In a previous entry I noted that research seems to be mixed with regards to the energy balance of ethanol production. That may turn out to be dependent on the layout and location of the particular facility with relation to the users of by-products.
Currently in Meade Nebraska an ethanol plant has started production in conjunction with a cattle feedlot. In this operation 30,000 head of cattle will supply manure that will be used to create methane gas via an anaerobic digester.
Methane is 21 times more powerful than CO2 when it comes to heating the atmosphere. So instead of being released into the atmosphere this gas will be used to operate the ethanol plant instead of using natural gas. The residual of the grain used for ethanol would then be used as cattle feed and the residual from the manure digestion could be used as fertilizer for the supplying corn crop. All of this implies less petroleum use in ethanol production, swaying the energy balance to the positive, and perhaps indicating economies of scope in corn, beef and ethanol production.