ISEEK Spotlight Archive

Ethanol Production in Minnesota

Arthur L. Adiarte, Minnesota Department of Employment and Economic Development

Building on Gov. Pawlenty’s renewable energy initiatives, the Minnesota Legislature doubled the state’s ethanol standard to 20 percent by 2013.

With an annual capacity of 1.1 billion gallons, Minnesota ranks fourth nationwide in ethanol production capacity. This includes facilities in operation or under construction as of August 2008. To put that in context, 1 billion gallons of ethanol is equivalent to 24 percent of the energy content in all the gasoline consumed annually in Minnesota.

The location of operating and under-construction ethanol plants in Minnesota is shown on Map 1.

The newest plants are in Fergus Falls and Fairmont with capacities of 55 million and 110 million gallons per year respectively. In 2005, ethanol topped the list of renewable energy produced in Minnesota (51 percent), followed by wood (20 percent), biodiesel (10 percent), wind (7 percent) and other (12 percent).

Ethanol Basics

Also known as grain alcohol or ethyl alcohol, ethanol is an alternative to petroleum-based transportation fuels.

It is produced by fermenting and distilling simple sugars from biological sources. In Minnesota, most ethanol is made in a corn dry-milling process where the whole kernel is ground into a powder, mixed with water to form a mash and then cooked with enzymes that convert starch to glucose.

Starting with corn, which has a commodity value of $4.84 per bushel, the dry-milling process produces ethanol and a high value byproduct—distillers grain—with a total value-added of $8.78 per bushel of corn. (Values are as of May 2008.)

Direct Jobs from Ethanol Production

In 2007, there were 20 ethyl-alcohol manufacturing establishments with 580 employees and $32.7 million in total wages paid to those employees (see Table 1).

Eight of these establishments are eligible for the Job Opportunity Building Zones (JOBZ) program - www.positivelyminnesota.com/bizdev/jobz.htm.

Although data are not available for ethyl-alcohol manufacturing prior to 2006 because the industry was so small, it now represents about half of basic chemical manufacturing in Minnesota.

Employment in this larger industry grew from 829 jobs in 2000 to 1,092 jobs in 2007. This is an increase of 18.6 percent compared with total statewide employment growth of 4.7 percent (see Figure 1).

This increase was largely due to growth in ethyl-alcohol manufacturing. Moreover, the industry is projected to grow another 18.9 percent between 2006 and 2016, largely due to the increase in ethyl-alcohol demand.

Table 1
Ethyl-Alcohol Manufacturing, Minnesota
Year	Firms	Employment	Average Weekly Wage	Total Wages
2006	18	506	$1,042	$27,412,099
2007	20	581	$1,082	$32,691,496
Source: Minnesota Department of Employment and Economic Development, Quarterly Census of Employment and Wages.

Figure 1: Employment in Basic Chemical Manufacturing

Total Economic Impact of Ethanol Industry

The ethanol industry causes significant indirect economic impacts. These indirect impacts come from the supply purchases made by the ethanol industry and expenditures of income generated by both the direct and indirect effects.

The sectors impacted by ethyl-alcohol production include service, wholesale and retail trade, agriculture, manufacturing, transportation, communication, public utilities, finance, insurance, real estate, and construction.

According to a 2007 estimate by the Minnesota Department of Agriculture, the projected total statewide impact of producing 1 billion gallons of ethanol in 2008 is $4.95 billion of total output and 18,461 total jobs.

Workforce Education and Training Needs

As Map 1 shows, ethanol plants tend to be located in Southwest Minnesota. In fact, the Minnesota Department of Employment and Economic Development projects that basic chemical manufacturing will be one of the fastest growing industries in Southwest Minnesota in the near future, more than doubling its workforce with the addition of more than 200 employees over the next 10 years. Where will these workers come from?

Data from the Integrated Postsecondary Education Data System (IPEDS) show that there were 13,117 science and engineering graduates with bachelor’s, master’s or doctoral degrees in Minnesota in 2006.

About 77 percent of these graduates were in biological/medical sciences, engineering, computer/information sciences, physical sciences, mathematics/statistics, and agriculture and related sciences.

These graduates represent a current and potential pool of scientists and engineers that could supply the need for skilled workers in the biofuels industry in Southwest Minnesota.

In 2007, the U.S. Department of Labor awarded a $5 million Workforce Innovation in Regional Economic Development (WIRED) training grant to coordinate the efforts of workforce and economic development agencies and to ensure an ample supply of skilled workers in Minnesota’s agribusiness region.

The 36-county area stretches from the Red River Valley of in northwestern Minnesota through the eastern edge of the Southwest region.

Cellulosic Ethanol

During the past several years, academics, politicians and the media speculated about whether using corn to produce fuel may be contributing to the increasing cost of food, since corn is an important source of food for humans and farm animals.

This led researchers to look for alternatives to corn for biofuel production, resulting in the development of cellulose-based ethanol. Cellulose is the main component of the cell wall of plants and cellulosic materials such as corn stover (leaves, stalks, cobs), wood products, trees and grass.

A team of researchers led by Dr. G. David Tilman, University of Minnesota Regents Professor of Ecology, discovered that land planted with a highly diverse mix of prairie grasses and plants will produce more than twice the bioenergy as the same land planted with a single species, such as corn or soybeans.

Even better, these prairie plants and grasses can be grown in agriculturally degraded lands, require no fertilizer or pesticides, and are more efficient in terms of greenhouse gas emissions than corn when made into ethanol.

Minnesota is a leader in commercializing cellulosic ethanol. Two ethanol plants in Minnesota are in the forefront of cellulosic ethanol production:

Central Minnesota Ethanol Co-op, a farmer-owned plant in Little Falls, uses two separate technologies—thermal oxidizers and gasification systems. A thermal oxidizer is a device used to control air pollution in many chemical plants. It decomposes hazardous gases at a high temperature and releases them into the atmosphere. A gasification system converts a fuel, e.g., biomass, into a gas mixture called syngas, which can be used to generate electricity. Moreover, this production facility uses surrounding forest wastes in place of natural gas in the production of ethanol. In addition to ethanol, this co-op produces electricity and sells back one megawatt of green power to Xcel Energy.
Chippewa Valley Ethanol Co. of Benson—with the help of Iowa’s Frontline BioEnergy, which specializes in biomass gasification—successfully integrated gasification in the spring of 2008 to displace natural gas as a fuel for its ethanol process.

Summary

Minnesota’s ethanol industry is still small but growing fast, particularly in Southwest Minnesota where it is projected to nearly double in employment over the next 10 years. With help from workforce development programs like WIRED and advances in technology, the industry will continue to thrive and provide positive effects for Minnesota with more jobs, alternative fuel and a greener environment.