Aggressive US mandate may do more harm than good.
In trying to assure the market that there is a future for advanced biofuels, the US Congress may have gone too far. Its 2007 mandate for the production of such fuels, intended to convince technologists that a substantial market was guaranteed, may in fact be hampering the technology's development. The targets are so ambitious that many now expect them to be cut back, thus creating an uncertainty just like the one Congress intended to dispel.
Several companies are moving forward with demonstration plants — partially sponsored by the US Energy Department — to produce ethanol from cellulose in corn (maize) stover (the leaves and stalks), wood chips and other plant materials, rather than from the edible part of crops such as corn. But industrial-scale plants remain on the distant horizon, because the technique for efficiently making 'cellulosic ethanol' is still in its infancy. That has many wondering whether the investments are being made to meet the federal mandate, which ramps up to nearly 4 billion litres annually by 2013 and some 60 billion litres annually by 2022.
The biofuels community is watching the Environmental Protection Agency (EPA), which is developing regulations to certify that all of the biofuels in the programme reduce greenhouse-gas emissions by specific levels.
Add the continuing questions about actual production costs for a host of new technologies and long-term questions about the price of oil, and the result is a truck-load of uncertainty, says Wallace Tyner, agricultural economist at Purdue University in West Lafayette, Indiana. “What many people do in this situation is run,” Tyner says. The repercussions could be huge if corn ethanol fails as a bridge to cellulosic ethanol. “If oil prices stay high, there's a real temptation to just keep growing corn rather than take the risk on cellulose.”
All eyes are on the Environmental Protection Agency at this point.
Corn-ethanol production has skyrocketed in recent years, far exceeding the required production. Capacity is expected to hit nearly 40 billion litres annually this year and more than 51 billion litres annually in 2009, according to the Renewable Fuels Association, a trade body based in Washington DC. It comes at a time when corn ethanol is facing increased scrutiny. The mandate requires that corn ethanol reduces greenhouse-gas emissions to 20% below gasoline emission levels, but many researchers now believe that it will come up short. This is partly because the resulting higher commodity prices could drive agricultural expansion into wild lands around the globe.
Existing plants were 'grandfathered' in, meaning they won't have to meet the new environmental standards. Given that corn ethanol was capped at 57 billion litres in the mandate, this question affects 10% of the corn-ethanol market. But the entire mandate for cellulosic ethanol — which must reduce emissions to 60% below those of traditional fuels — rides on how the EPA calculates carbon emissions, including potentially indirect effects from land-use changes in the US and abroad. “All eyes are on the EPA to see how they resolve these questions,” says biofuels expert Liz Marshall at the World Resources Institute in Washington DC.
The industry must also address various infrastructure issues. Corn-ethanol production will soon reach what is known as the 'blending wall' by saturating the current market given the 10% cap on ethanol blends and the scarcity of stations selling an alternative fuel that is 85% ethanol.
David Berry, a principal with the venture-capital firm Flagship Ventures in Cambridge, Massachusetts, says that it will be “incredibly difficult” to meet the mandate for cellulosic fuels. It is likely to be refined and adjusted in the coming years, but this doesn't mean that it will go away entirely, so the technological front runners will be rewarded regardless. “Whether it turns out to be a US$15-billion-dollar market or an $80-billion-dollar market, those are still big numbers,” Berry says. He believes that investors will make their move in the next couple of years after the results from various demonstration-scale projects come on line. “We have to figure out who the winners and losers are from a technical standpoint.”
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Tollefson, J. Advanced biofuels face an uncertain future. Nature 452, 670–671 (2008). https://doi.org/10.1038/452670b
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