Introduction to Farm Energy Use

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2 Module 1: Introduction to Farm Energy Use Authors: Don Day, Extension Associate, Energy, University of Missouri Extension Scott Sanford, Senior Outreach Specialist-Rural Energy, University of Wisconsin-Madison Peer Reviewers: Pam Porter, Senior Outreach Specialist/Bioenergy, University of Wisconsin-Madison Carol Williams, Department of Agronomy, University of Wisconsin-Madison This guide is also available as an online learning module at: Additional modules on Energy independence, Bioenergy Generation, and Environmental Sustainability are available online at: This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture, under Agreement No Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture.

3 Table of Contents Summary... 2 Learning Objectives... 2 Background and Guiding Questions... 3 Current Trends in U.S. Energy Production and Consumption... 4 Energy Supply Forecast... 6 Direct and Indirect Energy Use on Farms... 7 How Energy Factors into Farm Production Costs... 9 Energy Conservation & Efficiency Considerations Conclusions References Cited

4 Summary This module introduces concepts of on-farm energy conservation and efficiency. Farm energy conservation and efficiency that should be a starting point for reducing the demand for energy resources used in agricultural production. The module provides a context to situate on-farm energy use in the total picture of United States energy use. The module begins with information about the national energy supply, and introduces areas where farmers have opportunities to conserve energy in their farm operations. Energy conservation and efficiency practices are covered in detail in Module 2 of this course. The introductory section also explains why energy assessments are important and how to find an energy auditor. Learning Objectives 1. Understand where energy is used on farm and where savings can be achieved. 2. Discuss the importance of energy audits. 3. Identify energy assessment resources and tools available to farm clients. Acronyms used in Module 1 Btu: British thermal unit (stands for one million British thermal units per hour) CAFE: Corporate Average Fuel Economy EISA: Energy Independence & Security Act RFS: Renewable Fuel Standard RPS: Renewable Portfolio Standard 2

5 Background Relative to total energy use in the United States, farming operations use a small share of total energy consumed. However, as energy use can still be a significant expense on farms, farm operators can save costs by incorporating energy conservation and efficiency measures in their operations. These conservation and efficiency measures will also do a great deal to reduce greenhouse gas contributions from farm operations and to improve the total environmental footprint of agriculture. Compared to other industrial sectors, agriculture consumes only a small percentage of total energy used in the United States. Nevertheless, energy conservation on farms can have an aggregate energy savings impact, and can cut farm expenses for the operator. While reading this unit, consider the following guiding questions: Guiding Questions 1. What are reasons that farmers should consider energy conservation and efficiency? 2. What are direct and indirect energy uses on farms? 3. How do farm energy costs vary with commodity and region? 4. Future units will address how to reduce on-farm energy costs by reducing these direct and indirect energy use. 3

6 Current Trends in U.S. Energy Production and Consumption In the United States, industry and manufacturing, transportation, and commercial and residential sectors each use about a third of the total energy consumed (Figure 1.1). Farming operations use about 1 percent of the total energy consumed [7]. Approximately 92 percent of the energy used in the U.S. comes from non-renewable sources (coal, petroleum, nuclear and natural gas). Renewable energy (biomass, solar, wind, hydro) provides the other 9 percent (Figure 1.2). It is projected that by 2035 total energy use will increase, with the fossil fuel share decreasing slightly (from 84 percent to 78 percent) as renewable fuels increase (from 10 percent to 14 percent) (8). This projected fuel shift is due largely to changes in federal and state policies, including the Corporate Average Fuel Economy standard (CAFÉ), the Energy Independence and Security Act (EISA), Renewable Fuel Standards (RFS), Renewable Portfolio Standards (RPS) and the American Recovery and Reinvestment Act. Among the fossil fuels, natural gas will play a much larger role in the future, as the U.S. has recently discovered vast new areas of natural gas (shale gas deposits) and economists are projecting very low prices for decades to come. Coal will remain the dominant fuel source for electric energy production. Very few, if any, new coal plants will be built, but it is projected that coal use will increase gradually over this time as current coal facilities are used more intensively and old plants are shut down. Figure 1.1: Total U.S. Direct Energy Consumption by sector in Agriculture uses approximately 1 percent of total U.S. energy use (included with industrial uses section). Source: U.S. Energy Information Administration, Annual Energy Review 2009, and Monthly Energy Review (June 2011), preliminary 2010 data. Retrieved from: cfm?page=us_energy_use 4

7 Note: Sum of biomass components does not equal 53% due to independent rounding. Figure 1.2 U.S. Prime Energy Consumption by Energy Source, 2011 U.S. Energy demand is met by multiple sources, including petroleum, natural gas, coal, nuclear electric power, and renewable energy. Source: U.S. Energy Information Administration, Monthly Energy Review, March 2012 (preliminary 2011 data). Retrieved from: The pattern of fuel use varies widely by sector (i.e. the transportation sector relies heavily on petroleum sources, while very little petroleum is used for electrical generation). Figure 1.3 illustrates the distribution of energy resources by sector, and the primary sources of energy per sector. 5

8 Figure 1.3: Primary Energy Consumption by Source and Sector, 2011 Sources: U.S. Energy Information Administration, Annual Energy Review Tables 1.3, 2.1b-2, 1f, 10.3, and 10.4 (October 2011) Retrieved from: Energy Supply Forecast The U.S. relies on coal and imported oil for much of its energy needs. Coal is not a favorable energy source despite ample reserves in the U.S. because of its high carbon, sulfur (which causes acid rain) and mercury emissions. Reducing energy demand, especially for imported sources, would reduce the potential for disruptions in the future. There are currently many efforts to find renewable energy alternatives such as cellulosic ethanol or biodiesel to replace liquid fuels. The U. S. Energy Information Administration analysis of energy supply and demand through 2035 (Figure 1.4) anticipates: Moderate growth in energy consumption, Increased use of renewable energy, Declining reliance on imported liquid fuels. 6

9 Figure 1.4: U.S. Primary Energy Consumption, quadrillion Btu, Source: U.S. Energy Information Administration, Annual Energy Outlook 2010 with Projections to 2035 Retrieved from: Direct and Indirect Energy Use on Farms Direct energy use is that energy used in operation of farm equipment or machinery. Direct energy used in agriculture includes fuel for cropping and livestock operations: use of cars, trucks, tractors, and other machinery for field preparation, planting, and harvesting of crops; application of agricultural chemicals; transport of inputs and outputs to the farm and to market. Farm operations also use natural gas, liquid propane, and electricity for lighting, heating, cooling, and operation of equipment. Indirect farm energy use is that used for the manufacture of farm inputs such as fertilizers and agricultural chemicals [7] 1. In 2002, the agricultural sector used an estimated 1.7 quadrillion Btu of energy from both direct (1.1 quadrillion Btu) and indirect (0.6 quadrillion Btu) sources of an estimated 98 quadrillion Btu total energy used in the U.S. (Figure 1.5). Agriculture used 56 percent of the nitrogen used in the U.S. and 67 percent of the expenditures for pesticides in 2002 (7). Figure 1.5: Total Energy Directly and Indirectly Consumed on U.S. Farms in 2002 was 1.7 Quadrillion Btu Source: from Schnepf, For a listing of direct and indirect farm energy uses, see table 1 in Schnepf,

10 Figure 1.6: Composition of Energy Use in U.S. Agriculture from 1965 to 2002 Source: from Schnepf, 2004 Retrieved from: The steady decline in energy use from the late 1970 s to the 1990 s can be attributed to energy-saving technologies and in-creased energy efficiency. The changes that precipitated this decline included: switching from gasolinepowered to diesel-powered engines, use of conservation tillage practices, use of larger, multifunction machinery, and new methods of crop drying and irrigation [1, 3]. In agriculture, there has been a long-term trend to reduce manual labor with technology, such as replacing manual scraping of manure with skid steer loaders and larger equipment such as 24 row corn planter in-stead of a 4 row unit (Figure 1.7 ). While farm labor inputs fell almost 30 percent from 1996 to 2006, farm equipment use rose by ten percent. Increased use of farm equipment would indicate increased energy consumption. Nevertheless, energy inputs have not followed the same trend lines. Spikes in energy use in 2002 were followed by declines through These declines were precipitated by rising and volatile energy prices [2]. Links For more information, see Current Trends in U.S. Energy Production and Consumption 8

11 Figure 1.7: Farm energy inputs have declined over the decade from , with trends greatly influenced by fuel price fluctuations. Source: Canning, et. al., 2010 Retrieved from: How Energy Factors into Farm Production Costs Direct and indirect energy use averages about 15 percent of total farm operating costs [3,4]. Changes in the cost of energy can increase production costs, but the significance of the increase depends on energy s share of production costs and on total overall energy expenditures. If energy costs are a minor portion of production costs, energy cost changes will have less of an impact. In crop production, direct and indirect energy input has been decreasing since the mid 1990 s (4. Energy input and operating costs tend to be highest for wheat and corn grain production while soybean tends toward the lowest energy input at about 20% of production costs [3]. Reducing energy costs can make a large impact on farm income on these farms. Regional variation of energy input also affects operating costs. For example, in regions where irrigation is essential for crop production, energy input costs are generally higher due to the fuel cost associate with irrigation. In livestock operations, direct energy costs are generally 3-7 percent of total operating costs. Indirect energy costs on these operations include feed production and transportation costs, which can rise significantly when energy costs rise [3]. 9

12 Farm Energy Conservation & Efficiency Considerations Energy use reduction and energy cost savings can be achieved by management changes, retrofits of facilities, and purchase of energy saving equipment. Future modules will provide detail on energy savings farm practices, but a few are important to mention here: (1) Conservation tillage reduces tractor fuel consumption because fewer passes are necessary. (2) Low water use irrigation these systems conserve energy as well as water. (3) Crop rotation, cover cropping, and integrated pest management these practices may reduce both direct and indirect energy costs by reducing inputs. (4) Nitrogen management use of precision agriculture to more efficiently manage nitrogen can result in reduced fertilizer use. Use of manure for fertilizer, and accounting for nitrogen and other nutrients in fertilizer, also reduces the amount of fertilizer that must be applied. Soil testing should be used to manage fertilizer use. Some of these management and equipment practices can be achieved at relatively low cost and positive return. However, there are potential trade-offs to these practices, as well as investments of time and effort to incorporate new farming practices. Consideration should be given to economics when considering changes in crop rotations and other management practices. Profitability may be less for some crop rotations but may result it agronomic benefits. Doing an energy audit and investing in energy efficiency measures can reduce farm energy costs and the cost of renewable energy investments in the future. There are many energy saving measures for all types of agricultural enterprises available, and tools such as energy audits can help determine t which energy saving measure will have the greatest return on investment.. The cheapest and cleanest energy is that which isn t used. Reducing energy used through conservation measures helps improve the environment, reduces costs for farmers and reduces our dependence on fossil fuels. Many energy efficiency measures have high returns or faster paybacks than energy production from biomass or other renewable energy sources. Some energy efficiency measures that have positive returns include using variable speed vacuum pumps on dairy farms, reduced pressure irrigation, dry-eration for drying corn, and thermal curtains for greenhouses. These and other energy efficiency options are covered in detail in Module 2. Commonly Asked Questions: (1) What is an energy audit? An energy audit is a systematic process to estimate energy use on a farm. In an energy audit, a farmer provides information about current energy use in farm operations, and details farm practices and equipment use. Audits are typically done by a professional energy auditor. Auditors establish a baseline of how much energy is used on a farm by compiling information on the types of fuel used, the amount of fuel used for different operations, and equipment use. This baseline information is used to determine where energy savings can occur. (2) When is the best time to get an energy audit and invest in energy efficiency? An opportune time to invest in efficiency is when a piece of equipment must be replaced (worn out or need to upgrade capacity) or when it is economically justified. Energy efficiency measures almost always have a higher return on investment than bioenergy or other types of renewable energy. There are management practices and low cost options for saving energy. Some examples might include maintenance on equipment such as cleaning fans, switching to compact fluorescent lights, using time clocks or thermostats to control lighting and ventilation, or using shorter maturing varieties of corn to allow it more time for field drying. As energy costs increase, efforts should be made to evaluate and implement energy saving methods in advance of escalating energy costs to protect profits. (3) Why do an energy assessment? Doing an energy assessment will help quantify the amount of energy used for different operations and identify where potential savings might be possible. There are a number of ways to do energy assessments. A simple way is to look around at 10

13 the energy consumption on the farm and evaluate where you can make changes. Simple things like changing light bulbs, turning off lights, etc. can make a big difference. There are on-line tools and publications that can assist you in doing your own energy assessment or you may want to hire an energy auditor to review your operation and make recommendations. There are a number of on-line resources available for doing energy assessments. A few such resources are provided below. North Dakota Farmstead Energy Audit: ATTRA Links to Farm Energy Calculators: NRCS Energy Calculator Tools: NRCS Energy Self Assessment Tools: Purdue On-farm Energy Efficiency Tools: Wisconsin Energy Efficiency and Renewable Energy Resources, University of Wisconsin Extension, (4) How can I find an energy auditor? Hiring a professional energy auditor to audit your business can be a good investment. A professional auditor who has experience in agriculture will be able to quickly identify the most cost effective areas to make investments in to reduce energy costs. Energy auditors with farm experience can be a challenge to find and there is not a list of qualified auditors available in most states. The first place to start would be your local electric utility. Many energy programs are run through the local electrical utilities so they would likely know of energy auditor that would be qualified to agricultural enterprises. It would be recommended that an auditor have a Certified Energy Manager (CEM) certification or be a Professional Engineer (P.E.). There are a number of consulting companies that also specialize in energy auditing. Be sure the consulting company has knowledge and experience with the type of agricultural practices in your region. Conclusions Energy costs have varied a great deal in recent years, making budget planning difficult for farmers but the long term tend is increasing energy costs. Even when energy input costs may not comprise a major expense in farm operations, they represent an area for potential cost reductions. Energy conservation now can yield profit benefits in the future. Energy efficiency measures can reduce agricultural energy use by about 25% according to some experts. There can be savings of up to 80% for some measures such as lighting. Energy audits done with and on-line assessment tool or by a qualified energy auditor will help identify the energy efficiency measures that have the best economic benefit and will reduce the capacity needs if replacing with renewable energy technologies in the future. 11

14 References 1. E. Brown, Elliot R.N On-Farm Energy Use Characterizations, Report Number IE052, American Council for an Energy-Efficient Economy. Available at: verified 08/30/ P. Canning, Charles A., Huang, S., Polenske, K., Waters, A Energy Use in the U.S. Food System. Economic Research Report No. (ERR-94). March. Available at: verified 08/30/ J. Hendrickson Energy Use in the U.S. Food System: a summary of existing research and analysis. Center for Integrated Agricultural Systems, University of Wisconsin-Madison. Available at: verified 08/30/ J.A. Miranowski Energy Consumption in U.S. Agriculture (presentation). Farm Foundation Conference Agriculture as a Producer and Consumer of Energy, St. Louis, MO. Available at: verified 08/30/ D. Pimentel, et.al U.S. Energy Conservation and Efficiency: Benefits and Costs. White paper, Cornell University. Available at: verified 08/30/ R. Shoemaker, McGranahan D., McBride W Agriculture and Rural Communities are Resilient to High Energy Costs. Amber Waves, USDA. April. Available at: verified 08/30/11. 7 R. Schnepf Energy Use in Agriculture: Background and Issues. CRS Report for Congress. RL Available at: verified 08/30/ U.S. Energy Information Administration Annual Energy Outlook 2010 with projections to 2035, DOE/EIA Washington, DC. Available at: verified 08/30/11. Day, D., S. Sanford Introduction to Farm Energy Use. Module 1 in S. Lezberg, S. Sanford, and M. Jungwirth (eds). On-farm Energy Conservation and Efficiency. On-line Curriculum. Bioenergy Training Center. Learning for life