Wednesday, May 2, 2007

Analysis: Cellulosic biofuel breakthroughs


Biofuels Market Breakthrough Opens Way to Cellulosic Fuels Revolution
Patrick Mazza

For biofuels these are breakthrough times. Driven by volatile energy
markets and new public policy initiatives, biofuels production is
booming and production capacity is rapidly growing. For the first time
since petroleum emerged as the overwhelmingly dominant vehicle fuel
around a century ago, oil�s near monopoly on the market is breaking
while farmers and rural communities are discovering a new source of
prosperity � all good news.

At the same time a biofuels backlash is mounting. Record high corn
prices are raising worries about food supplies. A new energy demand for
agricultural products is bringing to the fore long-time concerns about
soil erosion as well as use of chemicals, fertilizers, water and
genetically modified crops. Fears that oil crop demand will decimate
tropical forests are also appearing. An old debate over whether biofuels
really reduce energy use and global warming emissions continues. Some
biofuels critics are even calling for outright opposition to biofuels

Yet a halt to rapid biofuels industry ramp-up is unlikely for reasons
given by one of the industry�s harshest critics, Lester Brown of the
Earth Policy Institute. �Investment in crop-based fuel production, once
dependent on government subsidies, is now driven by the price of oil,�
Brown writes. �With the current price of ethanol double its cost of
production, the conversion of agricultural commodities into fuel for
cars has become hugely profitable. In the United States, this means that
investment in fuel distilleries is controlled by the market, not by the

Evidence for this comes from the acceleration of biofuels capacity
growth far in excess of the federal Renewable Fuels Standard for 7.5
billion gallons per year (BGY) by 2012. A.G. Edwards projects U.S.
ethanol capacity will reach 13-14 BGY by 2009.

A combination of high corn prices and not quite high enough oil prices
might result in some slowing of growth. Even now there is talk of a
slowdown in ethanol plant construction. But in a world where petroleum
demand is accelerating while new supplies are becoming increasingly
difficult and expensive to recover, the long-term trend seems clear. The
question is not whether there will be significantly larger biofuels
production. That combine has left the barn. The significant issues now
circle around how the industry will grow � how much it will contribute
to global environmental sustainability as well as the economic
sustainability of rural communities. To these issues biofuels advocates
and critics alike must now turn, to enacting the public policies and
devoting the resources needed to make this new fuels market pay for both
the planet and farmers.

The fact that biofuels are securing a place of their own in the market
provides the opportunity to put a growing biofuels industry on a
sustainable basis. Industry observers are in general consensus that
corn-starch ethanol, well over 90 percent of all biofuels produced in
the U.S. today, will reach its production limit somewhere in the area of
15 BGY, with the highest projections just a few billion gallons above.
Some analysts place ultimate corn capacity significantly below these
levels. But at some point, interactions with food and animal feed
markets will make corn economically impractical as a feedstock.

Beyond that point, it is generally agreed, biofuels growth will depend
on new feedstocks of cellulose and hemicellulose, of which most of the
plant world is constituted. The most important way corn ethanol provides
a transition to the environmentally preferable cellulosic ethanol is by
creating market growth and certainty. On this foundation are emerging
both the powerful market drivers and the strong political constituencies
required to move ethanol to the next stage.

Cellulosic biofuels offer tremendous environmental and economic
sustainability advantages. They can be produced from organic residues
that are now often a waste management and pollution problem, though care
must be taken to leave sufficient residues to retain soil fertility.
Another source is perennial grasses that dramatically reduce soil
erosion, and chemical and water use while providing wildlife habitat.
This opens serious opportunities to restore native grassland ecosystems.
A recent University of Minnesota study reported in Science finds that
high-diversity grasslands can produce biofuels in ways that actually
remove carbon from the atmosphere, by sequestering carbon in soils and
roots while yielding up to 238 percent more energy than monoculture crops.

The biofuels world is starting the transition to cellulose. Emerging
cellulosic ethanol technologies are coming on two tracks. In one,
biological processes such as enzymatic digestion break the tough
molecular bonds of plant matter into fermentable sugars. The other uses
heat to convert cellulose into gas from which it can be transformed into
a number of fuel products including ethanol, synthetic gasoline and
renewable diesel. Cellulosic feedstocks are much more abundant and
cheaper than grains, but processing technologies are still more expensive.

While cellulosic ethanol costs have dropped from $5.66 a gallon in 2001
to $2.26 in 2005, according to the U.S. Department of Energy,
conventional ethanol production costs range around one-third to one-
half less. Public support will be needed to develop both cellulosic
technologies and markets. One proposal by the farmer-led 25x�25
Coalition proposes $7.5 billion in new federal funding over the next
five years to research, develop and demonstrate cellulosic technologies
and build new markets. 25x�25, which aims to produce 25% of U.S. energy
from farm-based sources by 2025, also proposes $14 billion over five
years to build up sustainable bioenergy crops. These proposed budgets
total less than one month�s U.S. oil import bill, and would pay many
times over in improved energy security and rural economic revival, not
to mention reduced pollution.

Biofuels are only one piece of an agenda to reduce petroleum use and
pollution in transportation. Other priorities include more efficient
vehicles with an average U.S. new car standard of 40 mpg by 2015, as
well as increased use of fully electric and plug-in hybrid vehicles
fueled with renewable energy. More compact land use patterns with much
improved walkability and improved transit service are also a requisite.
Biofuels can make an important contribution to this agenda, particularly
if we enact the policies and devote the resources needed to accelerate
the commercialization of cellulosic ethanol.

Patrick Mazza is Research Director for Climate Solutions, This is the first of a series of articles that
explore ways to build a sustainable biofuels industry. Please send
comments to


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