolyzed too.
According to the National Renewable Energy Laboratory (NREL) one of the key advantages of this new process is that it offers a greater potential for cost reduction compared to the dilute sulfuric acid process. Some of the advantages NREL hopes to achieve with this process are to increase glucose yields, increase fermentation yields of ethanol, and cumulative production cost savings per gallon. Enzymatic hydrolysis of cellulose, a process that is already being used in the textile industry provides the greatest potential for ethanol production from biomass. What makes this process unique and effective is that sulfuric acid is replaced in the hydrolysis step. Also, in order to prevent the degradation of sugars, temperatures are significantly lowered to 30 to 50ºC. In addition, this process allows simultaneous saccharification and fermentation (SSF). SSF combines cellulose and fermenting yeast in order to allow the production of sugars and conversion to ethanol by the fermentative organism to take place simultaneously. Once the cellulose hydrolysis is completed, the sugar that is produced is then fermented in order to produce ethanol. NREL predicts that by using countercurrent hydrolysis, future cost reduction will be greater for the enzyme process in comparison to the concentrated and the dilute acid processes. Since the concentrated and dilute acid processes are being phased out, researchers are eager to look into alternatives that are as effective as countercurrent hydrolysis. One process (still under development) in a facility in Louisiana uses bagasse, a sugarcane residue and the dilute sulfuric acid process to produce ethanol. Another process under development is headed by the Masada Resource Group which plans to use municipal solid waste (MSW) and the concentrated acid hydrolysis process to provide New York with ethanol. In Sacramento, California, Arkenol hopes to be able to establish a facility using rice straw and the concentrated acid hydrolysis process to produce ethanol and commercially distribute it.
Legislation One of the main motivations for ethanol use is improved air quality. Ethanol is primarily used in gasoline to meet minimum oxygenate requirements of two Clean Air Act programs. Reformulated gasoline (RFG) is used to reduce vehicle emissions in areas that do not conform to National Ambient Air Quality Standards (NAAQS) for ground-level ozone. Ten metropolitan areas, including New York, Los Angeles, Chicago, Philadelphia, and Houston, are covered by this requirement, and many other areas with less severe ozone problems have opted into the program, as well. In these areas, RFG is used year-round. The US Environmental Protection Agency (EPA) states that RFG has led to significant improvements in air quality, including a 17% reduction in emissions from vehicles, and a 30% reduction in toxic emissions. Another key issue involving ethanol is the current debate over MTBE. Since MTBE has been found to contaminate groundwater in some States (especially in California), there has been a push both in California and nationally to ban MTBE. In March 1999, California’s Governor Davis issued an Executive Order requiring that MTBE be phased out of gasoline in the State by 31 December 2002. Arizona, Connecticut, Iowa, Minnesota, Nebraska, New York, and South Dakota have also instituted limits or bans on MTBE. In July 1999, an advisory panel to EPA recommended that MTBE use be “reduced substantially”. Various organizations, ethanol producing facilities, and lawmakers come together to push for the expansion of ethanol use. Together they lobby against legislation that allow administrators to control or limit the oxygen content of reformulated gasoline. Their goal is to slowly but steadily phase out the use of MTBE. There has been much success especially in the Midwest and further with the Congress agreeing to a plan that requires ethanol to be blended into California gasoline. According to the EPA and the Department of Agriculture this is a first step into the nationwide attempt to eliminate MTBE. Although it seems that (with the phasing out of MTBE and the introduction of ethanol) Californians will be paying more, the long-term effect is that the demand for production of ethanol will increase more than 100-fold which will in turn compensate for any loss. On 20 March 2000, the Clinton Administration announced a plan to reduce or eliminate MTBE use, and to promote the use of ethanol. Although no legislative language was suggested, the framework included three recommendations:
The Congressional Legislation titled Tax Empowerment and Relief for Farmers and Fishermen Act Bills are to amend the Internal Revenue Code of 1986 to enhance the use of ethanol by small ethanol producers. The Bills, if passed, would extend the small ethanol producer’s tax credit to the members of the farmer-owned cooperative. The Bills also upgrade the small ethanol producer category, raising the requirement to sixty million gallons or less a year, allowing more farmer-owned ethanol plants to meet this requirement and participate.
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Financing Ethanol Production in India
Barriers Obviously, there are many barriers to this program in India which have to be identified and overcome, one being policy-related. The Government is yet to come up with a concrete policy to make ethanol blending compulsory for the oil industry. Without a firm off-take mechanism, sugar mills or distilleries are not expected to put up production facilities for automobile- grade anhydrous alcohol, which requires significant capital investments. Such policy or legislation is also expected to be resisted by the oil lobby for obvious reasons, as it will reduce demand for oil products. The lack of a concrete government policy also deters financial institutions to consider funding ethanol production projects. Another barrier is technological, as the blended petrol is yet to be tried in Indian automobiles. Moreover, automobile quality ethanol will require a special manufacturing process and strict quality control. Market barriers such as lack of awareness among potential consumers need to be overcome. The Government is also yet to announce incentives such as subsidies or accelerated depreciation benefits to this sector, which will help in expanding the market. Of late, some steps have been taken. A high level delegation headed by the Union Minister for Petroleum and Natural Gas visited Brazil recently to witness their ethanol program. The government subsequently initiated the setting up of three pilot ethanol-blending projects, one in Uttar Pradesh (Bareilly) and two in Maharashtra (Miraj and Manmad). Once the results of these pilot projects are available, the Government is likely to announce its ethanol blending program. An inter-ministerial task force has been constituted to examine the related issues and provide recommendations. IREDA’s Financing Schemes The Indian Renewable Energy Development Agency (IREDA) was incorporated as a Public Limited Government Company in 1987, under the administrative control of the Ministry of Non-conventional Energy Sources to operate a revolving fund for the development and commercialization of new and renewable sources of energy and to extend financial support to energy efficiency/conservation projects. IREDA has recently introduced a scheme for the financing of ethanol production facilities using biomass/sugarcane. The rate of interest applicable for this scheme is 12% p.a. (additional 0.5% interest rate rebate is available for timely repayment of principal and interest) with maximum repayment period of 8 years (including maximum 2 years of moratorium). IREDA finances up to 70% of the total project cost while the remaining 30% has to brought in as promoter’s contribution. Apart from being an environment-friendly renewable fuel, production of ethanol will also improve the financial viability of the sugar mills and will also create local employment opportunities in the country. The farmers will also be benefitted, as they will have an alternate avenue for their surplus cane production. Once the carbon trading under the Clean Development Mechanism is in place, such projects will become more attractive in view of avoided carbon emissions. IREDA invites entrepreneurs and sugar mills to come forward to avail of financial assistance for setting up ethanol production facilities in the country towards improving India’s energy security and the environment.
Courtesy: Mr Shankar Lal, Dy Manager (EEC), IREDA, Core-4A East Court, 1st Floor, India |