World Grain - April 2007 - 49

BIOFUELS QUARTERLY: SETTING THE BAR HIGH

current rate of one-half bushel per acre
per year.
In addition, EIA said improvements in
biofuel collection and refining, and bioengineering of corn and soybeans also
could contribute to improved biofuel
yields. Research on methods to increase
the starch content of corn and the oil
content of soybeans is also ongoing.
DISTRIBUTION ISSUES
Another issue that could limit the
growth of the U.S. biofuels industry,
EIA said, is problems with developing
the necessary infrastructure for collecting, processing and distributing large
volumes of biofuels. Currently, nearly
all U.S. biofuel production facilities
are located close to corn- and soybeangrowing areas in the Midwest to minimize the transportation costs for bulky,
unrefined materials.
The fact that these facilities are far
from the major biofuel consumption
centers on the East and West Coasts
presents a logistics problem. Unlike petroleum, biodiesel and ethanol cannot
be blended at the refinery and batched
through existing pipelines. That's because ethanol can easily be contaminated by water and biodiesel dissolves
entrained residues in a pipeline. Consequently, railroad cars and tanker trucks
made from biofuel-compatible materials
are needed to transport large volumes of
biofuels to market.
EIA noted that limited rail and truck
capacity has complicated the delivery of
ethanol, contributing to regional ethanol
supply shortages and price spikes between April and June 2006.
Feedstock and product transportation
costs and concerns remain problematic
for the biofuel industry and have led
some biofuel producers to explore the
prospect of locating near a dedicated
feedstock supply or large demand center to minimize transportation costs and
susceptibility to bottlenecks.
Distribution of biofuels to end-use
markets is also hampered by a number
of other factors, EIA said. Although E10
(fuel containing 10% ethanol) is readily

obtainable throughout the U.S., there are
a limited number of fueling stations for
E85 (fuel containing 85% ethanol) and
biodiesel. Some station owners may be
averse to carrying B20 (fuel containing 20% biodiesel) or E85, because the
unique physical properties of the blends
may require costly retrofits on storage
and dispensing equipment.

Recent EIA estimates for replacing
one gasoline dispenser and retrofitting existing equipment to carry E85 at
an existing fueling station range from
$22,000 to $80,000, depending on the
WG
scale of the retrofit.
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World Grain - April 2007

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