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Opportunities and Challenges in the Nebraska Ethanol Industry. Governor’s Ethanol Coalition August 2007 Presentation by Todd Sneller Nebraska Ethanol Board. Historical Perspective. “Induced Employment”: Lincoln, NE- 1933; Governor’s car being filled up with corn alcohol gasoline ( E-10).

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Opportunities and Challenges in the Nebraska Ethanol Industry

Governor’s Ethanol Coalition

August 2007

Presentation by

Todd Sneller

Nebraska Ethanol Board

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Historical Perspective Industry

“Induced Employment”: Lincoln, NE- 1933; Governor’s car being filled up with corn alcohol gasoline ( E-10)

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Ethanol: An Economic Catalyst for Nebraska Industry

  • “Unquestionably, the most important value-added product to the State’s economy is, and will continue to be, ethanol production.”

  • “Policy decisions at the federal level along with increased demand for ethanol could dramatically increase U.S. net farm income and create many jobs over the next few years.”

  • “Nebraska must communicate that it is eager to attract desirable businesses such as…bio-fuel plants…through a combination of tax breaks and innovative policies.”

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Ethanol Production By Incentive Industry1985-2007

No Incentive 1985-1989; LB1124 1990-2000;LB605 2001-2005;Overlap of LB605 & LB536;LB536 2003-2012

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Oil: Hidden Costs Industry

By including externalities, the true cost of oil may exceed $150 per barrel

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Ethanol Plants in Nebraska Industry

17 plants producing nearly 1.1 billion gallons per year

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Emerging Issues Industry

  • Jobs/Training

  • Energy/Natural Gas/Coal

  • Transportation (Rail/truck)

  • Remediation

  • Safety Training

  • Water

  • Distillers feeds

  • Pipeline

  • E85 expansion/E10 Saturation

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Economic Benefits of Ethanol Production Industry

  • Increased Economic Value for Cattle/Dairy Industry; Feed Manufacturing

  • Stimulates Transportation Sector; Rail/Truck

  • Quality Jobs; Retention of Skilled Workers

  • Plants Well Suited for Rural Communities

  • Expands Local Tax Base & Tax Revenues

  • Value-Added Industry; Promotes Export of Finished Products

  • Growth Industry that Attracts Capital to the State; Plant Expansion Potential Increases Capital Outlay and Related Economic Activity

  • Stimulates Allied Industries and Enhances Infrastructure

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Ethanol Related Opportunities Industry

Ethanol development provides opportunities

for expansion of Nebraska businesses and industries. The impact of an expanded ethanol industry extends well beyond the

agricultural sector.

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Opportunities – Related Industries Industry

Service Providers

Parts Providers

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Current and Projected Job Demand Industry

  • July 2007 NE Ethanol Industry Jobs:

  • 885 Direct Jobs at 17 Plants

  • 1,500 Indirect (“induced”) Jobs

  • Six Plants w/ major expansion underway

    -Expansions to be completed by 1Q ’08

    -100 new Direct Jobs from expansions (est.)

    -165 Induced Jobs from expansions (est.)

  • 9 Plants Under Construction

    -400 Direct Jobs in new plants by 1Q ’08

    -630 Induced Jobs in new plants

  • 1,300 new Direct and Induced Jobs by 1Q ’08

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Ethanol Sector Jobs Industry and Wages

  • Ethanol jobs listed on Nebraska sites:

    General Manager Lab Supervisor

    Office Manager Administrative Assistant

    Plant Manager Accounts Payable

    Commodities Manager Commodities Administrator

    Controller Risk Management Assistant

    Process Supervisor Grain Merchandiser

    Maintenance Supervisor Sales and Contracting

  • Average annual salary at Nebraska ethanol plants in 2006 was $50,000.

  • Demand for transportation sector jobs is high.

  • Demand for skilled trade positions is high.

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Future Challenges Industry

  • Continued Development Will Require:

  • Expansion of engineering and construction services

  • Efficient permitting of new and expanding facilities

  • Continued development of livestock industry to provide new distillers feed markets and products

  • Supply trained workers for ethanol and related businesses

  • Support training and education programs at colleges

  • Foster competitive business environment

  • Increase supply of potential feedstocks for ethanol production

  • Maintain a public policy framework that encourages the

  • production and use of biofuels

  • Enhance transportation efficiency

  • Create awareness of quality and quantity of ethanol related jobs

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Putting Water Use in Context Industry

  • Virtually all types of manufacturing use water at some point in the production process.

  • Current ethanol processing technology uses approximately 3 gallons of water for each gallon of ethanol.

  • Ethanol process improvements indicate water use can be reduced to 1.5 to 1.

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Water Conservation Opportunities Industry

  • Reduce Energy Consumption (less cooling tower evaporation & blowdown)

  • Recycle waste and blowdown streams

  • Treat makeup water (less blowdown)

  • Use air or groundwater to reject heat (less evaporation and blowdown)

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Water Conservation Opportunities Industry

Gallons Fresh Water/ Gallon Ethanol less than:

  • <3 – Current Best Practice

  • 1.5 – Achievable with proven technology at extra capital cost

  • 0 – Possible in future with new technologies

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Putting Water Use in Context Industry

  • 17 ethanol plants are currently operating in Nebraska; 9 plants are actively under construction; 37 additional plants have been proposed for Nebraska sites. If ALL current and proposed plants were operating, they would use about two-tenths of 1 percent of the water pumped in the state.*

    *Based on USGS estimates.

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Putting Water Use in Context Industry

  • A large (100 mgy) ethanol plant uses the same amount of water annually as it takes for four center-pivot irrigation systems to water a section of land.

  • In water-short area, ethanol plant developers buy land that has irrigation wells and convert the water use from irrigation to ethanol production.

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Most Recent Studies Show Positive Net Energy Balance for Corn Ethanol

Energy balance here is defined as Btu content a gallon of ethanol minus fossil energy used to produce a gallon of ethanol

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Total Energy Conclusions Corn Ethanol

  • Corn-based fuel ethanol achieves moderate percent reductions in GHG emissions, large percent cuts in oil use. Its total production is limited relative to transport fuel use.

  • Cellulosic ethanol can achieve much greater percent GHG benefits than corn ethanol. Per mile oil use benefits are comparable to corn ethanol. Potential production is far greater.

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Ethanol Production should Corn Ethanolremain a targeted industry in Nebraska

  • Ethanol production will continue to be an economic stimulus for many product and service sectors in Nebraska.

  • It is an industry ideally suited for rural communities.

  • Ethanol production will become an increasingly more important part of Nebraska’s economic base.

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Slide Seven Corn Ethanol

Nebraska’s Competitive Advantage for Ethanol Production

Nebraska continues to provide some of the highest returns

for ethanol investors.

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Slide Four Corn Ethanol

Nebraska’s Competitive Advantage for Ethanol Production

Corn Supply

  • Nebraska had net exports of 459 million bushels of corn for the 2006-07 crop year.

  • Net exports for current (2008-09) crop year are projected to be 195 million bushels – which would be a quantity sufficient to produce an additional 550 million additional gallons of ethanol.

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For more information, contact: Corn Ethanol

Todd Sneller

Nebraska Ethanol Board

Lincoln, NE