Study Burns Biofuels

Source:
http://www.registerguard.com/news/2007/01/31/a1.biofuel.0131.p1.php?section=cityregion
Study Burns Biofuels
By Greg Bolt
The Register-Guard
Published: Wednesday, January 31, 2007

A new analysis by a team of Oregon State University economists concludes
that biofuels offer only marginal progress toward energy independence
and reduction of greenhouse gases and do so at a much higher cost than
other alternatives.

The study found that the "net energy" from biofuels - the amount of
energy in the end product after subtracting the amount of energy used to
produce and distribute it - is as low as 20 percent for corn-based
ethanol. That compares with 75 percent for standard gasoline.

Also, although each of the three types of biofuels studied would help
reduce greenhouse gas emissions, the reduction would be as much as 200
times more expensive than other options, such as improving gas mileage
or establishing a carbon tax.

Biofuel supporters don't necessarily dispute the numbers but suggest
that the math would tilt in alternative fuels' favor by changes in
existing production and distribution systems and future improvements in
technology. They say the biofuels market is a necessary first step and
that rising consumer demand will help bring about advances that will
improve cost effectiveness.

"We must keep in mind that biofuels are not the end answer to our liquid
fuel problems," said Ian Hill, founder and a managing partner of
SeQuential Biofuels. "What they are is a progressive step in the right
direction."

The study was done by professors William Jaeger and Thorsten Egelkraut
and research associate Robin Cross in OSU's College of Agricultural and
Resource Economics. Jaeger said its purpose was not to tell people
whether it makes economic sense to put biofuels in their gas tanks, but
to help in the debate over steps Oregon can take as a state to address
energy and environmental needs, such as encouraging development of
biofuel refineries.

He said the report probably won't be welcome news for those who advocate
greater use of biofuels, but he said it helps show where investments are
needed to help make such fuels a more viable alternative.

The analysis looked at three types of biofuels: corn-based ethanol, wood
cellulose-based ethanol and canola-based biodiesel. It looked at the
cost of growing and processing the crops used to produce and transport
the fuel, the net energy of the fuel and the effect on greenhouse gas
emissions.

Importantly, the study did not factor in the environmental cost of
refining and burning gasoline or of producing biofuels.

According to the study, only wood cellulose ethanol has a greater net
energy return than gasoline, 84 percent, but it still produces fewer
Btus per gallon, and with current technology it costs more to produce
than it would generate in sales. Canola biodiesel has a net energy of 69
percent, 6 1/2 times that of corn ethanol, which is 20 percent.

But a big part of the net energy calculation comes from the byproducts
of biofuel production. Both biodiesel and corn ethanol produce large
amounts of left over vegetable matter that is used as animal feed, and
that adds substantially to net energy because it reduces overall feed
production.

Biodiesel also creates glycerin as a byproduct, which contributes to the
net energy figure.

But producing biofuels in large quantities could flood the market for
such products, dramatically lowering their price or creating more than
can be used. If that happens, the net energy of biofuels will drop
dramatically.

The study also found that the cost of greenhouse gas reduction is very
high using biofuels. It said policy changes such as carbon
sequestration, carbon taxes and "cap and trade" rules would cost about
$50 per ton of carbon while corn ethanol would cost $10,700 per ton,
biodiesel $580 per ton and wood ethanol $350 a ton.

The study said the energy benefit from increasing automobile fuel
efficiency by one mile per gallon in Oregon alone would be equivalent to
the gain from building three or four large-scale corn ethanol plants or
13 biodiesel plants.

Also, the study said, to meet 1 percent of Oregon's current petroleum
energy consumption with biodiesel would require 400,000 acres of canola,
100 times the current acreage. That would produce 600 million pounds of
leftover canola meal, enough to feed five times the numbers of cows
currently raised in the state.

The gloomy findings aren't likely to deter biofuel supporters, who see
alternative fuels in terms of environmental costs avoided as much as
overall cost effectiveness. They say today's cost structure will change.

Hill said feedstocks other than canola could change the economics of
biodiesel and increased corn production in Oregon could do the same for
ethanol. The important thing, he said, is to keep moving ahead.

"We don't have a perfect solution today, but we do have some solutions
that take us toward a sustainable system and move us away from the
fossil fuel system," he said. "Is it better to take that step now or
not? We would argue as a company that it's absolutely better to take
that step and always be critical of where we are and push for greater
efficiency."
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