Biofuels could make up 10% of world's fuel mix

Shell exec calls them "vital"
July 9, 2008

Rob Routs, Executive Director of Oil Sands, Oil Products & Chemicals at Royal Dutch Shell, gave a speech in Germany on July 4 predicting that biofuels could come to represent 10% of the global fuel mix. Excerpts from the speech posted on Biofuel Review:

I think biofuels could grow from a mere one percent of the world fuels mix today to as much as 7 or 10 percent over the next couple of decades.... I want us [Shell] to lead in that space; and to that end we decided in 2007 to increase our rate of investment in them — quadruple it, in fact.

To hear some tell it, all of today’s, or “first-generation,” biofuels are a disaster and should be written off. But let’s be clear: when it comes to truly sustainable, low carbon biofuels, we can’t open the taps overnight.

We still need more innovations to lower the costs and raise the yields. We still need to learn more about sustainable production. We still need to develop markets and use them to scale up capacity. We still need first-generation biofuels, both to meet mandates and to build capacity for the next generation.

Shell is in the biofuels game to win:

In addition to using conventional fossil fuels more wisely, we also are working hard to develop alternative, low-CO2 sources of energy. In the first half of this decade, we invested more than $1 billion in alternative energies including GTL, hydrogen, and biofuels.

We’ve been working for thirty years on turning natural gas to liquid — what we call GTL...In fact, we already blend it with conventional diesel fuel and sell it in more than 4,000 Shell service stations in Europe and Thailand.

We have teamed up with a number of major cities around the world to see if GTL could have a positive impact on air quality and CO2 emissions in busy urban environments. The results are promising. The most recent test data, announced in Shanghai last September, showed that Shell GTL Fuel used in buses can reduce CO2 by 4%, particles matters by 35%, and black smoke emissions by 70% compared to conventional diesel.

Hydrogen is a possibility for the future, but biofuels — though not a “silver bullet” — is the near-term answer, according to Routs:

There are obstacles to be overcome, but hydrogen could become a commercially viable transport fuel in the years to come.... Unfortunately, the widespread use of hydrogen as a power source could take a decade or more. We need to find nearer-term alternatives, which is where biofuels come in....

In 2007 we sold more than 5 billion liters — mainly to meet government mandates — and we continue to build our capability.

If not managed carefully, they can sometimes compete for land with food, consume a lot of water, or disrupt biodiversity or local cultures. It varies tremendously but some of today’s biofuels also deliver only modest CO2 benefits — compared to conventional gasoline or diesel. Looking to the future, these disadvantages could be overcome by next-generation biofuels, which are already starting to show their promise. These are biofuels that use non-food raw materials and that deliver CO2 savings of as much as 90 % compared to conventional gasoline and diesel. They are going to be vital part of the fuels mix in the future.

The full text of his speech can be read here.

posted by Stephanie Cohen | 2:50 pm
File As: Biofuels

Start-up plans to use CO2 emissions to produce biofuel

A marriage made in alternative-energy heaven?
July 9, 2008

The DTN Ethanol blog has a post about Sequesco, a start-up company that is “using synthetic biology to produce advanced biofuels.” The company’s plan is to take carbon dioxide from coal plants and biorefineries and feed it into the firm’s bioreactors, where “large colonies of bacteria would use the greenhouse gas and a nutrient broth to produce ethanol, biodiesel and other valuable byproducts.” Interesting stuff:

Sequesco joins a list of startup companies using synthetic biology to produce advanced biofuels, the Industry Standard said. “But unlike competitors SunEthanol and Amyris, which are engineering microbes to make cellulosic ethanol from various plant biomass sources, it uses waste carbon dioxide as its primary feedstock. The idea is to pump CO2 from large emitters like coal plants or biorefineries into the firm’s bioreactors, in which large colonies of bacteria would use the greenhouse gas and a nutrient broth to produce ethanol, biodiesel and other valuable byproducts. The protein-rich byproduct could be sold as animal feed or fertilizer, while the lipid-rich byproduct could be converted into bioplastics,” the Industry Standard said. “This is similar to what GreenFuel Technologies, a Cambridge, Mass.-based algal biodiesel maker, has been doing. It pipes in CO2 from power plants or industrial processes through large ponds filled with algae to make them grow and then harvests them. Sequesco’s business model can best be described as a hybrid between what GreenFuel and Amyris are doing. Sequesco’s bacteria grow 10 times faster than most algae raised for biodiesel, and because they are non-photosynthetic, they can be grown 24 hours a day, rain or shine. Area isn’t a constraint for the bugs (only volume is), so they can be cultured in conventional, low-cost bioreactors. Since space isn’t an issue, there’s great potential for scalability and the bioreactors can be installed almost anywhere.”

For the basics of synthetic biology, check out this New Atlantis article: “The Promise and Perils of Synthetic Biology.”

posted by Stephanie Cohen | 11:46 am
File As: Biofuels, Business of Energy, Alternative Energy

Brit report hammers biofuels

July 8, 2008

The Renewable Fuels Agency (a U.K. group) released the so-called Gallagher review on July 7, a report assessing the “indirect effects” of greater biofuels production. The report was requested by the British government.

Ed Gallagher, chair of the Renewable Fuels Agency, laid out the report’s conclusions:

At this stage more caution and discrimination are needed. With little sign of the developed countries losing their appetite for travel and millions of new motorists expected in rapidly developing countries such as India, China, Russia and elsewhere, better fuels are needed, along with other well documented measures. We cannot afford to abandon biofuels as part of a low carbon transport future. Equally, we cannot continue producing biofuels which are ultimately more environmentally and socially damaging than the fossil fuels they seek to replace.

Other conclusions:

  • There is a future for a sustainable biofuels industry but feedstock production must avoid agricultural land that would otherwise be used for food production. This is because the displacement of existing agricultural production, due to biofuel demand, is accelerating land-use change and, if left unchecked, will reduce biodiversity and may even cause greenhouse gas emissions rather than savings.
  • The risks of indirect effects can be significantly reduced by ensuring that the production of feedstock for biofuels takes place on idle and marginal land and by encouraging technologies that utilize appropriate wastes and residues.
  • At present, feedstock for biofuel occupies just 1% of cropland but the rising world population, changing diets, and demand for biofuels are estimated to increase demand for cropland by between 17% and 44% by 2020. However, the balance of evidence indicates there will be sufficient appropriate land available to 2020 to meet this demand.
  • Increasing demand for biofuels contributes to rising prices for some commodities, notably for oil seeds, but the scale of their effects is complex and uncertain to model.

To read the executive summary go here. To read the entire report go here.

The British government responded to the report before Parliament; the responding minister noting that “Professor Gallagher’s findings are particularly significant in the context of ongoing debates about biofuel targets across the EU.”

posted by Stephanie Cohen | 5:29 pm
File As: Biofuels

SAFE reports on second-generation biofuels

July 8, 2008

A report from Securing America’s Future Energy (SAFE), “The Truth About Biofuels,” argues against reliance on liquid biofuels, concluding that 1) “there are drawbacks as well as advantages” to liquid fuels, 2) the limitations of corn-based ethanol have become clearer, and 3) second-generation biofuels (cellulosic ethanol) also have some of the same limitations. The report’s take on corn-based ethanol:

It is easy to understand the appeal of corn ethanol. At first glance, it appears to be everything that oil is not. It is renewable. It is domestically produced. It is clean (or cleaner, at least). But it has become increasingly clear to even casual observers that, like perpetual motion, what looks good on the surface may in fact be just a mirage.

The report summarizes all of the news and events that have led to a backlash against corn-based ethanol. On the topic of second-generation biofuels, the report — not surprisingly — finds that it, too, is seriously flawed:

Cellulosic ethanol...has distinct advantages over corn ethanol, but it is not perfect. The end product of cellulosic production is chemically identical to corn-based ethanol, meaning that it also has a lower energy concentration than traditional gasoline, and that it faces the same infrastructure challenges. In addition, some of the crops suitable for 2nd generation biofuels can become invasive species if introduced to certain regions. For example, jatropha is not a problem in its native India, but it can be an invasive weed in other areas, hindering agriculture later.

Maybe third-generation biofuels — “commercially viable liquid biofuels that combine the low cost of cellulosic feedstock with an output that can be transported and distributed using current pipelines and tanks, and burned in conventional engines” — are the answer?

Not likely, the report says. “All of these investments are designed to test fuel technologies that appear successful at the lab scale but have unanswered questions about cost and scalability for commercial use. It appears increasingly likely that some strong alternatives to cellulosic ethanol may appear on the market well before ethanol production reaches the scale of requiring substantial new infrastructure and engine modification investments.”

If biofuels and “all liquid fuels” are out, what’s in? “The electrification of the transportation system — with advanced biofuels providing critical bridging technology — may be the true path to energy security.”

SAFE’s advisory board includes lots of former senior White House staff and agency officials from the Reagan, Clinton, and Bush administrations. Roger Ballentine (chairman of the White House Climate Change Task Force and deputy assistant to President Bill Clinton), Rand Beers (senior director for combating terrorism for President George H. W. Bush), F. Henry Habicht II (deputy administrator of the Environmental Protection Agency and assistant attorney general at Department of Justice under the Reagan administration). The group says its aim is to reduce America’s dependence on oil and supports ending a federal moratorium on oil and natural gas production in the Outer Continental Shelf.

The group spent $380,000 lobbying in 2007 and so far has spent $80,000 in 2008, according to The website has a “relationship” map that shows the co-chairs of SAFE. Clicking on each name brings up a map of their professional and corporate connections.

posted by Stephanie Cohen | 1:32 pm
File As: Biofuels

Biofuels’ latest opponent: the weather

July 3, 2008

The New York Times reports on the weather’s impact on crops grown for fuel. The piece takes a look, of course, at the recent floods in the Midwest that may devastate some farmers’ yields. Crops, it turns out, are as vulnerable as oil rigs during a Gulf hurricane. Some of the corn wiped out this year was headed to refineries to be blended with gasoline. The article argues that using food for fuel creates a “new economic hazard”:

As America grows more reliant on corn for its fuel supply, it is becoming vulnerable to the many hazards that can damage crops, ranging from droughts to plagues to storms...

We are holding ourselves hostage to the weather,” said John M. Reilly, a senior lecturer at the Massachusetts Institute of Technology and an ethanol expert. “Agricultural markets are subject to wide variability and big price spikes, just like oil markets.”

posted by Stephanie Cohen | 3:38 pm
File As: Biofuels

Energy Reading

Speculators, Pension Funds, McCain, and Ducks

June 24, 2008

posted by Stephanie Cohen | 4:28 pm
File As: Energy Policy, Biofuels, Energy Politics

Former Ag economist delivers report on biofuel, food prices

June 24, 2008

Keith Collins, former chief economist for the Department of Agriculture (he stepped down in January 2008), has waded into the ethanol food-versus-fuel debate with a new report commissioned by Kraft Foods Global, Inc. The report is titled “The Role of Biofuels and Other Factors in Increasing Farm and Food Prices: A Review of Recent Developments with a Focus on Feed Grain Markets and Market Prospects.” (It’s available here in PDF format.) Kraft has faced higher dairy and animal feed costs this year, which are used to make Kraft food products.

Collins, an economist, concludes that “Many factors are contributing to higher farm-level and retail food prices.” Collins lists seven factors:

  • strong global economic growth (which thereby increases demand for U.S. commodities),
  • the declining value of the dollar (“although recent real trade-weighted exchange rates suggest that the weakened dollar has been less important to corn and other key crops”),
  • reduced supplies of some crops (like wheat and rice, due to adverse global weather),
  • higher energy prices that have increased farm production costs and food processing and distribution costs,
  • changing foreign agricultural policies that insulate countries from higher global prices,
  • increased investment by index funds and other managed investments that probably have increased price volatility but are not likely to have sustained effects,
  • biofuels (“particularly corn-based ethanol”).

About biofuels, Collins says they have been “a major factor for feed grain and livestock markets, with corn used in ethanol rising from 2.1 billion bushels in 2006/07 to an expected 4.0 billion in 2008/09.”

Key points made by Collins in the report:

  • The index of prices received by farmers for all farm products increased by 34 percent over the period January 2006 through May 2008. The index of prices received for feed grains and hay, led by surging corn prices, increased by 144 percent over that period.
  • The expected increase in corn used as a feedstock in ethanol plants from 2006/07 to 2008/09 is equivalent to the production of corn on about 12 million acres. The increase in corn demand due to ethanol is rising faster than growth in corn yields per acre. So long as that situation continues, corn will have to attract acreage from other crops to meet its expanding demand. This shift will mean higher prices for all crops that compete, directly or indirectly, for acreage with corn.
  • Ethanol drivers. There are two important factors that have increased the price of ethanol. First, high crude oil prices and correspondingly-high gasoline prices have helped establish the current level of ethanol capacity. Second, Federal biofuels policies are encouraging continued ethanol production even with record-high and steadily rising corn prices. The ethanol tariff limits U.S. access of foreign supplies; the tax credit enables ethanol producers to pay the equivalent of up to $1.43 more per bushel for corn used as feedstock; and the Renewable Fuel Standard (RFS) mandates steady, undeviating annual increases in ethanol demand.
  • The increase in farm-level prices has contributed to higher retail food prices, which were up 6.9 percent at a seasonally-adjusted annual rate during the first 4 months of 2008. This increase compared with a 4.9 percent increase during 2007.... Higher energy prices, overall inflation, and biofuels are major contributors to recent food price increases. This latter factor – biofuels – is likely to have more of an impact over the next few years as meat production slows due to higher feed costs.

The entire report can be found here.

posted by Stephanie Cohen | 4:23 pm
File As: Biofuels

McCain’s Energy Plan

A Battery Prize, Reduced Car Emissions, and a Flex-Fuel Mandate
June 23, 2008

Republican presidential nominee John McCain sees building a more energy-efficient car battery as central to reducing U.S. energy consumption. He announced Monday that, as president, he would establish a $300 million prize for anyone who creates a battery that can be used with plug-in hybrid car, the type of cars U.S. automakers are currently trying to develop:

[I]n the quest for alternatives to oil, our government has thrown around enough money subsidizing special interests and excusing failure. From now on, we will encourage heroic efforts in engineering, and we will reward the greatest success.

I further propose we inspire the ingenuity and resolve of the American people by offering a $300 million prize for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars. This is one dollar for every man, woman and child in the U.S. -- a small price to pay for helping to break the back of our oil dependency -- and should deliver a power source at 30 percent of the current costs.

(Related: This month, the heads of Ford and GM spoke in Washington at a conference and outlined what they need from Washington to make plug-in hybrids a reality for American consumers.)

McCain also wants to give “substantial” new incentives to carmakers to reduce CO2 emissions:

My administration will issue a Clean Car Challenge to the automakers of America, in the form of a single and substantial tax credit based on the reduction of carbon emissions. For every automaker who can sell a zero-emissions car, we will commit a 5,000 dollar tax credit for each and every customer who buys that car. For other vehicles, whatever type they may be, the lower the carbon emissions, the higher the tax credit. And these large tax credits will be available to everyone -- not just to those who have an accountant to explain it to them.

And he announced his support for the flex-fuel vehicle mandate that New Atlantis contributing editor Robert Zubrin has proposed:

Instead of playing favorites, our government should level the playing field for all alcohol fuels that break the monopoly of gasoline, lowering both gasoline prices and carbon emissions. And this can be done with a simple federal standard to hasten the conversion of all new vehicles in America to flex-fuel technology -- allowing drivers to use alcohol fuels instead of gas in their cars. Brazil went from about five to over 70 percent of all new vehicles with flex-fuel capacity. It did all that in just three years. Yet those same automakers that helped Brazil make the change say it will take them longer to reach the goal of 50 percent new flex-fuel vehicles for America. But I am confident they can do more, and do it faster, in the interest of our energy security. And if I am elected president, they will. Whether it takes a meeting with automakers during my first month in office, or my signature on an act of Congress, we will meet the goal of a swift conversion of American vehicles away from oil.

posted by Stephanie Cohen | 5:23 pm
File As: Energy Policy, Biofuels, Energy Politics

Floods and Food

Midwest floods could mean less ethanol production
June 23, 2008

According to an article in the New York Times on Saturday, the Bush administration may allow farmers to plant crops on millions of acres of conservation land to offset the four million acres of land washed out by the recent floods in the Midwest. Senator Charles Grassley (R.-Iowa) is pushing the White House to approve the plan.

At the same time, various industries are reportedly asking the government to relax federal ethanol production requirements, a move that would free up more corn for animal feed. From the Times article:

In disasters, the Environmental Protection Agency can roll back requirements for ethanol production, which could free up a large amount of corn for animal feed. Mr. Grassley, a strong ethanol backer, rejected that proposition, but in recent days many industries that depend on corn have urged the government to act.

A quarter of the United States corn crop is used for biofuels rather than animal or human food, and the percentage is rising. What this has done to the price of gasoline is debated by ethanol’s critics and defenders, but it has certainly benefited farmers, who have not seen such demand for their corn crop in decades.

On the losing side of the equation have been cattle, hog and chicken producers, as well as consumers. The government’s latest projection, released Friday, is that food prices this year will rise as much as 5.5 percent. Some products, including cereals and eggs, are expected to rise about 10 percent.

An Agriculture Department spokesman said Friday that the Grassley proposal would be considered. This week, the agriculture secretary, Ed Schafer, said his department would consider “everything possible” to aid farmers.

posted by Stephanie Cohen | 3:10 pm
File As: Biofuels

Obama and Ethanol

June 23, 2008

The New York Times today looks at Senator Barack Obama’s support for the domestic production of ethanol, an alternative fuel that has come under fire recently amid global speculation that turning crops into fuel is connected to rising food prices. The article contrasts Obama’s pro-ethanol position to Republican nominee John McCain’s opposition to federal subsidies for ethanol.

The article finds a contradiction in Obama’s efforts to classify himself as a reformer and his support for one of the most powerful and successful lobbies in Washington:

Mr. Obama is running as a reformer who is seeking to reduce the influence of special interests. But like any other politician, he has powerful constituencies that help shape his views. And when it comes to domestic ethanol, almost all of which is made from corn, he also has advisers and prominent supporters with close ties to the industry at a time when energy policy is a point of sharp contrast between the parties and their presidential candidates.

The article also examines Obama’s ties to ethanol-industry companies and groups, and cites Tom Daschle as a central figure.

Nowadays, when Mr. Obama travels in farm country, he is sometimes accompanied by his friend Tom Daschle, the former Senate majority leader from South Dakota. Mr. Daschle now serves on the boards of three ethanol companies and works at a Washington law firm where, according to his online job description, “he spends a substantial amount of time providing strategic and policy advice to clients in renewable energy.”

Mr. Obama’s lead advisor on energy and environmental issues, Jason Grumet, came to the campaign from the National Commission on Energy Policy, a bipartisan initiative associated with Mr. Daschle and Bob Dole, the Kansas Republican who is also a former Senate majority leader and a big ethanol backer who had close ties to the agribusiness giant Archer Daniels Midland.

Not long after arriving in the Senate, Mr. Obama himself briefly provoked a controversy by flying at subsidized rates on corporate airplanes, including twice on jets owned by Archer Daniels Midland, which is the nation’s largest ethanol producer and is based in his home state.

The article also looks at McCain’s opposition to ethanol subsidies, a stance that may well end up hurting him in the general election in farm states:

[McCain and Obama] offer sharply different visions of the role that ethanol, which can be made from a variety of organic materials, should play in those efforts.

Mr. McCain advocates eliminating the multibillion-dollar annual government subsidies that domestic ethanol has long enjoyed. As a free trade advocate, he also opposes the 54-cent-a-gallon tariff that the United States slaps on imports of ethanol made from sugar cane, which packs more of an energy punch than corn-based ethanol and is cheaper to produce.

“We made a series of mistakes by not adopting a sustainable energy policy, one of which is the subsidies for corn ethanol, which I warned in Iowa were going to destroy the market” and contribute to inflation, Mr. McCain said this month in an interview with a Brazilian newspaper, O Estado de São Paulo. “Besides, it is wrong,” he added, to tax Brazilian-made sugar cane ethanol, “which is much more efficient than corn ethanol.”

To read the rest of the article, go here.

posted by Stephanie Cohen | 2:40 pm
File As: Energy Policy, Biofuels