The development of cellulosic ethanol projects is being hit by the global credit crunch and oil price volatility. The timing could not be worse, because now is a critical time for companies to secure funding as they prepare to scale up from demonstration plants to commercial scale biorefineries.
But the news is not all negative. In the US, which is leading the development of cellulosic ethanol, the new administration is hugely supportive of renewable fuels and is expected to mandate higher ethanol in petrol. At the same time, in the absence of traditional financing routes, some cellulosic ethanol companies are securing partnerships with large multinationals, including BP, Shell and DuPont.
US president Barack Obama is placing an emphasis on climate change issues and cutting greenhouse gas emissions (C&I 2009, 7, 5), and commentators are expecting a renewed focus on the development of second-generation technologies, such as cellulosic ethanol. Cellulosic ethanol companies in the US have already enjoyed considerable support under former president George Bush’s energy security strategy.
Two studies, published in February 2009, have shone positive light on cellulosic ethanol – a biofuel produced from wood, grasses or the non-edible parts of plants. A joint report by Sandia National Laboratories, part of the US Department of Energy (DOE), and General Motors (GM) says that the US has enough land, water and transport capability to make enough cellulosic and corn-based ethanol to displace one-third of its petrol needs by 2030.
At the University of Minnesota, researchers suggest that cellulosic ethanol has fewer harmful effects on human health and the environment than previously thought. According to their study, cellulosic ethanol’s environmental and health costs, such as particulate matter, an especially damaging component of air pollution, are less than half those of petrol (PNAS 2009, 106, 2077).
As Obama defines his energy policy, the authors of the Sandia/GM study stress the importance of incentives, such as carbon taxes, excise tax credits and loan guarantees, to reduce the risk of oil market volatility. ‘If we do want to go down this path, with the goal of large-scale cellulosic ethanol production, managing this risk is critical,’ says Todd West, a Sandia-based lead researcher on the project.
‘The biggest problem for cellulosic is that right now the credit markets have dried up,’ comments Candace Wheeler, a researcher at GM, which has stakes in US cellulosic ethanol companies Mascoma and Coskata. ‘These companies are at the point where they need to put up their first commercial plant, and that’s when large amounts of money are critical.’
The researchers estimate that cellulosic ethanol could compete with oil priced between $70 and $90/bbl in 2030, assuming there is an accelerated development of technology and feedstocks. That $90/bbl figure might sound high today, says West, ‘but it didn’t seem high at all a few months ago’.
The US DOE kick-started the commercialisation of technologies for the production of cellulosic ethanol in early 2007 when it announced plans to invest up to $385m in six commercial scale cellulosic ethanol biorefineries. Four are expected to come onstream at the end of 2010 and during 2011, while two have dropped out of the programme.
According to the US Biotechnology Industry Organization (BIO), more than 30 existing and planned cellulosic biorefineries are set to begin production in the US within the next few years.
While some cellulosic ethanol projects have been delayed as a result of funding difficulties, others are benefiting from partnerships with large companies. BP has partnered US-based Verenium, and the two companies plan to start up a commercial-scale plant in Florida in 2012. Meanwhile, Shell has raised its stake in Canada-based Iogen Energy, which has a demonstration cellulosic ethanol plant in Ottawa, and has expanded its biofuels catalysts agreement with US firm Codexis.
The GM/Sandia study concludes that it would be possible to sustainably produce 90bn gallons/year of ethanol, the energy equivalent of 60bn gallons/ year of petrol, in the US by 2030. Of this, 75bn gallons would be derived from cellulosic biomass and the remainder from corn, West says. These capacities can be achieved without displacing crops, he notes.
The capital costs required to reach 75bn gallons/ year are estimated at $365bn. This is comparable to the kind of capital investments needed to establish and maintain 40bn gallons/year of domestic oil production, the authors calculate.
Attaining these goals would not be constrained by infrastructure requirements, says Wheeler, as the investment in the US rail network required to support biofuels distribution is a small component of projected total rail demands resulting from future expanded economic activity. ‘We had thought infrastructure would have been a larger problem than it was,’ she remarks. ‘You would have to build new rail cars, but there is the capability to do that.’
Brent Erickson, executive vice president of BIO’s industrial and environmental section, says the study uses relatively conservative assumptions about the development of cellulosic biorefineries, as well as the availability and possible yields of biomass, to show that large-scale production of cellulosic biofuels is possible. ‘Moreover, cellulosic biofuels can compete with high prices for oil while requiring investment equal to or less than that needed to find and develop new sources of domestic oil.’
The study considered four types of feedstock: agricultural residue, such as corn stover and wheat straw; forest residue; purposely-grown energy crops, including switchgrass; and short rotation woody crops, such as willow and poplar trees.
Dedicated energy crops would be required, in addition to forest and agricultural residues, to achieve 75bn gallons/year of cellulosic ethanol, West says. In the analyses, dedicated energy crops, which are being developed with minimal water and fertiliser input in mind, accounts for about half of the cellulosic production, he says.
Reducing fertiliser inputs means that cellulosic ethanol has a much smaller carbon footprint than corn ethanol or petrol, says Katherine Dunphy- Guzman, another Sandia-based researcher on the project. Greenhouse gas emissions from cellulosic ethanol production were calculated to be about half those of corn ethanol, she says, although she noted that the calculations did not take account of changes to land use.
The findings are backed up by the University of Minnesota study, which suggests that, depending on the materials and technology used during production, cellulosic ethanol’s environmental and health costs are less than half those of petrol, while corn-based ethanol’s costs range from roughly equal to about double that of petrol. This study assumed that additional corn or biomass needed for biofuel production was grown on land currently in the US Conservation Reserve Program as perennial grasslands or, in the case of corn stover, was collected from existing cropland.
However, environmental groups have expressed concerns that emissions could increase if farmers convert forest and grassland to new cropland to replace the land diverted for biofuels. Research led by Tim Searchinger, from the Woodrow Wilson School at Princeton University, US, suggests that most biofuels are likely to produce more greenhouse gases than the petrol they replace if you take into account the carbon storage and sequestration sacrificed by diverting land from its existing uses (Science doi: 10.1126/science.1151861).
The plan is to grow switchgrass on marginal land, says Kate McMahon, energy and transportation policy campaigner at Friends of the Earth (FoE), ‘But if it can be grown on marginal land, and there are no restrictions on where you are allowed to grow it, it is more than likely to be grown on nonmarginal land or fertile crop land or natural habitat land, because it is more productive.’
Studies that demonstrate the environmental benefits of using dedicated energy crops such as switchgrass are one-sided, she argues, because they count the carbon benefits of using land for biofuels but not the carbon costs associated with this indirect change in land use.
‘We’re not necessarily convinced that cellulosic ethanol is the cure-all that it is made out to be,’ McMahon says. ‘You have to be very wary of dedicated energy crops and how they will be grown.’
While debates about the environmental benefits of biofuels promise to run and run, companies are racing to become the first commercial-scale cellulosic ethanol producer in the US. Range Fuels, which plans to start up phase one of its commercial plant in Georgia next year, is leading the pack. ‘The world – and specifically the US – has significant challenges with regards to energy, the environment and the economy,’ Range Fuels’ chief executive David Aldous recently said. ‘We intend to be part of the solution to these monumental challenges.’
Continued R&D support and commercialisation is critical for conversion plants to increase their yields and drive down the cost of cellulosic ethanol production. ‘The pace of progress has a very large impact on both the price of cellulosic ethanol and how much we can make,’ West says. ‘Accelerating those technological developments through enhanced R&D will make a big difference to the progress of the industry.’
Anna Jagger is a freelance journalist based in London, UK.
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