Demand for Biofuels Presents New Farming Opportunities

While not all farmers are in the same circumstances as Couser, growing corn for ethanol isn’t new. Since the 1970s, government policies and market pressures have incentivized farmers, and today, the U.S. leads the world in ethanol production, with Brazil a close second. Given advances in technology, increased demand for renewable energy, and government policies, an even more robust biofuels marketplace is coming. It’s a big enough opportunity that farmers may want to consider a portfolio approach. In addition to making money from ethanol crops like corn and sugarcane, farmers may soon profit from energy farming by supplying an energy market that needs oilseeds like soybeans to make renewable diesel and biodiesel. Things that were of limited value before—like stover and manure—can become cellulosic ethanol or renewable natural gas (RNG).

From byproduct to coproduct

In 2021, the world produced 350.7 million metric tons of soybeans,¹ most of it in Brazil and the U.S.² More than three-quarters of that harvest went into livestock feed; only 2.8 percent went into soybean biodiesel production.³ With global demand for biofuels expected to grow 28 percent by 2026—a function largely of government policies and transport-fuel demand—that allocation is about to change.⁴

For many farmers, the booming renewable/biodiesel market simply affirms the wisdom of keeping a versatile crop like soy in their rotation. Since soybean oil is a byproduct of the meal that fuels livestock worldwide, biodiesel production needn’t come at the expense of food production. And since higher demand—for either biodiesel or animal feed—doesn’t always translate into higher profit, especially as the cost of inputs rises, growing a crop that can exploit both markets can even out financial fluctuations.

A virtuous cycle

Livestock emit methane, but when it is purified into biogas, methane becomes a clean-burning alternative to fossil fuels that delivers more energy both as renewable natural gas and as biomethane. RNG can be added to pipelines or compressed (as compressed natural gas or CNG) for use in vehicles and power plants. Biomethane can be used to run industrial machinery, including the equipment used to produce RNG.⁶

Second-generation ethanol debuts

Most of the world’s ethanol is made by fermenting corn, sugarcane, sorghum, and barley. As new technology comes online, there is now an interest in using residue from other crops, such as switchgrass, for ethanol.

Europe is leading the market. In 2021, the Swiss company Clariant completed Europe’s first commercial-scale cellulosic production plant in Romania; similar projects are underway in Slovakia, Poland, and Bulgaria.

With the world’s largest cellulosic plant already built in Nevada, Iowa, the U.S. isn’t far behind. The 30-million-gallon plant is being converted to produce RNG from corn stover, in addition to corn-based ethanol. Byproducts of the biogas-fueled biorefinery include organic fertilizers and humus for soil enrichment.⁸

That’s Couser’s strategy. As a cattle rancher, a corn and soy farmer, and a biofuel investor and supplier, he’s poised to receive multiple local-market bids for everything he produces. He’s thrilled at the prospect of lowering his carbon intensity score, as he’ll earn credits that command a premium from California oil and gas companies.

“The economics today really incentivize improving your CI score,” he explains. “We’ll be burning biogas to make cornstalks into ethanol and putting the excess into the natural-gas pipeline.

“When we do that,” he adds, “we’ll really be ahead.”