Save $270M! (and Make Biofuels Feedstocks, er, Feasible, er, Now)

May 6, 2013 |

CRP-enrollmentIs there bio-based relief for the harried taxpayer in sight?

Could conservationists, growers and biofuels producers find common ground in adapting the Conservation Reserve Program for bioenergy?

Could the US save $270M/year, and strengthen two carbon-reducing laws on the books?

The eminent Iowa State economist Bruce Babcock recently opined:

“The future of cellulosic biofuels in the United States hinges on whether three under-construction plants are successful. The three plants are designed to produce ethanol from crop residues and are all scheduled to be complete sometime in 2014. What is unique about these plants is that they are owned by large companies with abundant financial resources and experience in completing large projects. DuPont, Abengoa, and Poet/DSM are the owners.

“Success for these plants will be measured not by whether they can make a profit, but more by whether they can demonstrate that they can source, store and process large amounts of crop residues over the course of a year and whether their processing technology can consistently and efficiently convert biomass to ethanol.

Today, let’s take on that question of biomass sourcing.

With analysts predicting a long-term natural gas price around $4.50 per million BTUs in the North America, it’s been a game changer in terms of choosing between coal and gas for power generation. Low cost natural gas has also stimulated the first round of new refinery construction in the US in many years, in the form of GTL and ethylene plants.

But the comparison of biomass and natgas is different that the comparison to coal or oil —± and needs a second look.

First of all, some economics. For example, switchgrass comes in at 7,341 BTUs per pound and bagasse at 6,065. Now, how does that compare to natural gas? At those rates, value in a ton of biomass, at $4.50 per MMBTUs, is $54 per ton for bagasse and $66 for switchgrass .

(Note: That assumes that BTL and GTL systems would have equivalent efficiency in converting feedstock to fuels.)

Let’s introduce one other element into our thinking. That’s the 32 million acres enrolled in the Conservation Reserve Program.

If you are not familiar with the program, it was developed back in an era when there was more land available for production agriculture than markets could support in food, feed and bioenergy demand — keeping land out of production helped support crop prices while improving land quality and was also aimed to improve wildlife habitat. Farmers receive an average payment of $57 per acre per year in a program designed to reduce crop production, diminish soil erosion, and improve water quality on highly erodible agricultural lands.

Why is the CRP program relevant to the discussion?

A Wildlife Society report details: “Introduced grasses and legumes were planted on 71% of the hectares during the first 11 (annual) signups…As these pasture grasses became more established, number and diversity of plant and wildlife species generally declined over time…CRP fields often became monoculture stands with limited wildlife use except as escape, thermal, and nesting cover.”

As the report details: “From a production standpoint, Tillman et al. (2006) reported that diverse (16 species) native mixes planted on degraded infertile land produced more than twice the biomass a decade after establishment compared to monoculture plantings and contained 51% more overall energy than current corn and soybean biofuels grown on fertile lands.”

It raises the question of whether the CRP goals and bioenergy needs could be met within a combined program.


For example, consider a program that pays $57 per acre to the farmer and nets a further $66 per ton for mixed prairie biomass which is harvested off the land. Assume for a moment that the biomass could be harvested only once every couple of years, to preserve the conservation value of the land.

The value proposition

For the grower, it’s more profitable than a simple CRP arrangement – even harvesting once every five years, it adds value to CRP land. For the biofuels producer, it’s a good source of $66 feedstock — and most cellulosic biofuels systems do well economically at this price. For the conservationist, it adds an incentive to plant and manage diverse native mixes instead of monoculture stands.

Why complicate things with a combined program? Well, conservationists, in budget-strapped times, would be better off in finding partnerships, rather than assuming that a program that costs $1.8 billion per year will be funded forever. At the same time, bioenergy producers use the BCAP program, which pays growers up to $45 per ton — and that could be a target for budget-cutters, too.

3 billion gallons of affordable-sourced fuel

If extra biomass were removed every five years, for example, from CRP land — after establishment — that could open up the equivalent of 6 million acres dedicated to bioenergy. At, say, 5 tons per acre of biomass and a conversion rate of 100 gallons per ton, that’s enough land to support 3 billion gallons of (ethanol-equivalent) fuel.

That’s an affordable source of biomass for more fuel than the military sector needs, and a good start for the aviation sector — both of which have imposing sustainability targets and have no solar planes on the horizon.

Now, it does come down to ensuring that CRP land is not only right in terms of biomass, but in the right location — and that’s another reason to schedule enrollment on a combined basis. Right off the bat, it could save the US government up to $270 million each year in BCAP payments — as well as meeting conservation, grower and producer goals.

So, why not?

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