February 2008

The on-farm cost of producing switchgrass for cellulosic ethanol averages about $60 per ton, according to a new study by a UNL agricultural economist and others.

The study, which contracted 10 farmers in Nebraska, North Dakota and South Dakota to commercially grow switchgrass for five years, starting in 2000 and 2001, gives a real-life look to farmers interested in growing and contracting switchgrass, said Richard Perrin, the UNL agricultural economist who was the primary economic analyst for this study.

"This is the most comprehensive study to date on assessing the economic costs of producing switchgrass biomass in commercial fields," he said.The joint U.S. Department of Agriculture-Agricultural Research Service and Institute of Agriculture and Natural Resources study will be published in this month's BioEnergy Research. It is available online at http://dx.doi.org/10.1007/s12155-008-9005-y.

In the study, two farmers with previous experience growing switchgrass had the lowest production costs of $39 per ton. The five farmers with the lowest costs had production costs of less than $50 per ton, which should be achievable by other farmers as they gain production experience, Perrin said.

The study does not include costs to transport the switchgrass to a biorefinery, nor the costs to process it in the biorefinery.

"Cost beyond the farm gate is more speculative," Perrin said. "Currently there is not an exact figure available on how much it actually costs to produce ethanol from switchgrass because that industry is not really born yet."

Researchers offered a speculative scenario that factored in transportation and ethanol production costs. Estimating production cost at $50 per ton and assuming a conversion efficiency of 80 to 90 gallons per ton, the cost of switchgrass feedstock delivered to the refinery would be equivalent to 58 cents to 66 cents per gallon of ethanol.

The Energy Independence and Security Act of 2007 mandates the use of 100 million gallons of cellulosic biofuel by 2010, possibly more than will be produced, Perrin said.

The technology to convert cellulosic materials to ethanol on a commercial scale has been difficult to develop. Cellulose first must be broken down into starch and sugar before it can be fermented into alcohol.A number of cellulosic ethanol plants are in operation, including one in York, but most are pilot-scale plants.

Six cellulosic biorefineries co-funded by the U.S. Department of Energy also are in the works across the U.S. and should be completed over the next few years. These plants are expected to produce more than 130 million gallons of cellulosic ethanol per year, according to the U.S. Department of Energy. The closest of these will be in Iowa and Kansas.

Perrin and the agronomists involved in the study expect production costs will decline further as farmers' experience with switchgrass grows and new ethanol-friendly cultivars are developed. Increasing land rents will significantly increase production cost because they account for nearly half of all production costs.

The fields used in the study were in Nebraska near Atkinson, Crofton, Lawrence and Douglas; in South Dakota near Highmore, Bristol, Huron and Ethan; and in North Dakota near Streeter and Munich. Land was marginal cropland that would have qualified for the Conservation Reserve Program.Farmers were paid for their work under contract with UNL and recorded all costs for producing switchgrass biomass start to finish, including machinery and labor, materials such as seed and fertilizer and land rent.Total baled biomass yields were determined for each farm.

Other authors of the study were Ken Vogel, a USDA-ARS geneticist in UNL's agronomy and horticulture department; Marty Schmer, USDA-ARS agricultural science research technician and UNL doctoral student; and Robert Mitchell, USDA-ARS agronomist at UNL.

This study follows up on a net energy study published in the January Proceedings of the National Academy of Sciences (PNAS) which found switchgrass grown for biofuel production produced 540% more energy than needed to grow, harvest and process it into cellulosic ethanol.That study also found greenhouse gas emissions from cellulosic ethanol made from switchgrass were 94% lower than estimated greenhouse gas emissions from gasoline production.

For more information about this study, see the March 12 edition of Cornhusker Economics at http://www.agecon.unl.edu/Cornhuskereconomics.html

Sandi Alswager Karstens
IANR News