The New Edisons From Dot Com Millionaires to Biofuel Pioneers

Fortunes built on the foundations of chips consisting of strings of silicon atoms are now building businesses based on creating chains of carbon atoms. Silicon makes a dandy medium for computer chips, but if you put a match to it, it melts with virtually no flame and leaves an ugly black residue. Carbon atoms, in contrast, burn with a vengeance when hooked together in long chains. We have built our economy on the energy contained in those chains, in the form of coal and oil. But now we are ready to put into our service whole new combinations of carbon atoms, this time arranged by living plants rather than by the compression of the earth's dead crust.

Biofuels are a new generation of carbon chains and may be fairly considered fresh energy sources. They are fresh in the sense that they are not the product of millions of years of compression beneath millions of tons of metamorphic rock, which is what it takes to mint a gallon of oil or a ton of coal. Instead, they represent a benign marriage of chlorophyll molecules with the sun's own rays falling silently on our farmers' fields. That marriage produces carbohydrates, which can be refined by companies now being founded by software millionaires and farmer-owned cooperatives alike.

Biofuels are based on the principle that humankind can break apart what photosynthesis has put together. Unlike fossilized carbon, which must be mined from the earth and then is sent into the atmosphere, biofuels pull carbon from the air, recycling it back into plant matter as they build the sugars and fibers that become fuel. That wonderful process, in which chlorophyll acts as a matchmaker between carbon dioxide and sunlight, is the foundation of life on this planet. With no photosynthesis, there is no food.

Carbohydrates are like vegetable energy-storage packets. That's why we eat them. But new technologies allow us to break up the cells encapsulating the precious carbon and burn that carbon in the form of ethanol, biodiesel, butanol, and other exotic fuels. Some of those technologies involve distillation, some involve stripping certain components off the plant's molecules; but at their heart they all depend on taking the carbon used to make cornstalks or wheat shoots, concentrating that stored energy, and burning it. And because they use the natural carbon cycle instead of pulling up fossils from deep beneath the earth, if done right, they can dramatically cut our carbon emissions.

Not that this idea is entirely new. In 1896 Henry Ford produced his first vehicle to run on straight ethanol. Still earlier, in 1893, a German inventor named Rudolf Diesel constructed his first eponymously named engine to run on oil extracted not from crude oil, but from peanuts. But each time biofuels have begun to take root, so to speak, some circum-stance—from war to oil monopolies—has interfered. This time, however, the vision shared by Ford and Khosla may just become a reality

That forthcoming reality is being hastened by the realization that ethanol, particularly cellulosic ethanol, can come to compete with gasoline in price. With corn at $2 a bushel, ethanol is economically competitive with gasoline (at the current federal subsidy of $.51 per gallon) when oil costs $30 a barrel or more. Without the subsidy, it is competitive with gasoline when oil costs $50 a barrel or more.Yet as demand has risen, so has the price of corn. At $3 a bushel, ethanol competes with gasoline without a subsidy when oil costs $70 a barrel or more.6 The day is coming, however, when the decreased costs of processing cellulosic ethanol, in combination with the increasing cost of oil, will make this second-generation fuel attractive based just on price. The National Renewable Energy Laboratory has a goal of reducing the cost of producing cellulosic ethanol from $2.25 a gallon in 2005 to $1.07 by 2012.7

Currently, starches from corn kernels and the juice extracted from sugarcane are used to make ethanol in the United States and Brazil. These were used to produce 4.86 billion gallons of ethanol in the United States and over 4.3 billion gallons in Brazil in 2006.8 But ethanol produced from those sources is just the warm-up act in the biofuels revolution. The show will hit the big time when the more sophisticated process of making ethanol from the woody cellulose of the plant fibers themselves is commercialized. If corn ethanol is the Wright Flyer of biofuels, cellulosic ethanol is the Boeing 787.

Cellulose is a compound found in the cell walls of all plant life, or biomass. Producing ethanol from cellulose is the holy grail of ethanol advocates. Using the woody cellulose material to produce fuel vastly expands the amount of organic material from which we can distill energy. It opens up a wide range of waste products, from straw to rice hulls to corn stover and perennial grasses and fast-growing trees, that can be grown as dedicated energy crops. These dedicated biomass crops—like switchgrass, hybrid poplar trees, and many native grasses— require fewer energy inputs in their cultivation, less fertilizer and water, and fewer pesticides and herbicides than corn.9 As perennials, most biomass crops also promote a healthy ecosystem by reducing soil erosion and improving soil fertility.

One persistent concern about biofuels has been the "energy balance" of ethanol production. Repeated claims that more energy goes

Ethanol Embodied Energy
Switchgrass is just one of the many crops that can be used to produce cellulosic ethanol.

into the production of a gallon of ethanol than is embodied in the resultant fuel have hurt the reputation of this energy source. Ten years ago, 1 Btu (British thermal unit) of energy was required to make .87 Btus of energy in the form of ethanol. Now all evaluations show improvements, but a wide variety of ratios remains in the twenty studies that have examined this issue. The most credible are the ones conducted by the Ar-gonne National Laboratory and the USDA, which, respectively, concluded that first-generation corn ethanol has a net energy return of 26 percent10 and 34 percent.11 In 2006 the Natural Resources Defense Council (NRDC) commissioned a review of studies on the energy return on investment from corn ethanol and found that all but one resulted in a positive net energy balance, ranging from 29 percent to 65 percent.12 And the horizon is rapidly expanding for ethanol's efficiency. Even using existing technology, as farms and processing plants begin to apply what are today's best practices, net returns should rise further. Brazil has increased the productivity of sugarcane ethanol to eight times the energy input, and estimates on cellulosic ethanol range from an energy balance of between 4.40 and 6.61 units returned for every unit of energy input.13

Huge leaps forward may be in the offing. Techniques that substitute biomass for fossil inputs to produce ethanol currently yield returns as high as 46.6 units of energy for each Btu of fossil fuel input,14 demonstrating the tremendous potential for improvements in efficiency of production if the measurement is not merely energy efficiency but also reducing the carbon footprint of the fuel. Argonne National Laboratory finds that cellulosic ethanol reduces fossil fuel energy use by 90 per-cent.15 With commercial cellulosic feed stocks for ethanol on the horizon, and use of biomass in the production process increasing, the energy and environmental profile of ethanol can continue to improve.

It is essential, as well, to have the infrastructure in place that will allow drivers to use the fuel across the country. Already today, a surprising number of cars can run on E85 ethanol—the blend of 85 percent ethanol and 15 percent gasoline that is emerging as a standard. There are over five million flex-fuel vehicles that can run on high blends of ethanol on the road16—a market roughly the size of that for diesel automobiles—but many car owners are not aware that they can already fill their tanks with it. Owners can discover whether their car can run on E85 by consulting their driver's manual, but until now, auto manufacturers have not lifted a finger to advertise this capability. Millions of gallons of gas are also now blended with a variety of percentages of corn ethanol, from E6 to E20, but the leap has yet to be made to providing substantial amounts of E85 to American drivers.

An engine built to run on this blend of 85 percent ethanol costs roughly $100 more at the factory, the cost of a sensor and upgraded fuel lines, and still allows drivers to use regular gasoline as necessary. The cost to gas station owners of installing an E85 pump ranges from $10,000 to $50,00017 and can be done easily at existing facilities— unlike the adaptations for hydrogen or natural gas—and that cost can be reduced through federal and state incentives. So ethanol enjoys an enormous advantage over other alternative liquid fuels. It works with the transportation and fueling infrastructure already in place in the United States with only minor modifications.

Even more important than price and efficiency, the true beauty of ethanol is its ability to tackle emissions of CO2. Even production of first-generation corn ethanol reduces greenhouse gas (GHG) emissions by one-third compared to gasoline.18 With the introduction of cellu-losic ethanol, the reduction of CO2 can reach more than 90 percent below the emissions produced by an equivalent amount of gasoline.19 Because growing biomass removes from the atmosphere an amount of greenhouse gases roughly equivalent to the amount ethanol gives off when it is burned as fuel, biofuels are a "closed loop" of carbon. The only net increase in atmospheric CO2 is from the energy used in production.20

Currently, the extra greenhouse gas emissions from the ethanol cycle are limited to CO2 that is produced from the fossil fuels used in growing the feed stocks and processing the ethanol. When burned, gasoline emits approximately twenty-five to thirty pounds of carbon dioxide per gallon. This figure does not consider the substantial amounts of fossil fuel used in the oil extraction and refining processes. Corn ethanol releases around twenty pounds per gallon,21 and that number will only get better as production technologies improve. Therefore, as fossil fuels are substituted out of production and efficiencies increase, the climate impacts of ethanol can be reduced more substantially than those of gasoline alone could ever be. In short, gas will always be dirty. Ethanol has the potential to become even cleaner than it is now.

When biomass energy rather than fossil fuel is used in the refining process, corn ethanol emits only about eight pounds of carbon per gallon. Advanced cellulosic ethanol, using biomass energy in the refining process, will release a mere three pounds of carbon per gallon, almost an order of magnitude less than an equal volume of gasoline.

In its most advanced form of production, ethanol can even cause a net reduction of CO2 in the atmosphere. When the carbon is captured and stored underground during the manufacturing process, corn-based ethanol can actually reduce the net amount of carbon in the air by two pounds as the corn plant grows. Cellulosic ethanol does even better, sequestering a net total of over five pounds of carbon for every gallon burned if the carbon is captured. The sequestration process is expensive but could become economically attractive when manufacturers have to pay a price for their carbon emissions, or when federal standards reward low carbon fuels. This potential to actually clean the air is extremely exciting to ethanol's supporters.

The biomass feed stocks that can be used to make cellulosic ethanol are widely diverse, as mentioned. Fast-growing trees and grasses, animal waste, residue from paper mills, and urban demolition materials are all examples of biomass. In early 2007 Vinod Khosla announced a major investment in a project to use wood fiber to produce ethanol in Georgia, and virtually every region of the country can take part in supplying feed stocks for this fuel. The by-product of cellulosic ethanol production, lignin, can also be used to generate electricity.22

For all these reasons, investment and speculation in both current and next-generation ethanol are booming. In the race to make cellu-losic ethanol efficient and profitable, companies are competing for research grants, loan guarantees, and future market share. Companies that have developed bacteria that digest biomass to produce ethanol include Iogen and Arkansas-based Bioengineering Resources Inc. Investment firm Goldman Sachs has poured $27 million into Canadian biotech company Iogen.23 Iogen has also entered into a partnership with Volkswagen and Royal Dutch Shell to explore the feasibility of opening a cellulosic ethanol biorefinery in Germany. Vancouver-based Syntec Biofuel has invested in a method of ethanol production involving gasification of organic material rather than bacteria. In addition to Khosla and Gates, Virgin Group chairman Sir Richard Branson is investing $300 to $400 million in ethanol production facilities in the United States.

As interest in ethanol has grown, however, so have concerns about the environmental consequences of growing ethanol crops. Certainly if ethanol follows a technology path that requires increasing natural gas or coal for process heat and increasing the use of chemical fertilizers for corn, the environmental benefits would at a minimum be diminished, with the possibility of harms. These are real concerns. However, the growth of the biofuels industry will not and should not be simply an expansion of current ethanol technology. Instead, several forces are pushing ethanol development in a very different direction. First is the growth of cellulosic ethanol and the introduction of a much more diverse, low-impact, and high-yield set of feed stocks that use fewer inputs of energy and water. Second is the very promising development of new policies like the California low-carbon fuel standard, which rewards reductions in the amount of CO2 in fuels, thereby recognizing biofuels produced using renewable energy—like methane or gasified cellulose—instead of natural gas. While their net environmental impact remains to be seen, based on our future technology choices and regulations, biofuels—unlike gasoline—can be produced sustainably, and that should not be taken lightly.

A particularly persistent criticism of ethanol production has centered on fears that land consumption would damage food supplies. If we ramped up our capacity to refine biodiesel, for instance, but expected productivity increases didn't materialize, resulting in a net reduction in the production of soybeans dedicated to food, what would that do to our nation's food supply? In a word, nothing.

The fact is that today we export fully 58 percent of our wheat, 34 percent of our soybeans, and 18 percent of our corn.24 We export mountains of heavily subsidized U.S. agricultural products, a practice that has had some very negative effects on agriculture in developing countries. When subsidized U.S. food commodities are dumped in third world markets, they can drive food prices below the costs of local agricultural production, making it uneconomical for farmers to produce, driving poor farmers from their land, and devastating local economies.

For instance, the 2002 Farm Bill increased agricultural subsidies by $83 billion over a period of ten years, raising subsidies to cotton growers by 60 percent.25 This effectively shut cotton grown in Africa out of the U.S. market. World Bank studies suggest that U.S. subsidies reduce West African annual revenues by $250 million a year.26 Switching from subsidized food and fiber exports to environmentally beneficial energy crops in the United States would be a boon for both American energy security and the world's subsistence farmers.

In a very real sense as well, our export crops are grown to feed our rapacious hunger for foreign oil. Oil imports are the single-largest share of the U.S. trade deficit. In addition, a large share of the price of those bushels of soybeans that are exported flows out of our farm economies and out of the country. Some experts estimate that as much as 40 percent of the price of those export crops goes to pay the shipping costs to send them overseas. Much of the money for our crops is going to multinational exporters rather than American farmers, a situation that can be alleviated by moving to more domestic and localized energy and agricultural production.

In short, our agricultural system today generates export revenues that simply flow out of our economy to sustain payment obligations to the Middle East, rather than serving as primary investments in the foundation of our own domestic economy and homegrown sources of energy.

What can we realistically expect from the development of the next generation of biofuels? The possibilities are impressive. Studies by the NRDC demonstrate that in combination with aggressive efficiency measures and smart-growth policies, the use of switchgrass for cellulosic ethanol production could shrink our demand for gasoline to just 6 billion gallons per year in 2050, compared to the 290 billion gallons expected under business as usual. Assuming improvements in yields, this scenario would require 114 million acres of land, a demand that could be met using a portion of the 120 million acres that are currently dedicated to export crop production and the Conservation Reserve Program (CRP), which pays farmers to leave lands fallow—often by planting them in perennial switchgrass already—while still protecting both food production and land conservation goals.27 Other studies show as little as 50 million acres being needed.28 These studies show that even if we fall short on conservation and smart-growth goals, we could nonetheless replace all the oil we now import from the Middle East by

2050. Sweden has already set a goal of eliminating its oil use altogether; we can, too.

At the same time, it is crucial not to minimize the importance of requiring substantial improvements in production practices. Some estimate that producing just half of U.S. automotive fuel—for example, using only existing corn ethanol methods with no improvement in crop yields—could use 80 percent of the nation's cropland, with severe impacts on commodity prices and food supplies. The biodiesel industry is already encountering serious environmental concerns about the impacts of tropical palm oil and soybean plantations on biodiversity, and more issues are sure to follow unless standards are developed within the industry to certify the sustainable production of fuels, as well as monitor their carbon impacts. Such certification programs are well under way in the European Union and are beginning to be developed in the United States. The stakes are high for getting it right. Biofuels are the best option for our liquid fuels, but finding the balance of technology, policy, and environmental issues is not a lead-pipe cinch.

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Responses

  • Nilde
    Who is making butanol fuels?
    6 years ago

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