MORRIS -- Ten years ago, a group of farmers in Swift County set out to prove that agriculture could reduce our reliance on imported oil by processing locally raised corn into ethanol.
Today, the farmers who created the Chippewa Valley Ethanol Company are eager to show that ethanol's role can be even bigger than anyone imagined.
And surprisingly, that future won't necessarily rely on corn.
When President George W. Bush talked about making ethanol from switch grass in his State of the Union address, "Our board did not scoff at that,'' said Bill Lee, general manager of the Chippewa Valley Ethanol Company in Benson. Lee offered his view on the fast-evolving ethanol industry and Chippewa Valley's role in it at the Home Grown Energy conference hosted Tuesday by the University of Minnesota, Morris.
Lee indicated that it is probably too early to say whether switch grass is the next best thing to convert into ethanol. But he does believe that future ethanol production will turn increasingly to cellulose and other biomass as its raw material in place of the corn or grain now preferred.
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Lee sees the day when farm-raised biomass will provide both the energy to operate ethanol plants and the raw material to produce the fuel itself.
Chippewa Valley Ethanol Company is already committed to being a leader in the industry's evolution.
The Benson facility will soon become one of the first ethanol plants in the country to use farm-raised, renewable biomass to provide the energy for its operations. It is working in partnership with Frontline BioEnergy LLC of Ames, Iowa, to install two gasifiers to power the plant's production of over 40 million gallons of ethanol annually.
The first gasifier, which should be in operation by the end of this year, will use distiller's dried grains as its fuel source. The distiller's dried grains are produced by the plant as part of making ethanol and are sold as animal feed.
The gasifier will convert the distiller's dried grains into a clean-burning, synthetic gas that will replace most of the $20 million worth of natural gas that the ethanol plant now purchases each year.
By the end of 2009, Chippewa Valley Ethanol Company and Frontline intend to have a second gasifier in operation that will use farm-raised biomass as the fuel. This second unit will rely primarily on corn stover -- the stalks, leaves, cobs and other plant residue remaining after harvest -- as its biomass fuel source.
Jerod Smeenk, of FrontLine BioEnergy, said the gasifier will require a supply of 300 tons of corn stover per day, or over 100,000 tons per year. CVEC and Frontline will need to develop the infrastructure for harvesting the stover, as well as create the market for its purchase.
Smeenk said that current projections show corn stover producing energy at costs of $3.50 to $4 per one million BTUs. That compares very favorable to natural gas, which costs in the range of $6.50 to $7 per one million BTUs. Natural gas -- which cost Chippewa Valley just over $2 for one million BTUs when its operations began 10 years ago -- rose to over $12 at one point in the last year.
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The ethanol industry is also looking at corn stover and other biomass as the possible raw material for ethanol itself.
Currently, ethanol plants rely on what is called the "sugar platform'' model for converting corn into ethanol. It is a biological process that relies on fermentation and enzymes to convert the corn to energy.
Ethanol can also be produced by using a thermo-chemical or gasifier technology, said Lee. The same biomass that becomes the fuel for a gasifier can also be converted by that process into a liquid fuel.
The technology to do this already exists. There is reason to believe the market to produce much more ethanol also exists.
Lee said that ethanol crossed an important threshold in the new U.S. energy bill. Instead of treating ethanol as a fuel oxygenate, the new energy bill sets a renewable energy fuel standard.
The federal government calls for ramping up ethanol production from 4 billion gallons a year to 7.5 billion gallons by 2012. Its goal is to replace an ever larger portion of the more than 140 billion gallons of petroleum now used for transportation.
Lee said there are now 95 ethanol plants in operation in the country and 34 more under construction. Ethanol is seeing "exponential'' growth, he said. He predicted that the industry will reach the 2012 capacity goal by late 2007, or early 2008.
But Lee said there is not enough corn available in the country to push ethanol production much above that level and remain economically competitive. For that reason, he believes producers will turn increasingly to cellulose and other biomass sources.
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Lee, who just returned from a national convention of ethanol producers in Las Vegas, said that there was once debate about whether ethanol could ever replace 10 percent of the gasoline in the country. Now, the debate is on much higher target levels, with many predicting that renewable sources could replace one-third or more of the oil now used.
Lee tempered his expectations for more growth in the industry with a warning.
The industry that was built on the concept of farmer-owned plants is "now changing in a profound way. Big money has found ethanol,'' he said.
Lee warned that there will be increasing pressure by large and multinational corporations to acquire farmer-owned plants. These large corporations are also building their own mega-sized plants to compete with farmer-owned plants.
Success in this ever-evolving environment will require both innovation and a willingness to take the lead, said Lee, who added that Chippewa Valley Ethanol Company has always prided itself on both.
