What’s Really Holding Cellulosic Biofuels Back
There was a recent article in MIT Technology review called What’s Holding Biofuels Back? There is a relatively simple answer to the question that I will delve into below, but the short answer to “What’s holding biofuels back?” is that we placed unreasonable expectations on them to begin with, and they have simply failed to meet those unreasonable expectations. People would think it was unreasonable if Congress mandated a cure for the common cold within 5 years, but they don’t think twice when Congress mandates the creation of a cellulosic ethanol industry within 5 years. Yet either scenario requires technical breakthroughs that are not assured.
The article notes that the cellulosic ethanol mandate for 2010 in the U.S. was cut by 93.5%, and now the 2011 mandate has been slashed (as I have predicted for several years would be the case):
This year’s mandate was supposed to be 100 million gallons of cellulosic biofuels, but that was reduced to 6.5 million. Last month, the EPA announced that it would lower the requirement in 2011, from 250 million to somewhere between five million and 17.1 million gallons.
The EPA is doing this because not enough cellulosic biofuel is being produced to meet the targets. So far, no commercial plants have been built–just some small pilot and demonstration-scale plants.
So they have identified the effect, and then go searching for causes. They quote a number of cellulosic ethanol players who blame the lack of progress on not enough funding or mandates. While it is true that if you throw massive amounts of money at the problem, you could certainly get some cellulosic ethanol facilities off the ground. But before throwing money at a problem, there needs to be a clearly identified path to long-term economic viability that is based on reasonable assumptions.
Unreasonable expectations are at the heart of the mandate-rollback. It was an unreasonable expectation for Congress to believe they could mandate technology. If something is uneconomical today, there are no guarantees that it will be economical tomorrow — even if you pass laws dictating that things must happen. You may make an uneconomical solution appear to be economical if you throw large amounts of cash at it, but then it is only “viable” as long is it continues to receive those cash infusions.
It is also true that sometimes uneconomical solutions can become economical given enough research and development, but bear in mind that we have been working on cellulosic ethanol for over 100 years. The same fundamental challenges that existed 100 years ago still exist today. (You can read more about the specific challenges of biofuels in Five Challenges of Next-Generation Biofuels).
MSNBC suggested in The green-energy landscape just keeps changing that perhaps the economics are a bit more challenging than proponents had appreciated:
Five years ago, cellulosic ethanol – produced from humble grasses and wood waste — looked as if it could be a “simple solution to pain at the pump.” [RR: Readers of R-Squared were not under that impression]. But in Science’s special report, Robert F. Service says the federal government’s plan for ramping up cellulosic-ethanol production is in “deep trouble” because the economics of ethanol don’t make as much sense as folks thought they would back then [RR: Again, regular readers were informed about the real economics of cellulosic ethanol as well as some of the unreasonable assumptions that caused various players to forecast the production of cheap cellulosic ethanol]. Technically, it’s still tougher than expected to convert cellulosic feedstock into fuel than it is to use American corn or Brazilian sugar cane.
The current issue of Science referenced in that quote has a special section on the future of energy called Scaling Up Alternative Energy. The authors dissect the alternative energy situation, and they conclude the same thing that you have heard me saying for the past five years:
The U.S. government’s flagship plan to reduce the nation’s dependence on oil by scaling up cellulosic ethanol is in deep trouble, highlighting the complex technical, economic, and political forces buffeting global efforts to create viable alternatives to fossil fuels.
Part of the problem in scaling up cellulosic biofuels continues to be technical. To brew ethanol, manufacturers use yeast to ferment simple sugars such as glucose. That task is relatively cheap and easy when starting with a raw material—or “feedstock”—rich in those simple sugars, such as sugar cane in Brazil. In the U.S., brewers using corn as a feedstock face a slightly more complex process, because they first must use enzymes to break apart the starch in corn kernels into their component glucose molecules. The task becomes even more difficult when using cellulosic feedstocks such as switchgrass, corn stalks, or wood chips. The sugars in these feedstocks are locked in cellulose, hemicellulose, and lignin, biopolymers more complex than starch. Breaking those biopolymers into intermediate compounds that can be converted to ethanol remains a difficult problem. Researchers call it “recalcitrance,” and it currently limits brewers to converting just 40% of the energy content available in cellulosic feedstocks to ethanol. Fermentation, by contrast, converts about 90% of the energy in simple sugars to ethanol. That means cellulosic ethanol plants currently need far more raw material than first-generation plants do to make the same amount of ethanol.
That’s also why I maintain that cellulosic ethanol will never be produced at a lower cost than corn ethanol: It is much more challenging to unlock the sugars in biomass than in corn. People may project lower costs, but they do so on the basis of models that have not been validated in the real world. As an example, I may presume that I can acquire waste biomass and will be paid $100/ton to take it. On that basis, I may very well project $2/gal (or lower) cellulosic ethanol — because the biomass contribution in that case is negative $1 per gallon. But I believe this is one of the most fundamental Bad Assumptions made by prospective producers of cellulosic ethanol. In the long run, nobody is going to pay me a lot of money to take their biomass, even if I find someone willing to do so today. I believe it is far more likely that I will have to pay $100/ton for large quantities of biomass to make it worthwhile for farmers to grow and harvest it. If that’s the case, then the $2/gallon ethanol case if I am being paid to take the biomass suddenly becomes $4/gallon when I have to pay for it.
I noted the unreasonable expectations in a recent story in Pacific Business News:
“Biofuels will become increasingly competitive,” said Rapier. “I’m not looking at where things are now, but where things are going.”
That said, Rapier is also realistic about the current difficulties facing the industry.
“The thing about biofuels is that people don’t appreciate how difficult it is to compete with oil,” said Rapier. “A lot of time there are unreasonable expectations.”
Over time, I do believe that biofuels will become more competitive. But those who suggest that there is an easy path, and that cellulosic biofuels will have an easy time displacing oil — are simply creating those unreasonable expectations. Biofuels have to contend with oil, which Mother Nature already processed over millions of years with heat and pressure to produce an energy-dense, transportable mixture. With biofuels humans must grow and transport the biomass (which is far less energy dense than oil), and then add heat and pressure to convert the biomass into fuels. Thus, it shouldn’t be a surprise that biofuels tend to be more expensive than oil.
However, oil is becoming more difficult to extract, and is of course a depleting resource. Over time this will continue to drive up the cost of oil and various oil substitutes, which will improve the economic prospects for those biofuels that are not heavily petroleum dependent.
In conclusion, it is fine to set goals, as the EPA did with the cellulosic ethanol mandates. But when the goals aren’t reality-based, they will eventually need to be massively scaled down as they were. Frequently scaling back expectations will ultimately erode public confidence in the sector. So let’s operate on a more reasonable set of expectations: Prices at the pump will rise, and as they do so certain biofuel technologies will become more competitive. If Congress doesn’t attempt to anoint specific technology winners before they perform, then we won’t be collectively disappointed if they fail to deliver.