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Ethanol Producers Are Drawn to Coal As a Power Source

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PostPosted: Mon Jul 24, 2006 5:20 pm    Post subject: Ethanol Producers Are Drawn to Coal As a Power Source Reply with quote

Ethanol Producers
Are Drawn to Coal
As a Power Source
July 24, 2006; Page C3

Ethanol may be a fuel of the future, but many of its producers are turning to a tried and true energy source, coal, to power their plants.

Coal is cheaper than natural gas, the fuel used most to make ethanol. A coal-fired ethanol plant can also generate electricity that can be sold onto the grid, which increases the efficiency of both ethanol and electricity production.

In the most striking example of this efficient combination, Blue Flint Ethanol, a North Dakota producer, is building a plant next to Coal Creek Power Station, a 1,200-megawatt facility owned by Great River Energy. The plant will rely on excess heat from Coal Creek's boilers to run the ethanol plant. The heat will be used to create the steam necessary to refine corn into 50 million gallons of ethanol each year. Blue Flint Ethanol is a joint venture between Great River and Headwaters Inc.

"This whole concept of having an energy complex is a very efficient way to minimize carbon-dioxide emissions and take advantage of the waste heat from a power plant," said Bob McIlvaine, president of energy consulting firm McIlvaine Co.

The concentration of coal-fired power plants in the Midwest, where most of the U.S.'s corn is grown, makes similar configurations in the future likely, he added.

Other companies are pursuing a similar strategy of building small coal-fired boilers that will run ethanol plants and generate electricity. Great River is helping build a 40-megawatt coal-fired boiler in Spiritwood, N.D., that will sell electricity and power a 100-million-gallon-a-year ethanol plant. A group of investors in Goodland, Kan., is building a 20-megawatt boiler that will generate electricity and power ethanol and biodiesel plants. Coal-burning ethanol plants are also under construction in Illinois, Iowa, Minnesota and Missouri.

"You're definitely seeing more interest in coal," said Monte Shaw, spokesman for the Iowa Renewable Fuels Association. "The advantage is you can lock in your coal price for 20 years. It's part of a trend to look at a viable alternative to natural gas."

Ethanol, a transportation fuel produced from corn or sugar, is being touted as a way for the U.S. to reduce its dependence on foreign oil, lower the price of gasoline and reduce carbon-dioxide emissions.

Federal legislation passed last year requires refiners by 2012 to blend 7.5 billion gallons of ethanol or biodiesel annually into the U.S. gasoline supply. The industry says that both supply and demand for the fuel will exceed that level well before that time.

The prospect of more coal-fired ethanol plants has raised concerns from some environmental groups that the benefits of using ethanol -- particularly in limiting greenhouse-gas emissions from automobiles -- would be negated by the fact that the plants run on coal. Coal-fired power plants tend to produce far more carbon-dioxide emissions than natural-gas-burning plants.

But Mr. McIlvaine said increased carbon-dioxide emissions need not result from using coal to produce ethanol. An efficient coal-fired boiler can rival the greenhouse-gas emissions produced by burning natural gas to make ethanol.

"There's somewhat of a difference between making ethanol from coal or natural gas," he said. "It's not much."

Ethanol prices have been extremely volatile lately. Front-month ethanol futures contracts on the Chicago Board of Trade reached a peak last month of $4.33 a gallon due to logistical problems experienced by refineries in blending the fuel into their gasoline product. Prices have since fallen; the front-month August contract closed Friday at $2.84.
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