Biofuels fits into the equation of being a strong competitor as a fuel source. Our leading expert, Doug Berven, vice president of corporate affairs at POET, shares the basics, competitors, infrastructure, economic benefits, how other countries utilize biofuels, challenges and trends of biofuels. Learn more about POET at poet.com.
Biofuels fits into the equation of being a strong competitor as a fuel source. Our leading expert, Doug Berven, vice president of corporate affairs at POET, shares the basics, competitors, infrastructure, economic benefits, how other countries utilize biofuels, challenges and trends of biofuels. Learn more about POET at poet.com.
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Speaker 1 (00:49):
Replacing fossil fuels with biofuels, how can agriculture make it happen and what are some of the challenges? Today we are joined with expert Doug Berven. He's the Vice President of Corporate Affairs at Poet and they remain focused on reducing our dependency on fossil based products. Poet is the world's largest producer in biofuels and a global leader in sustainable bioproducts. They're headquartered in Sioux Falls, South Dakota with 33 Bioprocessing facilities across eight states. Our conversation today will focus on the potential of agriculture and biofuels. Doug, can you share just a basic background on what are biofuels and what is the most used or popular?
Speaker 2 (01:30):
Joanna, thanks for having me. It's a pleasure to be with you today. From a very high level, biofuels are made from plant-based materials as opposed to fossil fuels, which are fuels derived from oil, basically, that are pulled from the center of the earth. And we process those fuels and those emissions go into the atmosphere. Whereas plant-based biofuels are part of a circular economy. It's, it's more of a balance in nature. And so they reduce greenhouse gases and they're much better for our earth, our human health, et cetera. But the most popular, the most known biofuels in the United States are bioethanol, which is blended into gasoline for a number of reasons that we can get into. And then there's biodiesel, which is made mostly from soy and corn oil, and that's blended into the diesel fuel that we use in this country. So Bioethanol makes up about 10% of the US fuel supply today, and biodiesel makes up depending on the area and and that sort of thing, five to 15 to 20% of several of the diesel fuels out there.
Speaker 1 (02:39):
And why are biofuels important?
Speaker 2 (02:41):
Well, from a high level, biofuels are important for our economy are environment and our energy security. And I can touch on each one. From an environmental standpoint, bioethanol is anywhere from about 46 to 70% better in greenhouse gas emissions than gasoline. So every time you put an ethanol blended fuel in your tank, you are helping the environment and human health. From an economic standpoint, bioethanol reduces the price of the pump significantly and provides a critical market for agriculture, not only in the Midwest but around the world. If it wasn't for biofuels today, we would have such an oversupply of grain, not only in the United States and the world, but we'd have a major agricultural crisis on our hands like was happening back in the 1980s, which was in essence the start of the biofuels industry. There was too much corn out there, and we built bioethanol plants to soak up that surplus grain to help farmers balance markets.
Speaker 2 (03:45):
And then from an energy security standpoint, as I mentioned, bioethanol makes up 10% of the U uss fuel supply today. That's 10% of our fuel. We don't have to import from another country. That's a really big deal. Plus the fact that bioethanol is really the only fuel out there that can compete with oil and gasoline on an economic basis. So we're not dependent upon the economics of foreign oil or the supply of foreign oil. And so our energy security today is still extremely important. We think of biofuels as mainly an environmental product, but it is also really important to our energy and national security.
Speaker 1 (04:28):
What are some of the biggest competitors to biofuel? I mean, you, we talk about fossil fuels, but what are some of the other bigger competitors to biofuel?
Speaker 2 (04:36):
Well, definitely oil and gasoline are biggest competitors. There's no doubt about that. Every gallon of ethanol that we sell today is a gallon less of gasoline that the oil companies sell. And so this has been a real issue for us in the past. You can imagine we're taking market share from the most powerful political force on the planet, which is oil. And the oil industry has done a lot to stop our growth. We do not have a free market for fuels in this country. It is dominated by the oil industry. And part of we're trying to do is get the word out about biofuels and the potential and all the benefits that that biofuels bring because we have a cleaner, less expensive, immediately available domestically produced source. And we believe that there should be an awful lot more of it in our fuel supplies in the United States and around the world.
Speaker 2 (05:30):
But oil and gas is the main competitor, and we hear a lot about electric vehicles as well, and electric vehicles are coming, but we believe they're coming at a little slower pace than most people talk about. There are a number of issues that the electric vehicle industry needs to work out yet. So the internal combustion engine is going to be manufactured in around for many, many years. And that's why it's so important that we clean up the fuels that these cars use. And bioethanol is without question, the best source to help clean up those fuels.
Speaker 1 (06:02):
Is green hydrogen another competitor that's creeping up with the biofuels?
Speaker 2 (06:06):
Green hydrogen is being talked about all over. And yes, when that becomes economically viable, it will be a competitor. But like with a lot of different technologies that are being worked on right now, even if the technology is there to create green hydrogen, the economics of competing with oil and other more traditional energy sources are not there yet. And most consumers don't want to pay more for a product than they have to, especially in today's economic situation. So another reason why ethanol is so successful today is it lowers the price at the pump, and it does all those other things that the other competitors do, cleans the air better for our economy, et cetera.
Speaker 1 (06:51):
And I know some of the dialogue around electric vehicles and the challenges is not having a strong enough infrastructure with having the charging stations. What is the infrastructure like with biofuels?
Speaker 2 (07:02):
Well, right now, most of the biofuels are produced in the Midwest where the grains are grown, where corn and soybeans are grown, and that's either railed out or trucked out into the different markets around the country and around the world. We do put ethanol on barges and ship it all around the world. We also put our distillers grains on barges and sell that all around the world. An important point to that is a lot of people don't understand that when we make ethanol, we aren't consuming food. Number one, we don't make it out of food, corn, we make it out of field corn, number two, yellow dent. And we don't consume that corn. We only transform the starch of that corn to ethanol, all the protein, all the fiber, all the oil goes right back into markets that corn has grown for in the first place.
Speaker 2 (07:52):
So we bring in corn, we make ethanol out of the starch, and then we sell the other products, the protein, the oil, the fiber all over the world for different animals, whether that's cows, pigs, chickens, turkeys, fish. We're feeding an awful lot of animals out there. And this might be interesting to you, Joanna, the amount of distillers grains, that's the protein oil and fiber that we produce through the ethanol production process. We produce enough of that to supply 550 million people their daily dose of protein on an annual basis. We sell an awful lot of that. So we're not depleting the world of nutrition, we're enhancing the world of nutrition. And that's a misnomer that is out there.
Speaker 1 (08:42):
And I know we're gonna dive into more of this topic of some of those challenges, and we can tell that Doug, you are very well versed in this topic, so we appreciate your time here today. Now, let's talk about some of the economic benefits. What are some of the economic benefits of agriculture and biofuels?
Speaker 2 (08:59):
Okay, well, there's a lot of 'em. Joanna <laugh>, let's just start at the top. Bioethanol reduces the price of the pump significantly. So here in South Dakota, we have ethanol free gasoline and E 10, E 15, E 20, E 30. And what I mean by that E 20, E 30 is the percent of ethanol in that gallon. You can compare the E 10 87 octane with E 0 87 octane. The price difference is about 40 cents a gallon just by blending 10% ethanol into the fuel supply. So most states don't offer an E zero fuel. Everything is 10% bioethanol all around the country. I would say about 99% of every gallon sold in the country has 10% ethanol. So everybody is realizing a 40 cent savings from E 10 from ethanol being blended. And then we're trying to go from E 10 to E 15 as a national standard, and that would save an additional 10 to 20 cents per gallon.
Speaker 2 (10:06):
So from an economic standard to the consumer, if we had E 15 nationwide, that would generate about $12.2 billion in consumer savings just in the United States alone. So that's the consumer economic savings. And then what we mentioned before is bio ethanol is absolutely critical to agriculture today. You know, in the eighties, agriculture was dying. We had farmers going bankrupt all over the place. We had farm aid helping finance farmers so the family farm wouldn't go bankrupt. Bioethanol has come in and soaked up surplus grain and balanced these grain markets. We have supported grain prices to the point that agriculture is profitable today in most cases. And when agriculture is profitable in the United States, that helps spur global investment in agriculture as well. So you can imagine if we have to subsidize the US farmer and we're producing grain or selling grain, that is under the cost of production, we're selling subsidized grain around the world that stifles global agriculture.
And that's why we have problems around the world with agriculture because it's not healthy for developing nations to depend on the United States for their grain, just like it's not healthy for the United States to depend on the Middle East for our oil, both are critically important to be able to supply in country themselves. So those are some of the economic benefits that we do. But the benefits, they go well beyond that from an economic standpoint into national security and, and you name it. So we reduce the amount of subsidies that go into the ag sector, and that's an important fact to understand too.
Speaker 1 (11:56):
Right, and and poet is that global player, and you kind of referenced some global aspects in your last answer. How are other countries utilizing biofuels? And is the US ahead on the technology of biofuels?
Speaker 2 (12:09):
Yeah, that's a great question. I'll run through a couple countries. Brazil, for example, they have an option at the pump. You can either put 27.5% ethanol in your tank or a hundred percent ethanol that those are the only options. They don't have 10% ethanol or 15, it's 27.5 or a hundred percent, that's it. That's what they use in their small engines, in their marine engines, their light duty transport. So Brazil has been a leader in the amount of ethanol in the fuel supply. India is now moving quickly to a 20% nationwide blend of bio ethanol and the fuel supply. Brazil has an air quality issue, and so they want to blend as much biofuel as they can to reduce the smog, the soot, the carcinogens in the air that are coming from gasoline in those countries. And so that's another country that's moving fast. Canada is another country that is moving fast to higher blends. China is looking at higher blends. The rest of the world is really looking at higher blends. So I would say that the United States is the leader in technology. We no longer consider ourselves ethanol plants. We're bioprocessing facilities, but the rest of the world is taking note as well, because decarbonization is really important. Reducing our greenhouse gases and bioethanol is a proven benefit to our environment.
Speaker 1 (13:36):
And this sounds like this could be a really good opportunity for us agriculture, right, to support those goals that you just mentioned. All those countries trying to use more biofuel in their vehicles.
Speaker 2 (13:48):
Yeah, biofuels are critical to agriculture. I can't stress that enough. As yields continue to rise in this country, we have to be able to soak up that surplus grain and biofuels are really the only market that can grow fast enough to keep up with the technology of ever increasing yields, especially in corn. And we can talk about that a little bit around the world too. But folks don't realize the average yield per acre around the world in corn is about 57 bushels per acre. In the United States, we produce about 178 bushels per acre. So when the world average is 57 and we're producing 178, there's a tremendous amount of potential out there to sustainably increase production of grains around the world. The world record for corn production, just so you know, Joanna is 616 bushels per acre. So not only is there potential around the world, there's still potential in the United States to produce more on the same amount of land.
Speaker 1 (14:50):
Doug, let's talk about some of those challenges. I was looking at EPAs website and they were explaining some of those potential challenges with biofuels that changes to land use patterns that may increase greenhouse gas emissions, the pressure on water resources, air and water pollution, and increase food cost. How can agriculture overcome those challenges or find that balance?
Speaker 2 (15:12):
Yeah. Well, here's the thing. A lot of those are very old concerns. And we've got a 20 year history now of producing an awful lot of biofuels. And we are not guilty of any of those things, believe it or not, from a environmental standpoint, it's proven that bioethanol is cleaner than gasoline. It cleans the environment. It's better for human health because we're not putting carcinogens in the air like gasoline does from a land use standpoint. We aren't using any more land today than we were a hundred years ago. The concern was if we're taking corn out of a field and putting it into a gas tank, someone's gotta burn forest land somewhere and plant corn there. That's just not the truth. In fact, there's a de correlation between deforestation and biofuel's growth. While biofuel's growth has taken off over the last 20 years, deforestation around the world has come down.
And from a water standpoint, every gallon of water that we bring into a bioprocessing facility is used and it's recycled and used. The only thing that comes out of one of our facilities is steam through the stack clean steam that is actually perfectly clean. So there's no discharge, there's no waste. And then, let's see, the last one was food cost. Well, food cost is a function of oil cost. If you look at food costs, they track exactly with oil because it's the energy and the transportation that makes food cost more. Biofuels and grain have very little to do with food costs. In fact, if you took a box of corn flakes, you would find that there's about a nickel worth of corn in that box of corn flakes. And there's about $2 worth of transportation and energy cost in that same box. And the fact that we reduce transportation costs, we could argue that we reduce the amount of transportation costs that goes into food costs, but we do not drive food costs. And in fact, we support agriculture. So it's very easy to see how food costs track when oil goes up, food cost goes up, when they come down, they come down. That is obviously the biggest factor in food costs, not grain.
Speaker 1 (17:39):
Thanks for laying that out for us. So simple. Doug, can agriculture play a more prominent role in energy while providing food for a growing population?
Speaker 2 (17:48):
I'm glad you asked that question, because agriculture is being asked to do a lot. They're being asked to provide food for a growing population. The resources for an energy transition that we're trying to work out right now, all while reducing our greenhouse gases and combating climate change, that's a really tall order. And so the question is, can agriculture do that? And the answer is a simple yes, it certainly can with the potential that we talked about around the world in agriculture, we can do more than provide enough food and energy for the world, and we can sustainably manage that land, increase soil, organic carbon through climate smart practices like no-till and cover crops. There are so many things that we can do. The potential of agriculture around the world is virtually untapped, and this is what people don't understand. A lot of times. For 200 years, all we've known is an oil economy.
We get everything from oil from our computer screen to our drugs that we take in the morning to our fuels, our energy. Everything has been coming from oil for so long, for 200 years, right? It seems to be insurmountable to phase out of oil, right? But up until 200 years ago, all we used was resources from the surface of the land. Right? And how long has humanity been on this planet? A long, long time. So I think 200 years from now, we'll look back at this 200 year period where all we used was oil as an oil era that we're glad we got away from. So we can provide all the food, all of the resources for human consumption, as well as an energy transition through agriculture while reducing greenhouse gases and combating climate change. It can be done. It can be done sustainably. All that we need is markets that offer a margin in agriculture. 'cause that margin leads to investment, investment leads to innovation, that innovation leads to prosperity through agriculture.
Speaker 1 (19:57):
A couple more questions as we wrap up this episode of Farm Food Facts, and let's talk about more of those future items. How can oil companies add biofuels into their future strategic plan?
Speaker 2 (20:08):
That's a great question, and it's a very simple answer. They just need to blend more biofuels. The good news is that the oil interests are coming to us and saying, how do we decarbonize? How do we use more of your product to make a cleaner liquid fuel for cars of today and tomorrow? And it's very simple. You just blend more biofuels. It's economically viable for them, and that is what's coming. I think you're going to see a lot more E 15, E 20, E 30. And once we get up into those E 20, E 30 type blends, then the auto manufacturers will start optimizing their vehicles to run on a higher octane, which is a higher ethanol blend. And then you can make a smaller engine that gets more power, more miles to the gallon, fewer emissions, just a better engine with a smaller engine, believe it or not. So those conversations are ongoing right now. I'm very excited about what the future fuels look like because they are going to be cleaner and they are going to consist of more biofuels. I don't think there's any doubt about that.
Speaker 1 (21:14):
I was gonna add a follow up question, Doug. What's the timeline? I mean, I say strategic future plan, but could they get this done in five years, 10 years? Your answer made it sound like it could be very simple for them to be adding biofuels, but how long realistically does that take?
Speaker 2 (21:31):
It can be very, very quick. Like I said before, we are 10% of the US fuel supply today. We could be 15% of the US fuel supply in a few years if we wanted to be, if everybody would cooperate. Yeah, it doesn't take much. We've got the resources, we've got the feed stocks, we've got the facilities to produce the ethanol today. We've got 210 bioprocessing facilities today that are capable of producing 17 billion gallons worth of ethanol. We're only selling about 14 billion gallons of ethanol into the supply today. So there's 3 billion gallons that we can steal from without building another facility. E 15 nationwide would supply a market for farmers of about 2 billion bushels of corn, something that they're going to need in the coming years because yields continue to increase. So yes, it could be a very, very fast transition to a higher blend in this country and around the world.
Speaker 1 (22:28):
Doug, last question as we wrap up this episode. What are some short-term trends you foresee happening in biofuels?
Speaker 2 (22:36):
Well, the improvement of the bioprocessing facility is going to continue, and that consists of reducing our carbon footprint. Poet has said we're at least 50% better today than gasoline and greenhouse gas emissions. By 2030, we'll be 70% better, and by 2050 we'll be carbon neutral. And frankly, I think we're going to blow by those goals because there are so many things that we can do to reduce that carbon footprint, even in ag and in our processing. So that's a big deal. We're going to expand our product portfolio. We can make anything out of a bushel of corn that the oil industry can make out of a barrel of oil. And that's saying a lot, but it's really only a matter of biotechnology and economics. So we're working on expanding our product portfolio into all kinds of different bioprocessing. We're gonna provide growing markets for agriculture around the world.
Sustainable aviation fuel is something that everybody is talking about. Ethanol is going to be a resource, provide that. Pipelines for carbon capture utilization and storage are a big topic today. If we can take the carbon from the atmosphere that's soaked up naturally in the corn plant and process that corn in our facility, we can capture that c o two, put it in a pipeline and bury it in the center of the earth where all the oil used to come from and put carbon into the atmosphere so we can actually decarbonize our atmosphere from an economically and technologically viable standpoint in the very, very near future. We're using biomass of all sorts to create energy that is clean and again, circular economy rather than getting it from the center of the earth, we're getting it from the surface of the earth and basically the advancement of biotechnology in general. So one thing that we like to say is that biofuels are the catalyst for successful agriculture. Successful agriculture is key to solving some of the world's most pressing issues, including climate change, poverty, hunger, disease, agriculture, can do all of those things. And I think the future of agriculture is very exciting because of what it's being asked to do and because of what it's capable of doing. So we're very excited about the near term and the long term for bioethanol and agriculture.
Speaker 1 (25:01):
Right. Lots of opportunities. And we're glad to have you on Farm Food Facts, Doug. Sharing some of those insights and some exciting things that are gonna be happening in the future. Biofuels can be key to a brighter future. And we got a front row seat hearing all about it from Doug. You can stay connected on this topic by following poet on their social media channels or check out their website at poet.com. We appreciate your precious time and commitment to agriculture. I'm Joanna Guza for Farm Food Facts.