Opportunities and Challenges in the Nebraska Ethanol Industry

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Opportunities and Challenges in the Nebraska
Ethanol Industry

• Governors Ethanol Coalition
• August 2007
• Presentation by
• Todd Sneller
• Nebraska Ethanol Board

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Historical Perspective
Induced Employment Lincoln, NE- 1933
Governors car being filled up with corn alcohol
gasoline ( E-10)
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Ethanol An Economic Catalyst for Nebraska

• Unquestionably, the most important value-added
  product to the States economy is, and will
  continue to be, ethanol production.
  
• Policy decisions at the federal level along with
  increased demand for ethanol could dramatically
  increase U.S. net farm income and create many
  jobs over the next few years.
• Nebraska must communicate that it is eager to
  attract desirable businesses such asbio-fuel
  plantsthrough a combination of tax breaks and
  innovative policies.

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Ethanol Production By Incentive 1985-2007
No Incentive 1985-1989 LB1124 1990-2000 LB605
2001-2005 Overlap of LB605 LB536 LB536
2003-2012
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Oil Hidden Costs
By including externalities, the true cost of oil
may exceed 150 per barrel
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Ethanol Plants in Nebraska
17 plants producing nearly 1.1 billion gallons
per year
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Plants under construction
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Emerging Issues

• Jobs/Training
• Energy/Natural Gas/Coal
• Transportation (Rail/truck)
• Remediation
• Safety Training
• Water
• Distillers feeds
• Pipeline
• E85 expansion/E10 Saturation

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Annual NE Ethanol Production Capacity and Corn Use
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Economic Benefits of Ethanol Production

• Increased Economic Value for Cattle/Dairy
  Industry Feed Manufacturing
  
• Stimulates Transportation Sector Rail/Truck
• Quality Jobs Retention of Skilled Workers
• Plants Well Suited for Rural Communities
• Expands Local Tax Base Tax Revenues
• Value-Added Industry Promotes Export of
  Finished Products
  
• Growth Industry that Attracts Capital to the
  State Plant Expansion Potential Increases
  Capital Outlay and Related Economic Activity
  
• Stimulates Allied Industries and Enhances
  Infrastructure
  

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Ethanol Related Opportunities
Ethanol development provides opportunities
for expansion of Nebraska businesses and
industries. The impact of an expanded ethanol
industry extends well beyond the
agricultural sector.
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Opportunities Related Industries
Service Providers
Parts Providers
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Current and Projected Job Demand

• July 2007 NE Ethanol Industry Jobs
• 885 Direct Jobs at 17 Plants
• 1,500 Indirect (induced) Jobs
• Six Plants w/ major expansion underway
• -Expansions to be completed by 1Q 08
• -100 new Direct Jobs from expansions
  (est.)
  
• -165 Induced Jobs from expansions (est.)
• 9 Plants Under Construction
• -400 Direct Jobs in new plants by 1Q 08
• -630 Induced Jobs in new plants
• 1,300 new Direct and Induced Jobs by 1Q 08

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Ethanol Sector Jobs and Wages

• Ethanol jobs listed on Nebraska sites
• General Manager
  Lab Supervisor
  
• Office Manager
  Administrative Assistant
  
• Plant Manager
  Accounts Payable
  
• Commodities Manager
  Commodities Administrator
  
• Controller
  Risk Management Assistant
  
• Process Supervisor
  Grain Merchandiser
  
• Maintenance Supervisor
  Sales and Contracting
  
• Average annual salary at Nebraska ethanol plants
  in 2006 was 50,000.
  
• Demand for transportation sector jobs is high.
• Demand for skilled trade positions is high.

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Future Challenges
Continued Development Will Require
Expansion of engineering and construction serv
ices Efficient permitting of new and expandin
g facilities Continued development of livest
ock industry to provide new distillers feed
markets and products Supply trained workers fo
r ethanol and related businesses
Support training and education programs at
colleges Foster competitive business environmen
t Increase supply of potential feedstocks for e
thanol production Maintain a public policy fram
ework that encourages the production and use o
f biofuels Enhance transportation efficiency
Create awareness of quality and quantity of
ethanol related jobs
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Putting Water Use in Context

• Virtually all types of manufacturing use water at
  some point in the production process.
  
• Current ethanol processing technology uses
  approximately 3 gallons of water for each gallon
  of ethanol.
  
• Ethanol process improvements indicate water use
  can be reduced to 1.5 to 1.
  

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Water Conservation Opportunities
Reduce Energy Consumption (less cooling tower
evaporation blowdown) Recycle waste and blowdow
n streams Treat makeup water (less blowdown) Use
air or groundwater to reject heat (less
evaporation and blowdown)
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Water Conservation Opportunities
Gallons Fresh Water/ Gallon Ethanol less than
1.5 Achievable with proven technology at extra
capital cost 0 Possible in future with new t
echnologies
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Putting Water Use in Context

• 17 ethanol plants are currently operating in
  Nebraska 9 plants are actively under
  construction 37 additional plants have been
  proposed for Nebraska sites. If ALL current and
  proposed plants were operating, they would use
  about two-tenths of 1 percent of the water pumped
  in the state.
• Based on USGS
  estimates.
  

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Putting Water Use in Context

• A large (100 mgy) ethanol plant uses the same
  amount of water annually as it takes for four
  center-pivot irrigation systems to water a
  section of land.
• In water-short area, ethanol plant developers buy
  land that has irrigation wells and convert the
  water use from irrigation to ethanol production.

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Most Recent Studies Show Positive Net Energy
Balance for Corn Ethanol
Energy balance here is defined as Btu content a
gallon of ethanol minus fossil energy used to
produce a gallon of ethanol
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Total Energy Conclusions

• Corn-based fuel ethanol achieves moderate percent
  reductions in GHG emissions, large percent cuts
  in oil use. Its total production is limited
  relative to transport fuel use.
• Cellulosic ethanol can achieve much greater
  percent GHG benefits than corn ethanol. Per mile
  oil use benefits are comparable to corn ethanol.
  Potential production is far greater.

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Ethanol Production should remain a targeted
industry in Nebraska

• Ethanol production will continue to be an
  economic stimulus for many product and service
  sectors in Nebraska.
  
• It is an industry ideally suited for rural
  communities.
  
• Ethanol production will become an increasingly
  more important part of Nebraskas economic base.

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Slide Seven
Nebraskas Competitive Advantage for Ethanol
Production
Nebraska continues to provide some of the highest
returns
for ethanol investors.
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Slide Four
Nebraskas Competitive Advantage for Ethanol
Production
Corn Supply
Nebraska had net exports of 459 million bushels
of corn for the 2006-07 crop year.
Net exports for current (2008-09) crop year are
projected to be 195 million bushels which
would be a quantity sufficient to produce an
additional 550 million additional gallons of
ethanol.
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For more information, contact
Todd Sneller Nebraska Ethanol Board Lincoln, NE

402-471-2941 www.ne-ethanol.org