Building Blocks to Biofuels Success

Federal support for ethanol has been crucial for the growth of the ethanol industry as it expanded from a regional specialty fuel to an energy source of national importance. As the transition begins from first-generation to second-generation fuels, the government has created a plan to continue to help the industry develop new feedstocks and technologies to fulfill the new renewable fuels standard.
By Jerry W. Kram | November 03, 2008
Ethanol production is in transition. The capacity of plants currently producing corn-based ethanol and those under construction is rapidly approaching the limit set by the federal renewable fuels standard. As the first generation of ethanol production reaches its limit, it will be up to new ethanol technologies based on cellulosic feedstocks to reach the goal of 36 billion gallons of ethanol production by 2022, as required by the Energy Independence & Security Act of 2007. Currently, second-generation technologies are in their infancy. A few plants have come on line, but they are pilot-scale plants with limited capacity. More pilot-scale plants are expected to come on line in 2009. But in order to reach the lofty goals set by the EISA, a significant investment in both research and implementation will be needed.

Much of the financing, of course, will come from the private sector. But the federal government will continue to have an important role in boosting the industry. The bulk of the support will come from programs administered by the U.S. DOE and USDA. These agencies have been at the forefront of promoting renewable fuels even when the price of oil was $10 per barreldark days for the ethanol industry. Although energy prices have increased to the point where all biofuels seem to be a smart bet, federal support for new generation fuel sources through grants, loans and loan guarantees remains a vital part of developing this infant industry.

The level of support has been significant. In addition to the EISA, the 2008 Farm Bill included $1 billion in mandatory funding for renewable energy and energy efficiency projects, including $210 million in loan guarantees for cellulosic ethanol plants. Under the auspices of the Advanced Energy Initiative launched by the Bush Administration in 2006, the DOE has committed to investing more than $1 billion in partnership with industry and the research community to develop and deploy advance biofuels technologies by 2012. That funding includes up to $240 million for demonstration-scale projects, $400 million for bioenergy centers and up to $272 million for commercial-scale biorefineries.

Administering these programs is the Biomass Research and Development Board, which Congress created in 2000. The board coordinates biofuels and other biobased products research, development, procurement and implementation among and within government agencies. Its goal is to maximize the benefits of federal grants and assistance and bring coherence to government planning. The board is co-chaired by senior officials of the DOE and USDA and has members drawn from several other agencies.

With an ambitious goal of more than tripling biofuels production in just 14 years based largely on cellulosic ethanol production, the board developed a clear vision of where the country's biofuels strategy was headed. In September, the board released the National Biofuels Action Plan. "Federal leadership can provide the vision for research, industry and citizens to understand how the nation will become less dependent on foreign oil and create strong rural economies," says U.S. Secretary of Agriculture Ed Schafer. "This National Biofuels Action Plan supports the drive for biofuels growth to supply energy that is clean and affordable, and always renewable."

Indentifying Priorities
The plan identifies seven areas where the government will be taking steps to help the biofuels industry grow and evolve. Five of the priority areas are based on supply chain considerations, which include feedstock production, feedstock logistics, conversion, distribution and end use. The other two priorities are ensuring the sustainability of the biofuels industry and protecting the environment and the health and safety of workers and the public.

Each of the priority areas has an action plan outlining the board's short- and long-term steps toward achieving that goal. The first of those goals is sustainability. In terms of biofuels, the EISA defines sustainable biofuels as those that will significantly reduce greenhouse gas emissions, not have adverse impacts on the environment and do not compete with food production. It also stipulates that the EPA must report to Congress every three years on the environmental impacts of biofuels systems. To ensure the sustainable production of biofuels, the board is requiring that a set of science-based sustainability standards be identified by the end of 2008. An interagency working group headed by USDA, DOE and the U.S. EPA will coordinate the application of these standards in the government and with industry. Two series of workshops are planned for both policy-makers inside the government and with outside stakeholders to evaluate the strengths and weaknesses of the guidelines and their application.

Biochemical Conversion Cost of Cellulose to Ethanol

source: DOE EERE Office of the Biomass PROGRAM, Multi-year Program Plan

Feedstock production and logistics are the next action areas addressed. The board considers crop residue and timber waste as "second-generation" feedstocks while energy crops including perennial grasses and fast-growing trees are dubbed "third generation." The short-term goals of the action plan are to create a long-term integrated feedstock research plan that will include an examination of the environmental impacts and financial viability of feedstock production. The board will also look at what regulatory hurdles need to be overcome to encourage farmers and foresters to begin producing third-generation feedstocks. The plan states that logisticsmoving feedstocks from farm to plantcan constitute as much as 20 percent of the cost of cellulosic ethanol. Given the diversity of feedstocks and geographic variability, the action plan states that partnerships between agencies and private enterprises will be necessary to overcome the challenges of harvesting, storing, preprocessing and transporting feedstocks. The board is in the process of developing milestones in its implementation of logistics system demonstration projects.

The fourth goal of the plan, conversion technology, has been an area where there has been a great deal of success even before the adoption of the action plan. Since 2001, the cost of biochemically converting cellulose to ethanol has dropped by nearly two-thirds, from $6 to about $2, according to the DOE. However, for cellulosic ethanol to compete economically, this progress has to continue. The immediate steps the board foresees to achieve this goal are continued research on enzymes and feedstocks to make them better suited to ethanol production, identifying better conversion technologies, developing marketable coproducts, optimizing technologies to use multiple feedstocks, and looking for processes and innovations in other industries that could be applied to cellulosic ethanol production.

Moving Biofuels Efficiently
The U.S. Department of Transportation will take the lead in developing recommendations to address bottlenecks and barriers to the efficient distribution of biofuels. Steps in this process will include examining the use of pipelines to transport biofuels, identifying and eliminating bottlenecks to transporting biofuels by barge, train or truck, and using Geographic Information System tools to give potential biofuels producers information on infrastructure, demand, feedstock availability, water and other resources.

As ethanol makes up more of the U.S. fuel supply, end users will need to be educated on the benefits of using more ethanol and have access to vehicles that can safely use higher level gasoline-ethanol blends. The DOE and EPA will begin a testing program to look at the impact of midlevel blends such as E15 and E20 on existing vehicles and small motors used in lawn mowers and off-road vehicles. If the testing shows no ill effects, the board would support the approval of those blends. The board is also planning to work with state and local agencies to continue the penetration of E10 blends in the market by resolving obstacles created by local regulations.

The final action area is protecting the environment and the safety and health of workers and the public. With ethanol's 30-year history as a fuel, its risks are relatively well-understood. However, as new biofuels come into production, the risks associated with using those fuels will have to be evaluated. The board will review existing safety and environmental information available on biofuels and use that information to conduct outreach to the public, industry and others involved in the biofuels economy.

The path to reaching the country's biofuels goal has obstacles which must be overcome quickly. The goal of the National Biofuels Action Plan is having cellulosic ethanol production using second-generation feedstocks being cost competitive by 2012. Feedstock production needs to be evaluated to ensure sustainable practices are used and adequate supplies are available. Harvesting, collection and preprocessing technologies have to be perfected. Research is needed to drive the cost of converting cellulose to ethanol still lower.

Distribution bottlenecks will have to be resolved. In addition to all that, the plan states that by 2012 the market for E10 will be saturated. To absorb additional production, higher level blends of fuel will be necessary.

The final step in reaching the plan's goals will depend on the private sector. After the initial research and development phase of the plan, it will be up to industry to build the hundreds of plants needed to fulfill the 2022 RFS requirements. These new plants will need skilled technicians, builders and managers. Creating the human capital to keep up with growth of biofuels capacity will be the final key to a vigorous and viable biofuels industry. "This plan is a strategic blueprint that shows us the way to meet the president's goal of meaningful biofuels production by the year 2022," says Secretary of Energy Samuel Bodman. "It also shows how to do it in cost-effective, environmentally responsible ways that utilize a science-based approach to ensure the next generation of biofuels that are made primarily from feedstocks outside the food supply that are produced sustainably."

Jerry W. Kram is an Ethanol Producer Magazine staff writer. He can be reached at jkram@bbiinternational.com or (701) 738-4920.