The use of ethanol in combustion engines emits less greenhouse gasses than its petroleum equivalent, and it is widely hoped that the increased substitution of petroleum by ethanol will reduce US dependence on imported oil and decrease greenhouse gas emissions.

Ethanol, the common name for ethyl alcohol, is fuel grade alcohol that is predominately produced through the fermentation of simple carbohydrates by yeasts. The production of alcohol is the conversion of radiant solar energy into concentrated liquid form. Photosynthetic plants convert solar radiation into chemical energy through metabolic pathways. Simple carbohydrates that the plant produces can be utilized for: metabolism, structure, growth, and repair, or stored as more complex carbohydrates for future use. Ethyl alcohol is produced through the fermentation of stored simple carbohydrates into alcohol through distillation. The mass production of ethanol involves two major steps: growing and harvesting of a carbohydrate feedstock and the conversion of this feedstock into an economically viable and useful fuel.

In the United States, the most widely used feedstock for commercial ethanol production is corn. Corn is a native species of the Americas and is one of the most important and efficient producers of starch in North America. Yellow dent corn (YDC) is a hybrid of southern gourd seeds and northern flint corn varieties and is by far the most widely planted corn breed in the US Corn Belt.

Two processes currently being utilized to produce ethanol using YDC as a feedstock are dry milling and wet milling. Major differences between the two processes lie in the methods of glucose extraction utilized and the co-products that are produced. The wet mill process is more versatile than the dry mill process in that it produces a greater variety of products; starch, corn syrup, ethanol, Splenda, etc., which allows for the wet mill to better react to market conditions. However, the costs of construction and operation of a wet mill are much greater than those of a dry mill. If ethanol is the target product, then it can be produced at a lower cost and more efficiently in a dry mill plant than in a wet mill plant, under current economic conditions.

In the wet milling process, the corn kernel is steeped in hot water before the germ, which is high in protein, oil, and zines, is mechanically separated from the endosperm, which is high in starch content. The wet milling process is more flexible in production options and can produce corn sweeteners, starch, oil, and other products as well as ethanol and CO2. High protein animal feeds, corn gluten feed/meal, are co-products of the wet milling process. The flexible products of the wet mill allow better reaction to changes in market conditions for corn products than in the dry milling process. Dry mill plants produce ethanol as a primary product and a high protein / caloric animal feed (DDGS) and CO2 as co-products. Wet mills are slightly less efficient in ethanol production and require greater capital investment. The wet mill process does enjoy advantages in ethanol production over the dry mill process, including the ability to recycle yeast cells from batch to batch and lower water usage per gallon of ethanol produced.

80% of all installed ethanol capacity in the US is dry mill. All are owned by 4 companies - ADM, Cargill, Aventine and Tate & Lyle - however ADM & Cargill hold 80% of the wet mill capacity in the US. While POET is listed as the biggest producer, each of their facilities are individually owned as joint ventures with farmer cooperatives (which typically have around 400 farmer members). Counting POET as one firm, there are 123 firms producing ethanol from YDC in the US. The complete list of firms and their respective market shares are in the spreadsheet file. You need to look at this to answer the questions below.

The two largest ethanol producers, ADM and POET have two entirely different business

models.ADM utilizes large scale wet mills which they own entirely.ADM is a huge publicly held

multi-national food processing corporation, and is the #1 corn processor in the world.They buy

corn from producers at their silos.POET is a privately held ethanol only company.They utilize

smaller scale dry mills.Each dry mill is a separate entity co-owned with a local agricultural co-

operative, which are the suppliers of corn for production.Profits are shared between POET and

cooperatives.

Corn Corn Dry Wet Milling Milling (bushel) (bushel) Market price, dollars 2.16 2.16 Ethanol byproduct prices: DDGS $/ton 92.08 Corn gluten feed, $/ton 66.30 Corn gluten meal, $/ton 269.00 Corn oil, cents/lb 26.00 Starch (corn) / sucrose, % 72 72 Gallons of ethanol 2.75 2.65 Net feedstock cost, $/gal 0.53 0.40Dry Mill Wet mill Yield 2.75 2.65 gallon I bushel of corn capital 5 1.80 5 2.50 per gallon of nameplate capacity 5/ Gallon @ MES Corn 0.53 0.40 energy 0.19 0.20 chemicals (incl. water) 0.14 0.21 Labor 0.19 0.22 Total 5 1.05 S 1.03 Scale 50 - 100 100 - 425 Million Gallons per Year Approx MES 50 125 Million Gallons per Year Long Run Average Cost Curves Dry Mill ' Wet Mill N0 coproducts ' ' 'Wet Mill w/coproducts Appendix 1: list of ethanol companies 123 companies 100.00% COMPANY % capacity POET Biorefining Total 10.76% ADM Total 10.16% Green Plains Inc. Total 9.27% Valero Renewable Fuels Total 8.80% Flint Hills Resources, LLC Total 5.28% Pacific Ethanol, Inc. Total 3.80% The Andersons Total 2.58% Cargill, Inc. Total 2.26% Marquis Energy, LLC Total 2.26% Guardian Total 1.86% White Energy Total 1.85% CHS Inc. Total 1.62% Glacial Lakes Energy, LLC Total 1.38% Tharaldson Ethanol Total 0.96% Louis Dreyfus Commodities Total 0.91% Homeland Energy Solutions, LLC Total 0.88% Siouxland Ethanol Total 0.88% Little Sioux Corn Processors, LLC Total 0.85% NuGen Energy, LLC Total 0.82% Southwest lowa Renewable Energy, LLC Total 0.82% Absolute Energy, LLC Total 0.79% Al-Corn Clean Fuel, LLC Total 0.75% Chief Ethanol Fuels Inc. Total 0.75% One Earth Energy Total 0.75% Golden Grain Energy, LLC Total 0.72% Arkalon Energy, LLC Total 0.69% Big River Resources Galva LLC Total 0.69% Big River United Energy, LLC Total 0.69% Pennsylvania Grain Processing LLC Total 0.69% Big River Resources West Burlington, LLC Total 0.66% Tate & Lyle Total 0.66% South Bend Ethanol, LLC Total 0.64% Cardinal Ethanol Total 0.63% Heartland Corn Products Total 0.63% Badger State Ethanol, LLC Total 0.57% KAAPA Ethanol Ravenna, LLC Total 0.57% ABE South Dakota, LLC Total 0.53% Sunoco Ethanol Total 0.53%E Energy Adams, LLC Total 0.50% KAAPA Ethanol, LLC Total 0.50% Husker Ag, LLC Total 0.48% Blue Flint Ethanol Total 0.41% Bushmills Ethanol Inc. Total 0.41% Dakota Spirit AgEnergy LLC Total 0.41% Fox River Valley Ethanol, LLC Total 0.41% Western New York Energy, LLC Total 0.41% Heron Lake BioEnergy, LLC Total 0.40% Granite Falls Energy, LLC Total 0.39% Aemetis Total 0.38% Corn, LP Total 0.38% Kansas Ethanol, LLC Total 0.38% Lincolnland Agri-Energy, LLC Total 0.38% Redfield Energy Total 0.38% Show Me Ethanol, LLC Total 0.38% Highwater Ethanol Total 0.37% United Wisconsin Grain Producers, LLC Total 0.36% Big River Resources Boyceville LLC Total 0.36% Bonanza BioEnergy, LLC Total 0.35% Calgren Renewable Fuels LLC Total 0.35% Carbon Green Bioenergy Total 0.35% Central Indiana Ethanol (CIE) Total 0.35% Lincolnway Energy, LLC Total 0.35% Pratt Energy Total 0.35% Center Ethanol Company, LLC Total 0.34% Ergon Biofuels, LLC Total 0.34% Adkins Energy, LLC Total 0.33% Bridgeport Ethanol Total 0.31% Chippewa Valley Ethanol Co. Total 0.31% Didion Ethanol, LLC Total 0.31% Iroquois Bio-Energy Company, LLC Total 0.31% LifeLine Foods, LLC Total 0.31% Marysville Ethanol, LLC Total 0.31% Mid-Missouri Energy, Inc. Total 0.31% Pinal Energy, LLC Total 0.31% Plymouth Energy, LLC Total 0.31% Red Trail Energy, LLC Total 0.31% Three Rivers Energy, LLC Total 0.31% United Ethanol, LLC Total 0.31% Western Plains Energy Total 0.31% ACE Ethanol, LLC Total 0.30% Dakota Ethanol, LLC Total 0.30%Mid-America BioEnergy, LLC Total 0.29% Ingredion Inc. Total 0.28% Nebraska Corn Processing Total 0.28% East Kansas Agri-Energy, LLC Total 0.26% Sterling Ethanol, LLC Total 0.26% Corn Plus, LLP Total 0.25% Diamond Ethanol Total 0.25% Front Range Energy, LLC Total 0.25% Grain Processing Corp. Total 0.25% Prairie Horizon Agri-Energy, LLC Total 0.25% Trenton Agri Products, LLC Total 0.25% Yuma Ethanol Total 0.25% Pine Lake Corn Processors, LLC Total 0.24% Quad County Corn Processors Total 0.24% Commonwealth Agri-Energy, LLC Total 0.21% Red River BioRefinery, LLC Total 0.16% DENCO II, LLC Total 0.15% Gevo Total 0.14% Reeve Agri-Energy Total 0.08% Butamax Advanced Biofuels LLC Total 0.06% Parallel Products Total 0.04% Golden Triangle Energy, LLC Total 0.03% Merrick & Company Total 0.03% Maumee Express, Inc. (MXI) Total 0.03% Land O' Lakes Total 0.02% ESE Alcohol Inc. Total 0.01% Summit Natural Energy Total 0.01%