Consumer Energy Report is now Energy Trends Insider -- Read More »

By Robert Rapier on Mar 12, 2014 with 19 responses

Why Biofuels Tend to be Costly

Tags:

Catching Up

I have gotten some inquiries about my status, as I don’t typically go two weeks between posts. I am fine, but it’s been a very busy two weeks. There was lots of travel, lots of deadlines, and in between I worked in a trip to Hawaii to spend a few days with my family. I got to be there for my oldest son’s 18th birthday, and then helped chaperone an overnight camping trip for my son’s 5th grade class on the beach in Hawaii. I must say I never got a school field trip like that in elementary school in Oklahoma!

This week I am back in Arizona, where I continue to work on a project. Next week I will be in Washington, DC to sit on a panel at the 2014 Methanol Policy Forum. My panel is called “Unlocking Our Vehicles to Methanol.” I just cleared my last pressing writing deadline, and there are two topics I want to write about. One is the situation with natural gas inventories. The next Weekly Natural Gas Storage Report will be released tomorrow (March 13th), and I will put up a short post following that. So today I will address the other topic that’s been on my mind.

The 60 Minutes’ Edits

During my interview with Lesley Stahl, we discussed a lot of things that I wish had been aired. In fact, I told one of the producers that I think they could have avoided a lot of the fallout if they had aired more of my interview, because I presented a more balanced view than was presented by the overall story. As I said during my interview, the issue of cleantech isn’t black and white, or good versus evil. It is a complex story with many angles, and an attempt to reduce it to black and white was certain to create controversy.

As I mentioned in a previous article, Lesley’s questions to me were balanced. At one point she posed the following question about biofuels. Paraphrased, it was essentially “Doesn’t it make sense that we should power our transportation system with renewable fuel?”

I explained that we can rationalize that this is true in concept, but isn’t achievable in reality. She asked why, and I said “The first thing is that we can’t possibly grow and process enough biomass to replace 90 million barrels per day of oil. Theoretically we might be able to do it with algae, but we start to run into some big practical problems there as well. We ARE displacing a small fraction of our oil consumption with biofuels like ethanol, but the goal of displacing a large fraction starts to run into issues with cost.”

Why Biofuels are Costly

So she asked why biofuels have a hard time competing with oil on price, and I gave her the following basic explanation, which is what I wish they had aired.

Photosynthesis is a very inefficient process. Solar energy is converted into biomass at a rate of only 1 percent or so, which is a fraction of the energy conversion that can be achieved with a solar panel. But a big advantage of photosynthesis is that the biomass that is produced is built-in energy storage. It’s just that it has to be processed if that biomass is to be used as transportation fuel.

The creation of fossil fuels was also accomplished via biomass that was produced inefficiently from photosynthesis. However, in that case nobody had to plant the biomass. Nobody watered or fertilized the plants. Nobody had to harvest biomass and transport it to a facility for processing. Instead, Mother Nature grew and accumulated it year after year after year, and then the internal heat and pressure of the earth cooked the biomass into coal, oil, and natural gas. Left behind were these huge deposits of high energy-density hydrocarbons. In the case of oil, we harvest an easily transportable liquid with high energy density, and then refine it into the specific products we desire.

In the case of the vast majority of biomass to fuel schemes, we have to live with the inefficiency of photosynthesis in real time. We can boost that efficiency by adding fertilizer, but that of course adds to the cost and generally increases the fossil fuel inputs into the eventual biofuel that is produced.

That very low efficiency that wasn’t a problem when Mother Nature had lots of time suddenly becomes a very real and costly problem. Each year we have human inputs just to grow the biomass, harvest it, and transport it for processing. The resulting biomass has very low energy density compared to oil, and thus transportation costs are higher.

This isn’t a knock on biofuels, it is the simple reality of why biofuels have a difficult time competing on cost. Whenever I hear someone claim “Renewable energy creates more jobs”, I know that they are right, because with biofuels you have to replace many of Mother Nature’s free inputs with human labor. In other words, renewable energy creates jobs because it takes more people to make a unit of energy. That ultimately translates into higher cost.

Of course one way to address this is to use waste biomass. The challenge with waste is that it still usually isn’t free, and it is often of inconsistent quality and mixed with undesirable components. One of the best sources of waste biomass in the world is the residual biomass from sugarcane processing. This bagasse is already washed, pulverized, and at a factory as a result of the extraction of the sugar. (See my article Why Sugarcane Bagasse is the Most Promising Pathway for Cellulosic Ethanol). Waste biomass is the lowest hanging fruit, and should be utilized to the fullest extent before growing crops to produce advanced biofuels.

Conclusion

I explained all of this to Lesley in a more concise manner than I have here, and I could tell that my explanation resonated with her. I hoped they would air this exchange, because I felt it would help people to really understand one of the basic challenges in trying to displace oil with biofuels. Alas, they went a different direction with the story, so I share my thoughts with readers here.

In closing, note that I am not suggesting that we should abandon attempts to produce fuel from biomass. I am working on a project related to that myself. I just want to help people grasp the challenge in doing so at a cost point competitive with oil.

Link to Original Article: Why Biofuels Tend to be Costly

By Robert Rapier. You can find me on TwitterLinkedIn, or Facebook.

  1. By Forrest on March 13, 2014 at 7:55 am

    Well, it’s a Red Herring to dismiss biofuel per inability to meet entire energy demands of country. Most enthusiasts focus on light vehicle transportation fuel per alcohol production. The work on drop in fuels a long way to prove itself per economics. Biomass continues contribution to heat energy and a valuable versatile and universal fuel of the masses. I read an article that EPA could do more to maximum benefit to environment within minimum time period per bumping common pellet and wood stove efficiencies per the EPA II regs. These fuels usually cheaper than natural gas per space heating and provide stability for back up heat source per outages and price fluxuations of once source susceptibilities.
    What you post on job creation, is a big benefit to ethanol. It does take more jobs to produce equivalent ethanol. Middle class jobs spread out over more small local American businesses as compared to international corporations whom can spend large amounts of capital to maximize efficiency. Ethanol put puts trucks around delivery fuel as compared to super tankers floating upon dangerous military guarded waterways. Also, not to good to be exposed upon international markets of petrol when Russia is commanding control of the spigot. Our country has emergency backup per light truck and auto per ethanol industry. True, just a low percentage of fuel, but a backup and valuable component.

    [link]      
    • By Robert Rapier on March 14, 2014 at 11:55 am

      “Well, it’s a Red Herring to dismiss biofuel per inability to meet entire energy demands of country.”

      Reread the last paragraph of my article. But in short, the human inputs that are required by biofuels drive up costs relative to fossil fuels. There are some special circumstances in which biofuels can compete, but even corn ethanol, for example, has a big assist from fossil fuels. Not a lot of people realize the level of reliance of the corn ethanol industry on cheap natural gas inputs. Thus, those inefficiencies are somewhat compensated for in this way.

      But as I have said before, I think E85 could be competitive in the Midwest. I also think palm oil in Malaysia and sugarcane ethanol in Brazil can be competitive. These are generally highly productive food crops on very fertile land, in many cases land that was fertilized with fossil fuel inputs. Beyond that, the list of competitive fuels shrinks dramatically due to the human labor input requirement and low energy density of biomass.

      [link]      
      • By Forrest on March 14, 2014 at 1:36 pm

        It’s always the little inventions, improvements, that when stacked upon each other over long duration make for success. Plenty of examples in business world for that point. Biofuel has an excellent start and future looks to be brighter. The subject is broad and much of it confused with clean tech, drop in fuels, and the myriad process combinations as well as feed stock. Corn ethanol took a beating per some supercilious arguments of eating vs fuel and mpg calculations that claimed ethanol wasted more energy than it created, engine parts deteriorating…a whole pant load of propaganda that intertwined with politics and had been aided and abetted by competitive marketing practices (dirty pool).

        Cellulose ethanol feedstock is more diverse such as the most plentiful, wood. Waste ethanol may help in spreading production, as well. A few pipelines would enable cost effective distribution out of Midwest. The cellulosic process should offset the current ethanol plant practices of using NG or propane. The lignin leftovers great for that. Most plants are not utilizing the CHP turbine generators for improving energy utilization. I would bet on invented automation and process improvement to minimize labor costs. Industry is good at that. I agree the fuel will have a long growth cycle with unknown potential. To claim the fuel will replace gasoline is foolish. The best use of ethanol is to improve gasoline. The E30 blend very attractive and hopefully eliminate those nasty aromatics or benzene? Not sure on my petrol chemistry but have often read E30 can replace the most environmental and health damaging portion of gasoline. Hopefully that constituent can be reformed into friendlier hydro carbons?

        [link]      
        • By Robert Wilson on March 20, 2014 at 11:18 am
          [link]      
          • By Robert Rapier on March 20, 2014 at 11:34 am

            Ultimately everyone will say they saw this coming, but to my knowledge I am the only person who predicted bankruptcy for them this year.

            [link]      
            • By Forrest on March 20, 2014 at 5:45 pm

              Kior did attract a lot of attention and bio headlines per their amazing cost projections. This shakes my confidence upon the countries chosen leadership abilities to discern scientific and business information. I would think Mitt Romney type could have reviewed the books and quickly found the weakness even without industry experience. Robert called this one and scary to think he stood alone.

              It would be most interesting to have access to Kior’s evaluation of market and competition. Will management continue to blow smoke and offer the saving grace explanation that they couldn’t attract sufficient financing for future economic success? Hopefully, they threw in towel per competition as that would be a healthy transition per a maturing economic sector. I’m chuckling per memory of T.V. interview with Vinod spewing the management book dejour wisdom of many failures and one great success. I do know common people who have Warren Buffet wisdom to cut through the bull and hard wired with BS indicator. Warren success in the final review, whether to invest is to talk to CEO and evaluate the bull from the competence.

              [link]      
      • By Forrest on March 15, 2014 at 9:18 am

        To balance out the sunshine per RR concerns. Corn stover the first prime mover of cellulosic ethanol. Material handling the biggest concern as the energy content so low. The industry is settling on rectangle bales per efficiency of storage and transportation. Bales are one ton each and per state of the art conversion 80 gallons ethanol per bale. The two 2014 production plants have name plate capacity of 25-30 million gallons/yr. The process requires a one ton bale every 30 seconds or 900,000 bales per year. Transportation requirements, 25,000 semi loads, 300 farm tractors. The process could produce 45,000 tons ash per the farm ground contamination of bales. Interesting improvement per Dupont and ISU study. They were able to drop handling cost 43% from $91/T to $52/T. This translates to dropping cost of ethanol $1/gallon. That’s a head banger stat on importance of efficiency of material handling! The improvements- increase harvest/acre to 50% to concentrate geographical harvest (less distance) per agronomic info. Increase bale density. Semi trailers loaded to max weight restrictions. Lean manufacturing review to minimize equipment and process steps. Capture stover exiting combine before hitting ground to minimize ground contamination, moisture absorption, and combining process step. Personal note: My Industrial Engineer abilities particularly succeeded upon methods, mechanization, and increasing efficiencies such as these. My instincts….material handling costs will dramatically improve from farm to processing tank. The lessons learned have tumbled over for benefit of sugar cane processing as well. Also, the cellulosic processes will improve corn ethanol gallons/bushel and convert lower quality DDG to higher quality albeit less volume. The cellulosic process have clear potential to double ethanol volume of corn ethanol. Add to that the farm production of hybrid plantings for cellulosic production and were getting into serious fuel production for country.

        [link]      
        • By Robert Rapier on March 15, 2014 at 12:36 pm

          This highlights why I say that bagasse is a better starting material. That material has already been handled and is at the plant due to the extraction of the sugar.

          [link]      
          • By Forrest on March 15, 2014 at 6:42 pm

            Sugar cane is presently on hot seat for cellulosic ethanol conversion per corporate technology and what your say a good application. Sugarcane produces high tonnages of biomass as well. Currently they make good use of sugar saturated bagass as boiler fuel, but still have much to convert to ethanol. Rural plants don’t have access to NG. Brazil is also introducing sweet sorghum in between sugar cane plantings as a rotation crop since processing and harvesting equipment the same. U.S. is expected to produce more sorghum for ethanol, as well, since the plant is more tolerant of bad weather conditions and can be genetically tweaked to biomass, sugar, or grain production. The sugar production is quite impressive, but very sensitive to harvest conditions. Sorghum has the impressive advantage of being a forgiving reliable crop much suited to poor rural areas of world. The great promise of helping these areas develop a cash crop. Ethanol appears to help the smaller businesses, a much admired and respected hallmark of U.S. economy. Citizens can aspire to gain more wealth upon our shores…a good thing.

            [link]      
  2. By Forrest on March 13, 2014 at 9:47 am

    I reread and realized you did restrict to biofuel.

    Cellulosic processing technology is helping sugar cane bagasse ethanol future as the processes is currently attractive per economics. Also, corn kernel fiber and field corn residue enjoy same improvements to cellulose processing. Note some think harvesting any bio mass from farm field will detract from field fertility. This has not been proven per agricultural field tests. As I understand their is an optimum level of residue in which runoff, nitrogen, particulate carbonaceous matter, etc. need to balance per farming practice i.e. low till. Scientist have learned roots, bacteria, mold do most of the heavy lifting as well as a large portion of carbon sequestration. Low till and mold inoculation of soil tremendous improvement of farming not presently accounted for in all environmental impact studies. The corn plant can produce as much ethanol as the corn itself, but field harvests of plant material restricted to no more than 30%. Most take a fraction of that. But remember, we only take a fraction of corn to produce ethanol so basically the plant material could double field corn ethanol production. Also, these corn ethanol plants expected to combine with the process of cellulosic ethanol per new yeasts process. The separate and combined processes more capable, environmentally friendly, and economic competitive than the separate parts. The cellulosic process half has ability to process a wide range of cellulose material, a great advantage upon price fluxuations of feed stock. Production tests demonstrate 80 gallons of ethanol per ton biomass with added benefit of lignin leftovers with energy density of coal for use in boiler and steam generation of power.
    Also, the mix can be flexed to optimize ROI per market demands of feed, fuel, food, electricity, bio-gas, and chemical production. This is all shaking out to invent best product mix i.e. biodiesel or corn oil staple.

    [link]      
  3. By Joe Clarkson on March 13, 2014 at 7:29 pm

    Liquid fuels from cultured crops are just another way of turning natural gas and natural gas based chemicals into something that can run an internal combustion engine. The EROI is minimal, the crops would have been better used as food and the quantities are tiny compared with petroleum fuels. Cellulosic ethanol is a little better, but the bagasse you mention should probably be returned to the soil as much as possible. By now most ag land has little organic carbon content and most agriculture requires a higher caloric input from fossil fuels and chemicals than are obtained from what is grown. I think a better bet for supplementing our liquid fuel supply would be gas-to-liquids.

    But it has only been recently that biofuels have necessarily become marginalized. Biofuels were essentially the only fuels for thousands of years; wood for heat and fats and oils for light. A good overview of the place of wood as one of the foundations of civilization is John Perlin’s book; A Forest Journey: The Story of Wood and Civilization. It is fascinating how important wood was as a fuel, particularly the charcoal that was a crucial part of iron production until the advent of coking coal.

    One of the most sobering realizations I got from reading this book was that even with a world population only a small fraction of today’s, people managed to burn through entire continents of forests quite rapidly. Wood and other biofuels will never be able to be able to regain their place as a significant part of a sustainable energy system until world population is greatly reduced. As the fossil era winds down, this will be more and more likely, uncomfortable as that forecast might be. Wood will then again take its place as the king of fuels.

    [link]      
  4. By Forrest on March 14, 2014 at 7:53 am

    It’s a misnomer to claim biofuel expensive. My local Shell station currently sells E85 for $2.85/gallon vs unleaded for $3.85. E85 has been a buck cheaper since the station installed pumps 6 months ago. It’s not a fair to compare efficiency of photosynthesis to solar cells as it’s an apples to oranges comparison. How efficient is solar cells in producing plant matter? Can SS convert Co2? Improve soil fertility? Be part of the ecology? How efficient is SS to heat a home? Also, plant kingdom is all over the map when evaluating annual tonnage cellulose per acre. The hybrids of grass and popular are very impressive and appear to make the 1,000 gallon ethanol per acre goal achievable. However, the most acceptable plants require no irrigation, fertilizer, no planting (perennials), grow on marginal land, improve soil fertility, sequester more CO2, and improve wildlife habitat. I reviewed my solar radiance and SS power production….about the same BTU production as ethanol. Remember the SS is much less dense as compared to grass as much maintenance required for SS to clean, scrape, inspect, etc. IOWs much access roads and paths.
    The point of transportation cost should be advantage ethanol? Crude has exceptional long pathway to consumer including the pumping and drilling. Only the efficiencies of Super Tankers and pipelines make the product competitive. Pipelines just beginning to transport ethanol, that should help future of the fuel. BioMass is sensitive to transportation costs and Industrial Engineering studies have improved the feedstock cost and have much more efficiencies to capture. The future is trending brighter enabling a profitable farm product. Know that the more profitable farms become, the more food upon the planet. Biofuel does the job and a fallacious argument to oppose food with biofuel production. The farm will produce the most profitable commodity and with more profit more ability to pay for increasingly efficient processes, equipment, land, taxes, etc.. Processing ethanol comparable to crude oil processing, but simpler with abilities to produce more diverse products of feed, food, fuel, and pure CO2 gas. As you say crude oil production is a terrible inefficient process with no annual production nor opportunity to become more efficient. Environmental harm: I was traveling through Midwest during corn harvest and noticed a grain elevator dumping a mountain of harvest grain on ground, No 911 call to EPA services required. We all remember Pharaoh’s tomb containing grain that maintained bio-vitality to grow current ancient grain crop. They made beer out of the crop for fundraiser. How long can you store electricity? Petrol yes! Last year a truck load of ethanol leaked into stream, but no one noticed. Maybe the aqua life suffered a hangover?
    The biggest obstacle to ethanol is regulation and what ever obstacle to automotive to develop ethanol optimized auto’s. Once that occurred, the fuel would jump several notches in praise of consuming public.

    [link]      
  5. By Thinking_Ape on March 14, 2014 at 9:32 am

    Just saying that biofuels/biomass isn’t currently able to completely replace the world’s current oil consumption is beside the point. I think it’s reasonable to expect that there will be lots of contributors to solving the problem of transportation going into the future and especially in the mid term biofuels will be one. It can be easy to forget that ten years ago ethanol contributed almost nothing and now it is 10% of motor fuel in the US.

    [link]      
    • By Thinking_Ape on March 14, 2014 at 9:40 am

      As an additional note, it can be difficult to imagine the magnitude of change that happens over mid-long time scales. The magnitude of change in energy consumption that occurred over the middle five decades of the 1900s was very dramatic followed by essentially status quo for a few decades. We are probably in the midst or on the brink of another change which may take longer but in the end the results may be just as dramatic.

      [link]      
  6. By ben on March 20, 2014 at 7:23 pm

    In reading Forrest’s ramble about biofuels (ethanol), to include his most recent commentary on KiOR. I have but one thought: refill his Zyprexa. Amazing how improved materials handling/processing can somehow translate into competitive production costs vis-a-vis fossil fuel-derived energy supplies. I guess there are Newtonian principles here that have escaped the understanding of extremely capable scientists and chemical engineers who’ve worked this stuff for the past century. Guess I’m just a bit too dull to grasp how recent biofuel breakthroughs
    now make the spinning of straw to gold a credible feature of the biofuels marketplace.

    Gosh, If I’d know this was imminent, I would have bought up as many hay fields as I could have possibly found. Now, all the farmers with large, wide-open pastures will become as prosperous as all those ranchers and farmers who’ve leased their ground to those damn frackers! I doubt these guys will even need to raise food crops anymore. Hey, won’t that contribute more fodder to the food vs, fuel debate? ;)

    Alas, Is there no justice for the poor soul who has little land and even less entrepreneurial sense? I guess we’ll just have to keep our eyes open for the next really big deal. I think I need to get me one of those clever groups over their in the SF Bay area who are so expert in them there gold from straw techniques!

    Hope to hear more about progress with the new penny stock; you known,
    the$15 IPO and the beneficiary of Tinker Bell’s magic wand not so very long ago. Quite a story! Why, I’d put it right up there with ‘Solyndra-rella’ :)

    Ben

    [link]      
    • By TimC on March 21, 2014 at 9:52 am

      “Solyndra-rella,” very nice, I like that.
      If KiOR had built their Columbus plant at oil refinery scale, about 200,000 barrels per day, it might be making money. They didn’t build it that big, because 1) It would have cost at least $4 billion, and 2) It would have consumed about 80,000 tons of wood chips per day, more than is available in Columbus, or anywhere else. These are the “Newtonian principles” that cellulosic biofuels in general have yet to address. Until someone explains how to supply feedstock to oil-refinery scale biorefineries, there is no point in building any more biorefineries. Tiny little 1,500 barrel per day biorefineries are neither economically viable nor relevant in any way.

      [link]      
      • By Robert Rapier on March 21, 2014 at 10:32 am

        There used to be a guy who posted here a lot, and I was convinced he was an ethanol lobbyist. He would always say that he foresaw these small biorefineries all across America. And I would say “At small scale the capital costs kill you, and at larger scale the logistics kill you.”

        [link]      
        • By TimC on March 21, 2014 at 12:18 pm

          And labor. Capital and labor costs are the two killers for any small-scale commodity plant. KiOR Columbus has about 80 employees, at least $10 million per year payroll, making less than 20 million gallons per year of product. $0.50 per gallon labor costs will not cut it for any fuel or commodity product.
          This is not just true for biofuels. Back in the 1990s Syntroleum tried to commercialize small, skid-mounted F-T plants for converting stranded natural gas to diesel. Technically it was a slick idea, but it never caught on, because the capital and labor costs of making a few thousand barrels per day of diesel just don’t make sense, even using nearly-free NG feed. If you want to produce fuels or commodity chemicals, go big or go home.

          [link]      
          • By Forrest on March 21, 2014 at 2:56 pm

            Ethanol biofuel conversion process appears to be more capable. Per the 80,000 t/day example were talking 2-1/2 billion gallons of $2/gal CBOT fuel. Also, the enzyme chemist claim they are on the path to achieve higher efficiencies, from present day 80 to 100 gallons ethanol per ton biomass. Also, the ethanol processing equipment not as expensive since the corn ethanol production have paid most the freight and the two processes together improve costs. Enzyme cast has dropped dramatically past 4 years.
            A competing technology per MIT research and U-Wisconsin enhances process of drop in biofuels. It’s a low cost solvent derived from plant matter that actually is created during the process. This GVL solvent will broaden the biomass process conditions and greatly reduce acid and water requirements. The process need not be a batch process and can produce valuable chemicals or high density drop in fuels. Capital cost for bio-refineries would drop 30%. Cost of waste removal less.

            [link]      
Register or log in now to save your comments and get priority moderation!