Biofuels were envisioned to help to make the world a better place, but here comes a National Research Council report on Tuesday that casts doubt on the environmental and economic benefits of biofuels and the U.S.’s ability to meet its own production mandates.
The report, requested by Congress, says the U.S. is unlikely to meet the national Renewable Fuel Standard, created by Congress in 2005, that calls for gradually increasing the nation’s supply of alternative fuels from 9 billion gallons in 2008 to 36 billion gallons by 2022. Alternative fuels, which must be made from renewable sources, include ethanol, cellulosic ethanol (using non-food crops), biodiesel and hydrogen.
Struggling cellulosic biofuels
The report notes that producing enough next-gen, or cellulosic biofuels, will be particularly difficult. Sure, the Renewable Fuel Standard is creating a market by mandating 16 billion gallons of cellulosic biofuel by 2022, but the producers could fall short of that goal because of some known and hard-to predict hurdles, including: the need to convert more farms or other types of land to grow feedstocks, the high cost of converting the tough cell materials of a plant into fuel, and the dependence of growers and biofuel producers on government subsidies.
The country has no large-scale cellulosic biofuel refineries today. Cellulosic biofuels, at current production cost estimates, also can’t compete with fossil fuel prices. The federal government has doled out hundreds of millions of dollars in grants, loans and loan guarantees to help increase feedstock production and help build refineries. Recipients of these government funds are planning, and just beginning to build, processing plants. Poet recently clinched a $105 million Department of Energy loan guarantee to build a cellulosic ethanol plant in Iowa that will use corn husks, leaves and cobs.
Most of the renewable biofuels produced today are ethanol made from corn, which also is used for food for humans and animals. There has been no shortage of debates about “food v. fuel,” and the controversy isn’t just about corn.
The report noted that cellulosic biofuel production requires crops as well, and a lot of research is taking place to maximize the yield of plants such as switchgrass and sweet sorghum. Some cellulosic biofuel makers want to use wood chips or non-edible part of a food plants, such as corn stalks and wheat straw, but even those will need to be grown. The need for more of these “energy crops” will likely require more conversions of existing farm and pasture land or uncultivated land, which will fuel more debates about food prices. But the report cautioned that the impact of biofuel production on food prices is a complex question that is hard to quantify.
Do biofuels reduce greenhouse gas emissions?
All these land conversions raise a good question about whether or not biofuels reduce greenhouse gas emissions. How cellulosic biofuels will stack up against fossil fuels in reducing emissions over time is hard to gauge and depends on land conversion and production processes. Research already indicates that corn ethanol isn’t a better replacement for fossil fuels; the use of ethanol could increase air pollution, and its water use — from crop growing to fuel production — is higher than conventional fuels.
The biofuel industry’s growth still relies heavily on government help, and that could greatly affect the pace at which they reach the renewable fuel goals. Will biofuel producers be able to build a long-lasting business? Will investors shy away at first signs of reduced government support? Those will be persisting questions especially when policy is attempting to drive adoption.
Like other capital-intensive cleantech businesses such as solar manufacturing, the biofuel industry found it tough to raise private dollars to build processing plants after the financial market collapsed in 2008. The outlook has brightened over the past year as many technology producers lined up public and private investments to build their first large-scale plants (using non-food crops). Some of them held initial public offerings, which creates the impression that the age of cellulosic biofuel has arrived. Venture capital firms such as Khosla Ventures can now point to some successful exists for their portfolio companies. Biofuel companies that went public over the past year include Gevo (s GEVO), Amyris (s AMRS) and KiOR (s KIOR).
The report recommends more research and development work to increase both the density of energy crops grown on a given land and the amount of biofuels that can be converted. The report’s authors noted that Congress asked them to layout challenges and ways to reduce the negative impact of the renewable fuel mandate on prices and animal feed, food and forest products. But the task didn’t involve coming up with suggestions to change the mandate in order to achieve greater greenhouse gas emission reduction or to compare biofuels with electricity for powering cars.
Images courtesy of Kior, Amyris, Nancy Qian.