Ethanol (ethyl or grain alcohol) is a renewable fuel used to power vehicles and other internal combustion engines. Ethanol is currently made from feedstock crops such as corn, barley and sugarcane that contain significant amounts of sugar, or materials that can be converted into sugar, such as starch.

About 90 percent of ethanol in the U.S. is made from corn, due in large part to federal subsidies to encourage the production and consumption of corn-based ethanol.

About 90 percent of ethanol in the U.S. is made from corn, due in large part to federal subsidies to encourage the production and consumption of corn-based ethanol.1Cellulosic ethanol, by contrast, is produced from wheat straw, corn stalks (called stover), sawdust, rice hulls, paper pulp, wood chips, energy cane, sorghum, miscanthus grass and switchgrass, all of which contain cellulose and hemicellulose, which can be converted into sugars and then fermented into ethanol.

At present, corn is much easier and cheaper to process into ethanol than cellulosic biomass. However, compared to corn, cellulosic biomass crops require less energy, fertilizer, pesticide and herbicide to grow. Cellulosic ethanol production may not become economically feasible for a number of years, although the basic technology has existed for more than a hundred years.

Ethanol can be used as an alternative to gasoline and could help reduce America’s dependence on imported oil. In early 2007, President George W. Bush announced his goal to reduce U.S. gasoline consumption by 20 percent in 10 years. Furthermore, the 2007 federal energy bill sets a goal that the U.S. will produce 15.2 billion gallons of renewable fuels annually by 2012 and 36 billion gallons by 2022. In addition to the Renewable Fuel Standard (RFS), ethanol production also benefits from federal tax credits.

In addition to federal policies encouraging ethanol production, relatively low grain prices and high crude oil prices contributed to the industry’s growth. In January 2007, corn sold for $3.05 a bushel, although by March 2008 increased demand for corn to produce ethanol had driven the price up to $4.83 a bushel, a 58 percent increase in just over a year.

Like all industries, ethanol production can spur job growth and increase local tax revenues. Ethanol production can contribute to local economies.


At this writing, Texas has two operational ethanol plants.

Ethanol has been used as a source of energy for almost 200 years. The 1908 Ford Model T was designed to run on a mixture of gasoline and alcohol. Ethanol use increased during the 1970s and 1980s when gasoline supplies decreased and became more expensive. Currently, ethanol is used as a gasoline additive in mixes of up to 85 percent ethanol.


Ethanol can be used as an engine fuel by motor vehicles as well as some lightweight aircraft.

It can be blended with gasoline to produce a fuel called E85 – 85 percent ethanol and 15 percent gasoline. This fuel has a high oxygen content, and burns cleaner than other motor vehicle fuel. But ethanol has a lower energy content than gasoline and thus is less efficient; vehicles running on ethanol get fewer miles per gallon. On average, a vehicle consumes 1.4 gallons of E85 for every gallon of regular gasoline.

E85 is used in flexible fuel vehicles (FFVs) that are specifically designed to use it. (All cars built after 1970 can run on E10, a fuel that is 90 percent gasoline and 10 percent ethanol.) Except for minor engine and fuel system modifications, FFVs are identical to gasoline models.FFVs have been produced since the 1980s, and many models are available, though there remain few filling stations that sell E85.

Ethanol also can replace Methyl Tertiary Butyl Ether (MTBE), a fuel additive derived from natural gas used to increase gasoline’s octane rating and prevent engine knocking. In 2006, several major oil companies announced that they would replace MTBE with ethanol in all of Texas’ “non-attainment” cities – areas that have failed to meet federal standards for ambient air quality. These include Dallas-Fort Worth, Houston-Galveston-Brazoria, Beaumont-Port Arthur, San Antonio and El Paso. MTBE replacement alone will create a demand in the state for 400 to 500 million gallons of ethanol per year.

MTBE is being replaced with ethanol because MTBE is water-soluble, is not biodegradable and has been found leaking into some groundwater supplies.


One bushel of corn (56 pounds) can produce up to 2.8 gallons of ethanol.

As of April 2008, the U.S. had 147 operating ethanol plants, 55 plants under construction and 6 existing plants undergoing expansions. The majority of these plants are located in the Midwestern Corn Belt. Texas has two operating ethanol plants. The U.S. has no commercial cellulosic ethanol plants, but DOE has funded six pre-commercial scale plants for demonstration, none of which are in Texas.

U.S. ethanol production has increased rapidly over the past five years. In 2007, U.S. ethanol production reached 6.5 billion gallons.


Ethanol can be made from corn by either of two processes: dry milling and wet milling. Ethanol plants also yield a number of other commercially valuable co-products, such as livestock feed and carbon dioxide.

Ethanol 1

Dry milling works by grinding the corn into flour and then adding water to create mash. The mash then is mixed with enzymes to convert the starches to sugars. At this point, yeast is added to convert sugar to ethanol and carbon dioxide. Dry mills also produce distillers’ dried grain with solubles (DDGS) and carbon dioxide. The livestock industry uses DDGS as a high-value feed, and the carbon dioxide can be sold to beverage makers for carbonation.

In wet milling, corn is soaked in water and acid to separate the various grain components. Grinders then separate the corn germ from the fiber, gluten and starches. The starch and water from the mash are converted into ethanol. Other components of the corn can be used to produce corn gluten meal, corn gluten feed, cornstarch, corn syrup and corn oil.

Cellulosic Ethanol

Three primary polymers exist in the walls of plant cells – cellulose, hemicellulose and lignin. To convert cellulose to ethanol, the chains of cellulose molecules must be broken into sugars and then fermented into ethanol using yeasts.

Cellulose can be converted into ethanol by two different methods – the sugar process or the thermochemical process. Acid hydrolysis and enzymatic hydrolysis, in turn, are rival processes used to produce ethanol via the sugar process.

Ethanol 2

Sugar Process:

In this process, biomass is processed at the ethanol plant. Biomass is ground up resulting in smaller pieces. Pretreatment is needed to separate the cellulose from lignin in order to make the cellulose available for hydrolysis. Some pentose sugar molecules are freed during pretreatment. Pentose can be fermented into ethanol in limited quantities. The cellulose is hydrolyzed using either acids or enzymes.

Acid Hydrolysis

In this process, two different types of acid are used: dilute acid and concentrated acid. To produce ethanol from plants, a “traditional” process using acid was developed in the 1930s. This process has several drawbacks, however, since the acid must be recycled, and the high processing temperatures can degrade the sugar and lower the ethanol yield.

Enzymatic Hydrolysis

Before the enzymes can work to break down the molecules, a pretreatment process breaks down their crystalline structure. The enzymes can come from many sources, such as elephant dung and termite or cow intestines. This process appears to have promise if prices for the enzymes continue falling.

Ethanol 3

The hydrolysis of cellulose results in the formation of glucose – a sugar. Glucose is then fermented into ethanol by yeast or bacteria.

Ethanol 4

Thermochemical Process:

In this process, biomass is gasified into synthesis gas, or “syngas.” The gasification process employs different combinations of temperature, pressure, water and air to convert the cellulosic matter into gas. The syngas then is passed over a catalyst and converted to ethanol.21Research at several laboratories across the country is attempting to use thermo-catalytic processes to produce higher-value fuels more closely resembling gasoline and diesel.

Producing ethanol from cellulosic material currently is more expensive than corn-based ethanol, since it can involve many different enzymes as well as genetically engineered organisms. The enzymes used in the sugar process are expensive, although their price has dropped considerably in the past five years. In 2001, the enzyme cost per gallon of ethanol produced was about $5; by 2005, this cost had fallen to between 10 cents and 18 cents per gallon. Many ethanol companies are working with major chemical companies to genetically engineer new types of enzymes and microorganisms, such as bacteria or fungi, for ethanol production.

Another economic barrier to commercial production of cellulosic ethanol is the fermentation step. Currently, the yeasts used for this step cannot process some of the sugars (five-carbon sugars) generated by the breakdown of hemicellulose. Research is being conducted to increase ethanol yields by overcoming this challenge.

The U.S. Department of Energy (DOE) is pursuing the world’s most aggressive cellulosic ethanol initiative. On February 28, 2007, DOEannounced funding of up to $385 million in all to construct six cellulosic ethanol plants expected to produce more than 130 million gallons of ethanol per year. None of these DOE-funded plants are in Texas. The funding will last through fiscal 2010. These facilities are expected to produce commercial quantities of ethanol once completed.


Ethanol cannot travel in pipelines because it is water-soluble, and as a result will mix readily with any water present in a pipeline. Water often enters pipelines at the terminals, and ethanol that absorbs too much water during transport is unsuitable for use. As a result, ethanol must be transported by truck, train or barge, resulting in higher transportation costs. Most ethanol plants, therefore are situated near major highways or rail lines to ensure efficient movement.

Transportation of corn also can entail costs, and most ethanol plants are located near areas where corn is grown. (To date, the majority of ethanol plants are located in the Midwest because of this constraint.)

The largest corn-producing states are Iowa, Illinois, Minnesota and Nebraska. While Texas produces a significant amount of corn, it is not in the top tier for production, ranking 11th nationwide in 2007, with 296 million bushels of corn grown.35 In fact, Texas is a net corn importer, using more corn than is grown.

Some ethanol plants, called “destination plants,” are located close to feed yards and dairies, because the by-products of milling (distiller’s wet grain and dry distiller’s grain) are then fed to livestock. Manure from feed yards also can be used as fuel for the plant, as with the plant currently under construction in Hereford, Texas.

The largest ethanol plants planned for Texas will be located in the Panhandle, close to feedyards and as close as possible to Midwestern corn farms. There are more than 1 million head of cattle and 100,000 dairy cows within a 100-mile radius of Hereford, the current home of one completed ethanol plant and one under construction, which could benefit from grain residue.

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