Cellulosic Ethanol Targets Slipping
For those who read this blog, this story will come as no surprise. I have been warning for a couple of years that the cellulosic ethanol proponents have been getting ahead of themselves with predictions of how quickly the industry will scale up. In fact, not only have I said that they were vastly overpromising (see this essay challenging Vinod Khosla’s claims; he had the U.S. at 50 billion gallons of ethanol by 2020) but that enzymatic cellulosic processes would ultimately lose out to biomass gasification processes.
I think if I told people that we would cure cancer within 5 years – or better yet mandated that we cure cancer within 5 years or pay penalties as a result – people would generally think I was daft. In this case, they understand that technology can’t be mandated. But commercial cellulosic ethanol is a problem that we have been working on for just as long as we have been trying to cure cancer, and commercial success has proven elusive. Yet these same people don’t bat an eye when proponents casually assure everyone that commercial success is just around the corner.
This week, there have been two separate reports that indicate that the targets are indeed slipping:
Cellulosic ethanol is turning out to be an underachiever so far.
The 2008 Energy Independence and Security Act set a goal of producing 100 million gallons of cellulosic ethanol in the U.S. by 2010 and 250 million gallons by 2011, but a survey conducted by David Woodburn of ThinkEquity strongly indicates that the industry is likely to miss its mark.
Woodburn expects only 28.5 million gallons of cellulosic ethanol to be produced in the U.S. in 2010, leaving a 71.5 million gallon gap.
“Congress put this 100 million figure out there and I’m not sure they had any idea about the capacity in the industry,” he said.
28.5 million gallons works out to be almost 2,000 barrels a day. With that in mind, I will go one step further and say that we won’t even produce 28.5 million gallons in 2010. I also expect that the producers with announced plans to produce cellulosic ethanol in 2010 will do so at a loss on every gallon.
The article goes on to explain that consumers will be penalized as a result – that retailers must effectively pay “$2 for every gallon of cellulosic ethanol they couldn’t find.” Keep in mind, this comes about directly because people have overpromised – causing expectations to rise to high – and they are going to underdeliver. These are big pet peeves of mine.
The second report on the pending shortfall came from the Energy Information Administration (EIA). In their Annual Energy Outlook 2009, the EIA suggests that cellulosic ethanol will fall far short of the mandated levels. More on that story from CNN:
WASHINGTON -(Dow Jones)- The U.S. won’t be able to meet its mandate to produce 36 billion barrels of biofuel by 2022, according to the government’s top energy forecaster.
The EIA forecasts ethanol supply from cellulosic feedstocks reaching 12.6 billion gallons (including both domestic and imported production) in 2030, while biodiesel and biomass-to-liquid diesel fuel use rise significantly, reaching nearly 2 billion gallons and 5 billion gallons, respectively, in 2030.
The Renewable Fuels Standard of a year ago mandates 36 billion gallons of ethanol usage by 2022, with 16 billion gallons coming from cellulosic ethanol. As I said at the time, those numbers didn’t appear to be remotely credible. The EIA report indicates that we won’t have reached that level by 2030. I do note that this is a very big increase in the EIA projections, however, which previously projected less than 1 billion gallons of cellulosic ethanol being produced in 2030 (see comments on Guy Caruso’s Senate testimony in 2007 here). Maybe they believe at least some level of technology can be mandated.
2015 EIA Energy Conference
June 15-16, 2015 - Washington, D.C.
Platts North American Crude Oil Summit
February 26-27, 2015 - Houston, TX