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Wednesday, Jan. 17, 2007 05:42 pm

Opportunity’s risk

Explosion of ethanol production could tax available water sources

Untitled Document Abuzz with Friday’s news that corn had hit near-record prices, a small group of farmers and curious investors gathered at 1st Farm Credit Services in Normal last weekend to hear a pitch for shares in a new corn-to-ethanol plant in Gibson City. If it’s approved, the facility won’t be fired up until the end of 2008 — but presenters made a persuasive case that when it does, investors may see high-double-digit profits even with corn prices surging close to $4 a bushel. With the spring planting season fast approaching, farmers must first decide how much acreage to devote to corn and then ponder another question: whether to invest directly in ethanol production as a hedge against seesawing prices. It may be their golden opportunity to participate in the boom of a generation. “I want a piece of the pie beyond the farm gates,” says John Adams, a farmer from Atlanta, north of Lincoln off Interstate 55, who was impressed by the 100 million-gallon ethanol plant proposed by One Earth Energy LLC, a consortium of five central-Illinois grain cooperatives. The Gibson City plan is just one of about 30 applications pending before the state Environmental Protection Agency. But even as some see the soaring interest in corn and ethanol as a boost for the local farm economy, others are worried that the growing ethanol industry — requiring roughly 1.5 million to 2.2 million gallons of water per plant per day — will drain local water supplies.
As Illinois State Water Survey chief, Derek Winstanley’s job is to ensure that the region has enough water to meet current and growing demand. He recently caused a stir in Champaign by questioning whether the city ought to be approving new large-scale industrial uses of water, including an ethanol facility planned by Andersons Inc. on Champaign’s west side, that could push the county well beyond its current usage of 30 million gallons a day and threaten the long-term viability of the Mahomet Aquifer. As part of a three-year study, Winstanley is assessing the state’s key water sources, including the Mahomet Aquifer, which stretches lengthwise 150 miles from the Indiana border to the western end of Tazewell County south of Peoria. He is also helping the Mahomet Aquifer Consortium find nominees from the area’s spectrum of water users to sit on a regional planning committee, slated to meet for the first time Feb. 23 in Urbana.
“This is a big step forward,” he says. “This is the first time we’ll have a regional planning process whereby counties, towns, agriculture, environmentalists, and industry can all come together and talk about the resources of the aquifer and how we might want to manage it in the years ahead. We’ll look at regional water demands and how much water will be needed in the next 50 years.”
But Winstanley warns against making “sweeping statements” regarding the viability of the aquifer, which varies considerably from region to region. “We’re particularly concerned with the area around Champaign-Urbana, where 30 million gallons a day are withdrawn from the aquifer, so additional withdrawals there pose more challenges than the area around Paxton-Gibson City,” he says, “so each area is different in terms of the aquifer’s characteristics and also in terms of the water to be withdrawn.”
At the western end, in Mason and Tazewell counties, he says, farmers must rely on large volumes of water from the aquifer for irrigation. There the aquifer is composed largely of deep sandy levels that rainfall passes through quickly, replenishing the water in the aquifer but increasing the need for irrigation. “Large withdrawals from those areas appear to be sustainable, whereas large withdrawals from other areas might not be,” he says.
One Earth Energy’s Gibson City plant, for example, proposes drawing 1.7 million gallons a day from the aquifer, filtering the water after processing the ethanol, and returning 1.2 million gallons to fields and streams. But those 1.2 million gallons won’t necessarily penetrate the aquifer to replenish the water supply, Winstanley says. He believes much of that returned water will simply fill local waterways and run off into the Mississippi River. Nonetheless, because the aquifer in the area is particularly deep and local water use particularly low, he expects the ethanol plant there to have minimal impact, if any, on the area’s long-term supply. Seven ethanol production plants are up and running in Illinois. The One Earth Energy plant will rely mainly on the five grain coops — Alliance Grain Co., in Gibson City; Topflight Grain Coop, in Bement; Grand Prairie Coop, in Tolono; Fisher Farmers Grain & Coal Co., in Dewey; and Ludlow Cooperative Elevator Co., in Ludlow — to provide 36 million bushels of corn a year, which is about 15 percent of the locally produced corn in six central-Illinois counties, according to One Earth board president Steven Kelly, who led the presentation in Normal.
A bushel of corn — 56 pounds — produces 2.8 gallons of ethanol, which is essentially corn fermented into pure ethyl alcohol that can be blended with gasoline as an octane enhancer and oxygenator in fuel to replace the additive MTBE and reduce carbon monoxide emissions. That same bushel can also produce 18 pounds of high-energy feed byproduct for cows called DDGS (distillers dried grains with solubles). This year, Bear Stearns estimates that 19 percent of the country’s corn production will go to ethanol, but only 2 percent to 3 percent of U.S. vehicles can operate on flex fuel. In Brazil, Kelly says, plentiful ethanol produced from sugarcane feeds the 75 percent of flex-fuel vehicles in the country, “so there’s lots of penetration left” in the U.S. market.
Just last week, as corn prices were soaring, Illinois Gov. Rod Blagojevich signed legislation requiring state agencies to purchase flex-fuel vehicles that can run on E85, a blend of ethanol and gasoline, and diesel-powered vehicles that run on B5, a blend of biodiesel and regular diesel fuel. Last year, 400 of the 700 vehicles the state purchased were flex-fuel vehicles, and a total of 1,944 — or 16 percent of the state’s vehicle fleet — now run on flex fuels. According to the governor’s office, more than 140 stations offering E85 are listed at www.illinoisgreenfleets.org.
Farmers say that participating in ethanol production gives them a way to make money even when corn yields climb and prices once again cycle down. “If the price of corn goes back down, the farm may not make money, but the ethanol investment might be profitable,” says farmer John Adams. “It’s just a hedge. A lot of people might look at it like that.”
Local ethanol facilities also give local farmers another market for their corn. Because farm prices fluctuate from state to state and even from county to county, farmers who have more than one buyer could see higher prices for their crops as big purchasers such as Decatur’s Archer Daniels Midland — which runs an ethanol plant of its own — are forced to bid, Adams says. Then it doesn’t matter whether the crop is headed to the fuel tank or the breakfast table. “All the corn becomes more valuable,” he says.
Joan Villa is a freelance writer based in White Heath. She wrote about wind power in the Sept. 28 edition of Illinois Times.
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