Biofuels Have Questionable Path As New Fuels for Transportation

June 2009 Vol. 236 No. 6

Carol Freedenthal, Contributing Editor

In recent years, fossil fuels, particularly coal and crude oil products, have become politically incorrect. Though they account for more than 75% of all fuels used in the U.S., for a handful of reasons, some groups want to replace them.

The environmentalists are after them because of the ways they are produced from Mother earth, processed and refined and for the combustion products released which included large amounts of “greenhouse gases” (GHG). Economists are after them because of the tremendous impact on the U.S. balance of trade from buying about 14 million bpd of oil from foreign sources.

In the major segments of the U.S. where fuels are used – transportation; heating; electric generation and industry for heat and raw materials – there are some alternatives already on the scene making inroads as possible substitutes. They will not significantly replace fossil fuels in the short term for two reasons: first, it takes time and money to develop wind, solar, biofuels, and nuclear and, just as important, some of the same groups that oppose fossil fuels do not like the alternatives!

Nuclear supplies about 20 percent of the energy for electric generation. Though there is renewed emphasis on using nuclear as a power generator, no new plants are on the drawing board and cost, safety and public opinion will play a role. Wind and solar are drawing attention as electric generators but still play relatively small roles. Wind and solar provided just 1.3% of U.S. electric generation in 2008. They face a long, slow climb before they can begin to replace coal and natural gas in electric generation.

Biofuels become important in transportation. Liquid fuels are the major products used today. Regardless of how the all-electric car develops, liquids will still be needed for the next couple of decades.

Already biofuels have established a place in this market. They are liquid fuels produced from biomass materials and fall into two major groups: ethanol and biodiesel. In 2007, the latest full-year data available from the Energy Information Agency (EIA) shows 6.7 billion gallons of ethanol and 358 million gallons of biodiesel were consumed in the U.S. To compare against total liquid fuels consumed in the same year for transportation, 136 billion gallons of gasoline and 53 billion gallons of diesel fuel were used (not inclusive of biofuels) meaning ethanol comprised less than 5% of the gasoline market and biodiesel was about 0.7% of diesel products sold.

Ethanol – the same alcohol in beer and other beverages – arose as a second-generation biofuel and is now the leading biogenerated fuel. It replaced the methanol compound, methyl tertiary butyl ether (MTBE), which was initially added to gasoline to make its combustion products more environmentally friendly. MTBE was phased out when concerns were raised about leakage of methanol compounds into groundwater systems. Ethanol gained additional market share because of government rulings; the Renewal Fuel Standard requirements of the Energy Policy Act of 2005 played a big role in promoting ethanol.

In December 2007, the Energy Independence & Security Act of 2007 increased the amount of renewable fuels to be incorporated in gasoline to 36 billion gallons by 2022. Ethanol produced in the U.S. is made much the same way beer is produced from fermentation of grain or other agriculture products.

Corn is the preferred raw material in the U.S. but other agricultural crops heavy in starches or sugars like sugar cane and barley can be used. Cellulosic materials like woody biomass from tree bark or switchgrass can be used to make what is called “advanced” biofuels. A much more complicated process is needed for fuels from these raw materials.

Almost all cars can use up to a 10% blend of ethanol in gasoline (E10 gasoline). Additional changes in the car are believed necessary to reach higher amounts. These “flex-fuel” cars use a blend up to 15% ethanol (E85 fuel). As of last August, 1,400 of 170,000 gas stations in the U.S. sold E85.

The other major fuel available from renewable sources is biodiesel. Chemicals containing fatty acid methylesters can be used totally as diesel fuel or combined with petroleum-based diesel fuels. Agricultural crops such as soybeans or canola are the major raw materials as are waste-cooking fats from restaurants. Biodiesel blends are named by the amount in the final fuel. B20 is a blend of 20% biodiesel and 80% diesel oil.

These are the current generation of biofuels for the transportation segment. Each has some advantages that will keep them in competition while other biofuels are developed. But they also have some severe disadvantages that make it possible for a new generation of liquid biofuels to emerge.

Major advantages range from domestic production and keeping the cash in the U.S., continuous production without worry of depleting a believed fixed resource, and improvement in the environment. Even though the biofuels release carbon dioxide on combustion, because the raw materials for the fuel come from crops, it is considered that no new carbon dioxide is being released.

The list of disadvantages is long, especially for the use of ethanol as a gasoline additive. This is especially true for U.S.-produced ethanol since corn, a major food source, is the feedstock for the fuel. While Brazil uses sugar cane for the raw material, import tariffs now restrict the use of foreign ethanol. Many believe the demand for ethanol for fuel has increased food costs because of higher corn prices while hurting ethanol’s cause as a fuel additive. At the same time, tight credit markets have hurt plant and production expansion.

Besides the economic problems with ethanol – which are helped considerably by government subsidies – it has many technical problems. How much can be used in engines before hurting the machine; transportation, now limited to truck or railcar; efficiency as a motor fuel and even the question of whether it ultimately does help the environment all need to be resolved.

At best, current analysis concludes that ethanol as a renewable fuel is marginal or even negative. This is seen in the marketplace as numerous ethanol facilities have shut down and production is far below capacity. In early May, Texas’ largest ethanol producer sought bankruptcy protection claiming “high raw material costs coupled with low ethanol prices led to minimal or nonexistent profit margins.”

According to the trade organization for the ethanol industry – the Renewable Fuel Association – about 16% of the 12.6 billion-gallon capacity of U.S. production is shut down.

The biofuels used to replace diesel or as an additive are much more practical and efficient but the problem is supply. For these reasons, a new generation of biofuels is in constant research and production. The potential for new raw materials outside of the food chain and new processes to yield more efficient fuels is tremendous. Crops with a higher yield of fuel per pound of crop, a more efficient fuel and cheaper to produce are in the latter stages of research. Switchgrass and similar crops are under evaluation but some of the most exciting research is on algae as a source of fuel.

Algae has tremendous potential because of its ability to grow fast, absorb carbon dioxide and provide so much feed for making fuels. Under ideal conditions, algae can double its weight overnight. Compared to the most efficient crop source of biodiesel – the palm tree that yields about 20% of its weight in oil – algae can supply up to 50% of body weight as oil. It is estimated soybeans produce 50 gallons of oil per year per acre; palm can produce about 650 gallons per year per acre. Algae is estimated by some capable of supplying 10,000 gallons per year per acre.

Developing new bacteria and other bio-agents that can take various biomasses and “digest” them into specific high-performance fuels is very attractive. A California company claims it could be selling gasoline made from algae by 2011.

President Obama last month issued a directive forming a multi-agency task force for biofuel development. It includes the secretaries of Energy, Agriculture, and the Environmental Protection Agency. He also announced another $786.5 million from the stimulus package would be available for biofuel research and development and biofuel refineries.

Biofuel development and eventual production will play a major role in the U.S. quest for energy independence amid environmental concerns. As the technology and the demands change, exactly what sources and processes will end up as the best solution is open to many alternatives, some now only on the fringe of development. Hopefully, economics and technology will play key roles in determining best products and processes.

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