The pace car for the 2008 Indianapolis 500 ran on E85; the race cars burned 100% ethanol fuel.

Last month, for the first time in history, the cars racing in the Indianapolis 500 were fueled by pure ethanol. This should put to rest any concerns about ethanol lacking sufficient energy density to function as a motor fuel.

While the absolute amount of energy contained in ethanol is somewhat lower than gasoline - about 76,000 BTUs per gallon for ethanol compared to about 116,000 BTUs per gallon of gasoline - ethanol has higher octane, generally speaking 110 or more vs. 90 or less, allowing ethanol to run in higher compression, higher efficiency engines. A car optimized to run on ethanol can get comparable mileage to a car optimized to run on gasoline.

There are other concerns about ethanol, for example, the notion that it takes more energy to manufacture ethanol than the energy value of the fuel itself, the suggestion that it isn’t “carbon neutral” after all, and the whopper, the accusation that ethanol production has taken food crops out of production. All of these concerns have some validity, but are shrouded in complexities that defy simple characterizations or easy conclusions. Yet that is what has happened. A few years ago, biofuel in general, and ethanol in particular, could do no wrong. Today the situation is reversed, and around the world, for the most part the powerful media and environmentalist communities have turned on biofuel.

In many respects this awakening is healthy - when mandatory carbon offset trading in the European Community was subsidizing rainforest destruction in southeast asia to make way for oil palm plantations, something was clearly out of whack. But corn ethanol in the USA has drawn the most visible criticisms. California’s Air Resources Board, struggling to implement a lower carbon fuel standard, has recently determined, perhaps correctly, that hauling tank cars by rail over the Rocky Mountains from Iowa to the west coast probably eliminates any carbon neutrality ethanol may have otherwise enjoyed. In Washington D.C., the political backlash continues to build against the subsidies corn ethanol receives, with increasing urgency due to the global food shortages that are allegedly exacerbated by dedicating so much acreage to corn for ethanol.

In the USA, 10 billion gallons of corn ethanol will be produced annually within a few years.

There are many responses to these concerns, however. When producing ethanol from Brazilian sugar cane, for example, the energy payback can go as high as 8 to 1. In the case of corn ethanol, most analysts put the payback around 1.5 to 1, and at a margin that thin, there is plenty of room for interpretation. But the analyses that claim corn ethanol’s energy payback is insufficient to justify its use as a fuel ignore the caloric value of the distiller’s grain, a byproduct of corn ethanol production.

Critics of corn ethanol subsidies ignore the value of keeping these dollars in the U.S. to reduce the trade deficit. Those environmentalists concerned about the growing “dead zone” caused by agricultural runoff, presumably destined to grow even faster as we turn more acreage to biofuel, are certainly justified. But it is disingenuous to suggest that because we are distilling corn instead of harvesting grain there is somehow a more urgent problem than before. The dead zone in the Gulf of Mexico needs to be cleaned up. Agricultural runoff is an environmental challenge that awaits cost effective solutions - with or without the reality of biofuel.

The most problematic challenge to corn ethanol undoubtedly comes from those who are concerned it is causing rising food prices. But here again there are many significant factors that in aggregate eclipse the impact of corn ethanol, possibly by orders of magnitude. Rising per capita income in Asia and elsewhere has caused increased consumption of meat products, and livestock requires grain. Estimates vary, but for every calorie of meat consumed, about eight calories of grain have to be grown and fed to the livestock. This phenomenon has caused global demand for grain to grow far faster than it would already be growing due to increasing human population. At the same time, there have been temporary but severe setbacks to global grain output - a drought in Australia, flooding in the American mid-west. If that weren’t enough, commodities speculators have hedged themselves against devaluing dollars and falling asset values in stocks and real estate by purchasing commodities futures - driving prices up more than the forces of normal supply and demand already have.

Ethanol proponents have answered the critics in a variety of ways. The “25×25 Alliance,” an industry group committed to the goal of the USA producing 25% of its energy from renewable sources by 2025, has issued “sustainability principles” for biofuel production. The National Corn Growers Association has compiled a great deal of data in an attempt to debunk the position that corn ethanol is the primary cause of worldwide food shortages and commodity price increases. Automakers are caught in the middle - a powerful environmental lobby demands cars capable of being fueled with alternatives to gasoline, then savagely turns on corn ethanol, despite the fact it is the only motor fuel alternative we’ve got that we can produce in meaningful quantities today.

In any event, corn ethanol isn’t the ultimate solution to biofuel supplies, it is only a transitional fuel. This crucial point is often lost amid the controversy surrounding corn ethanol. It is cellulosic ethanol that has the potential to completely replace petroleum based fuel, and when cellulosic ethanol begins to arrive in high volume, a preexisting ethanol infrastructure - cars that run on ethanol, fueling stations that sell ethanol, and a transportation network to deliver ethanol to retailers - will need to be in place. Corn ethanol is priming the pump for the arrival of cellulosic ethanol.

Within the next few years corn ethanol production in the United States is predicted to top 10 billion gallons. This is not a trivial amount of fuel, given the entire light vehicle fleet in the USA consumes only 15 times that amount. Corn ethanol has already reduced the demand for foreign oil for light vehicle use by about 6.5%. Nonetheless, critics who claim corn ethanol production cannot possibly increase enough to replace petroleum are correct. The math of these critics is elegant - 10 billion gallons of corn ethanol, at 2.8 gallons per bushel and 155 bushels per acre equates to 23 million acres, about 7% of America’s active farm acreage. If you use corn ethanol to service 100% of America’s fuel requirements for light vehicles, you use 100% of America’s farmland.

Once again, however, this math is missing the point. Corn ethanol, distilled from corn mash, is not the end of biofuel, it is just the beginning of biofuel. Even the impressive global production of ethanol from sugar cane is easily eclipsed by the potential of cellulosic extraction. So what is cellulosic ethanol, where does it come from, how can it be produced, and how long will it be before meaningful quantities of this fuel arrive at the corner filling station?

One of the most visible and visionary proponents of biofuel is the noted venture capitalist Vinod Khosla, who early in his career was one of the four co-founders of Sun Microsystems, and has parlayed this spectacular victory into an impressive portfolio of investments in private sector companies. Over the past few years Khosla Ventures has invested in dozens of clean technology and sustainable energy companies, including several top tier biofuel ventures, including Coskata and Mascoma, mentioned later in this report. In a recent research paper written by Vinod Khosla entitled “Where will Biofuels and Biomass Feedstocks Come From ,” Khosla identifies and quantifies the many potential sources of cellulosic feedstock for ethanol fuel. Some of the information on the table below borrows from Khosla’s research, but changes some of the assumptions; other data comes from the U.S. Dept. of Energy.

HOW MUCH ETHANOL FEEDSTOCK IS THERE IN THE USA?

At least 1.0 billion tons of ethanol feedstock can be sustainably harvested each year in the United States.

The figures on this table are arguably realistic, not optimistic, based on the following assumptions for each feedstock:

Dedicated land use refers to cellulosic crops, such as miscanthus or switchgrass, planted on 5% of American farmland (total US farmland is estimated currently at 317 million acres), less than is currently planted for corn ethanol production. At a yield of 15 tons of cellulosic feedstock per acre and 100 gallons of ethanol per ton of feedstock, nearly 24 billion gallons of ethanol can be produced each year. While 15 tons of feedstock per acre is more than can currently be grown, it is considerably lower than forecasts of yields expected within the next couple of decades, which range as high as 25 tons per acre.

Winter cover crops would not displace existing farmland, and if they were profitable to grow it isn’t unlikely they could become additional income for farmers on 25% of land already under summer cultivation. At a yield of 3 tons per acre - projections go as high as 5 tons per acre - another nearly 24 billion gallons of ethanol can be produced each year.

California’s Redwoods. Forest thinning could help prevent catastrophic fires, reduce infestations, and provide hundreds of millions of tons of cellulose.

Excess forest biomass is a difficult number to calculate, but when one considers there are about 750 million acres of forest in the USA (ref. Forest Resources of the United States), as well as the fact nearly all of them have become dangerously overgrown (major factors in more catastrophic fires and beetle infestations, ref. Restoration Forestry), the figure we’ve used of 226 million tons per year is probably quite low. It would suggest a growth in forest mass of less than one-third of a ton per acre per year. And in our estimate, even the figure of 226 million tons is only assumed to be 70% utilized. Forest thinning is a form of stewardship long overdue, it will return America’s forests to their healthier historical densities, and their excess mass will power our engines instead of burn in forest fires.

Construction debris and municipal solid waste are obvious candidates for cellulosic harvesting, and even the non-cellulosic materials can be used as fuel for the extraction of syngas (which is converted into ethanol), or reclaimed as building materials. According to the Dept. of Energy, 325 million tons of these waste resources are produced each year. We have assumed 90% utilization, and only 75 gallons of ethanol per ton, a yield that is below most projections.

Other waste resources are deliberately understated - just our industrial emissions are probably sufficient to deliver 100 million tons of feedstock. Also not included in this analysis anywhere else are crop residue, a huge source of feedstocks, some percentage of which can certainly be allocated sustainably to ethanol production without sacrificing soil health.

It isn’t easy to estimate just how much cellulosic feedstock could be sustainably harvested each year in the USA, but but two things are clear from this analysis. (1) When cellulosic ethanol extraction becomes a commercially competitive process, and the industrial capacity is in place to produce high volumes of ethanol from cellulosic materials, there will be plenty of feedstocks - at least 1.0 billion tons per year; possibly twice that. Cellulosic ethanol definitely has the potential to become a significant source of transportation fuel, and (2) Khosla’s contention that land use dedicated to ethanol production in the USA might actually decrease when cellulosic processing takes over is completely plausible. In the example above, no corn ethanol was produced, and the dedicated acreage committed to cellulosic ethanol was assumed to be 5% of America’s farmland, whereas today corn ethanol is grown on about 7% of America’s farmland.

So how will we convert cellulosic material into ethanol? There are hundreds of companies around the world working on ways to accomplish this, using a variety of technological approaches. Last month, while on a General Motors sponsored tour for automotive journalists, I had the opportunity to visit two companies who are pursuing promising, and very different, solutions to the cellulosic ethanol puzzle.

Our trip began in Chicago on the morning of May 21st, where about a dozen journalists assembled to drive a convoy of GM vehicles, all equipped to run on E85 ethanol. In a completely unexpected turn of events, I found myself behind the wheel in a high riding Chevy Silverado, painted with GM colors that announced to the world the truck’s status as an ethanol fueled vehicle, with extended cab and a monstrous bed. Although I was unaccustomed to piloting such a behemoth, there was excellent road visibility from the cab, and GM’s OnStar tracked my position and provided constant audio directions, so I swung into downtown Chicago traffic, and joined the late morning rush out of town. At one point it was clear we needed to move across a couple of lanes to catch our exit, and to make sure we would safely execute this maneuver amidst the 18 wheelers and such, I found it appropriate to smash the gas pedal to the floor and hold it there. The tactic was brilliantly successful, as this gigantic truck leapt forward with impressive accelleration and increased our speed from 45 to 75 in a matter of seconds. Safely in our place on the correct route, I let off the accelerator and knew the power of corn.

Coskata CEO Bill Roe and General Motors Chairman Richard Wagoner seal the deal, as early Coskata investor Vinod Khosla looks on.

About 40 miles west of Chicago, in Warrenville, Illinois, are the labs of Coskata, a company that is contending to be the first to commercialize production of cellulosic ethanol.

In February 2008 General Motors invested an undisclosed sum in this three year old private company, whose CEO, Bill Roe, stated “we do not believe we have any remaining technological hurdles.” Coskata is betting on this with a pilot plant they are building in Madison, Pennsylvania, near Pittsburgh. They expect to have this plant operating early in 2009, producing 40,000 gallons of fuel per year. GM intends to use the fuel to test their growing fleet of E85 flexfuel vehicles.

Coskata’s technology for extracting ethanol from cellulose is elaborate, but apparently closer to commercialization than competing processes. Whether or not Coskata’s technology ultimately dominates is harder to assess, but according to Roe, the variable costs to produce a gallon of ethanol using their technology is expected to be under $1.00 per gallon. Here’s how Coskata intends to produce ethanol:

In the diagram below, “Coskata’s Manufacturing Process,” there are three primary steps. First the feedstock is shredded and dried, and fed into the gasifier, where it is reduced to syngas at a temperature of 5,000 degrees. Some of the syngas is used to provide the energy for the conversion process, but about 85% of the syngas is converted into ethanol in step two. A recent study by Argonne National Labs estimates Coskata’s process yields an energy payback of about 8 to 1.

The second step is to feed the syngas into a bioreactor, where microbes eat the syngas and excrete ethanol. These microbes are anerobic, meaning they can’t survive in atmosphere, and they are the result of careful selective breeding whereby they are now 100 times more efficient converting syngas into ethanol than they were when they began the process a few years ago. “We know our microbes can convert syngas to ethanol at commercial quantities, cost effectively,” said Roe.

The final step in the process is to feed the ethanol and water out of the bioreactor into a recovery tank, where the ethanol is extracted and the water is recycled back into the bioreactor.

From the look of things during our visit to Coskata’s lab in Warrenville, about the only bugs left in their process are the bugs in the bioreactor. According to Wes Bolson, Coskata’s Chief Marketing Officer, the company is actively seeking partners among the companies who have access to huge quantities of cellulosic feedstock, and currently have nothing they can do with it. These candidates include timber companies, sugar cane refiners, pulp and paper mills, and waste management companies. Coskata can also partner with companies who already are generating syngas, but haven’t got the bioreactor technology.

COSKATA’S MANUFACTURING PROCESS

Coskata executives believe their technology is ready today.

After spending a half-day at Coskata, our corn fueled convoy got back on the highway and headed south to Indianapolis, driving most of the way on southbound Interstate 65. And as our expedition hurtled through America’s heartland on this beautiful afternoon, as far as the eye could see, across the rain watered endless fertile fields of Indiana sprouted new shoots of spring corn.

If you are within blocks, long blocks, of the Indianapolis Motor Speedway, during the last full week in May, you will likely hear the roar of the engines. And as we neared the track on the morning of May 22nd, we too heard and felt the sound as the drivers did qualifying laps in advance of the 92nd running of the Indianapolis 500. In a thankfully soundproof auditorium on the massive infield of the racetrack, we attended an ethanol summit co-sponsored by GM, where I had an opportunity to meet Dr. Mike Ladisch, Chief Technical Officer of Mascoma. This company, like Coskata, is hot on the trail of commercializing cellulosic ethanol production, but they are pursuing a solution that will not rely on high temperature gasification. Instead, Mascoma is developing a biochemical method to convert cellulose into ethanol. Ladisch, a genial scientist who has taken a leave of absence from Purdue to serve as CTO at Mascoma, was understandably guarded about his company’s technology, but characterized it in the following way:

“The work at Mascoma is based on organisms and processes designed to rapidly break down the components of biomass, convert a range of sugars and polymers of sugars to ethanol, and thrive in a manufacturing environment.”

Mascoma intends to do this in one step using genetically engineered microbes that are capable of performing both processes. This is known as consolidated bioprocessing, or CBP, and perhaps represents the ultimate technology to extract ethanol from cellulose.

Another informed opinion on Mascoma (and cellulosic technology in general) was obtained via email from Dr. Lee Lynd, a professor at Dartmouth who, along with Ladisch, is one of the leading scientists in the world pursuing advanced cellulosic technologies. Here is what he wrote:

“Mascoma has the largest and most focused effort worldwide on consolidated bioprocessing, which I consider to be the ultimate low-cost conversion strategy. If Mascoma is able to continue this aggressive effort, I believe that they will succeed and that they will have the lowest cost technology for converting herbaceous and woody angiosperms (e.g. grass and hardwoods) to ethanol and other biofuels. It is less clear that the Mascoma approach will be best for gymnosperms (softwoods), and this could be a long-term niche for thermochemical processing along with processing residues from biological processing. Mascoma’s business strategy features a ’staircase’ of process configurations, starting with options that can be commercially implemented very soon and progressing ultimately to CBP.”

How soon will Mascoma and others deploy these technologies? Although Mascoma’s website has an excellent description of the various cellulosic technologies (ref. Consolidated Bioprocessing), exactly when they expect their technology to be ready for commercialization appears to be a closely guarded secret. Other observers, off the record, have stated commercially viable enzymatic processing is 5-10 years away. But advances in biotechnology are happening at a staggering pace, and unforeseen breakthroughs are not something to bet against. On the other hand, even if Coskata, Mascoma, and countless other credible contenders to deliver commercially competitive cellulosic ethanol technologies were all ready tomorrow, it will still take years to build the new refineries and transform America’s light vehicle fleet.

In the meantime, corn carries the weight of being the primary source of ethanol in the USA, as the rest of the infrastructure falls into place. There are already 1,600 ethanol stations in the U.S. - about 1% of all gasoline retailers - and with UL certification imminent the big box chains are going to begin offering ethanol fuel, greatly increasing access. General Motors now offers 15 models of flexfuel vehicles; and they are now producing over 1.0 million of them per year. Other automakers are following suit. All over the world, governments are determining what percentages of ethanol fuel - along with other biofuels, biodiesel in particular - to blend into their transportation fuels.

How long can corn carry the weight of this growth, serving as the transitional feedstock? How soon can hybrids and extended range electric vehicles level off or even reduce the demand for transportation fuel? There is little doubt ethanol is a viable fuel for light vehicles, and there is little doubt cellulosic ethanol feedstocks exist in sufficient sustainable abundance to greatly offset petroleum consumption. Finally, there is little doubt that money and support for cellulosic ethanol commercialization is ongoing; from Washington DC to Detroit to the Silicon Valley, everyone is on board. The uncertainty lies in whether or not the new technologies to extract ethanol from cellulose will emerge in months or decades, and in how fast we can build large scale industrial capacity to exploit these new technologies. Look to pilot plants in Madison, Pennsylvania, and elsewhere, for early indications of what may come, and when.

Food & Fuel - Corn becomes more prized than ever.

CORN GROWING AREAS IN CHINA

Source: USDA Joint Agricultural Weather Facility

China is the world’s second largest corn producer, but a growing appetite for grain combined with ambitious fuel ethanol targets may make the country a net corn importer, possibly as early as this year.

China may become net corn importer despite move away from grain ethanol. At present, grain accounts for about 80 percent of biofuel feedstock, and consumers are finding themselves at increased competition with the country’s burgeoning energy needs for limited domestic resources.

Although China can essentially meet its own grain demand for the moment, it is a tight balance that could easily be thrown off. With 20 percent of the world’s population but only 7 percent of global farmland, the country’s grain supply is under long-term pressure from a growing population, and rising incomes, while urbanization gradually nibbles away at cultivatable land.

By 2010, China plans to consume 6.7 million tons of blended ethanol fuel gasoline and 11 million tons of bio-diesel-blended diesel annually, which would meet 10 percent of forecast demand for transport fuel. Government targets caused demand for corn from the ethanol industry to explode, which has raised concerns about how the policy will impact the country’s grain supply safety and price inflation.

Although the government has suspended the approval of new corn-based fuel ethanol projects and encouraged the use of non-grain feedstock for ethanol plants, industry insiders remain doubtful.

“China has just started on its mass plantation plans for cassava and sweet potato for industrial use, and it takes time for such crops to grow and mature,” said an official with a foreign equipment manufacturer whose products include those used in bio-fuel production. I believe that within three years time, grains such as corn and wheat will still be the leading feedstock for ethanol fuel.”

Henan Tianguan Enterprise Group Co. Ltd., one of the country’s four major ethanol producers, currently uses a mix of 60 percent wheat, 20 percent corn, 10 percent cassava and 10 percent sweet potato to produce the fuel.

China has just started large-scale production of crops such as cassava, sweet potato and sweet sorghum. However, the country lacks mature technology to produce cellulosic ethanol, which is seen as the future of large-scale ethanol fuel industry.

China’s concerns about rising food prices and grain supply concerns are not unique. A report published last year by the Sri Lanka-based World Water Management Institute said biofuel production will increase demand for land at the expense of the environment, and will also require large quantities of water, already a major constraint to agriculture in many parts of the world, including China. Other reports have said that ethanol production may severely impact upon the food industry, since, at excessive levels, it can use the food industry to feed energy needs.

The International Monetary Fund has said higher bio-fuel demand will push up food prices, especially for the world’s poor, and increase food import costs, thus curbing economic growth. In the last 15 years, China went from being the world’s largest soybean exporter to the world’s largest importer. With similar trends emerging in soy meal, edible oil, and grains, rising import costs will affect the lives of hundreds of millions of people.

China began promoting the production of corn-based ethanol in 2001, when the country’s corn production was booming, and net corn exports increased from 10.47 million tons in 2000 to a high of 16.4 million tons in 2003. After peaking in 2003, imports began to fall rapidly. Last year, China’s corn exports reached 4.8 million tons, but this was mainly due to the fulfilling contracts signed in 2006.

CHINA’S GRAIN OUTPUT: 1997 - 2007

Source: China’s National Bureau of Statistics (NBS)

The dramatic reduction of export quotas for this year from 3 million to 1 million tons, the ongoing introduction of stricter usage policies, and the cancellation of all tax rebates on grain exports belie the official stance of grain security, especially insofar as corn.

Consumption in 2008 is estimated at 141.5 million tons, of which nearly two-thirds is for animal feed. In January, pork prices surged 58.8 percent year-on-year. Further rapid price growth, coupled with government support to the industry, may see pig production increase at a faster-than-anticipated rate, which means livestock feed estimates are likely too conservative. An increase of 5 percent in this area could put severe strains on domestic supply. Corn and soy meal are used to produce approximately 70 percent of animal feedstuffs. Note that these figures have not yet been adjusted for damage and losses caused by the current snowstorm crisis that has battered China since mid-January.

CHINA’S GRAIN DEMAND: 1997 - 2006 (million tons)

Source: China Customs, Chinese Ministry of Agriculture, Interfax research. (In this report, Interfax uses the sum of domestic grain output and net grain import to estimate total domestic demand for grain.)

The USDA estimates China’s state corn stockpiles are in the region of 35 million tons, but it is difficult to verify this figure. However, given China’s aggressive state auction policy designed to stabilize market prices, this figure may be optimistic, although it could serve as a cushion in the event of a production shortfall.

Planting intentions, while difficult to predict as farmers tend to delay decisions, may be affected by corn ethanol restrictions. The tendency may be to shift to wheat and, where possible, soybeans which are more profitable, and China may have to resort to significant corn importation, possibly this season. This may be a continuing trend, given the scarcity of arable land and water resources.

If China does become a net corn importer this year, the impact on the price, both domestically and globally, will be dramatic and a price of $6 per bushel, up from current price of $5 is probable. The question now is how China will impact other agricultural commodities, like wheat, soybean and edible oils, in the year ahead.

Edited by Erik Dahl with contributions from Victor Wang, Tinko Hua, Yang Jing, and David Harman. This article was originally published by Interfax-China, and is republished with permission.

Findings in the article are based on extensive research from the Interfax-China China Commodities Report Grains & Softs 2008 industry report. Interfax-China’s team of in-country analysts track China’s industries and markets, providing comprehensive daily coverage of China’s energy sector. Learn how more about these markets and the opportunities they offer your business. Learn about energy in China through our China Energy Weekly and focused energy reports carbon trading, clean & renewable energy, CTL, oil & gas, and power generation. Free Trial: Contact Andrew Billard; andrew@interfax.cn or by phone at 86-10-8532-5021 (Beijing, China).

Additional EcoWorld reports on China:

- China’s Coal

- Cleaning Up China

- China’s Energy Demand

- China’s Renewable Energy

- Wind Power in China

- China’s Energy Outlook

- Fuel Cell Development in China

- China, Canals & Coal

Released March 2008 by the 25x’25 Alliance, republished with permission.

Biofuel, especially via cellulosic extraction from crop residue, has huge potential. (Photo: 25x’25 Alliance)

Biodiesel & methanol from livestock waste is a promising source of alternative fuel. (Photo: 25x’25 Alliance)

In September of 2007, the 25x’25 Alliance’s Steering Committee chartered a work group composed of a cross section of agricultural, forestry, industry, environmental and conservation leaders to help further define sustainability in a 25x’25 renewable future.

The mission of the work group was to develop recommendations for sustainability principles that would help guide the evolution of 25x’25.

The sustainability principles outlined in this report are the product of the 28-member 25x’25 National Steering Committee. Though the assumptions and principles were drawn from the consensus recommendations developed by the work group, they represent the views and position of the 25x’25 National Steering Committee rather than any individual 25x’25 Alliance partner.

Sustainability Principles for a 25x’25 Energy Future

Preamble

In the Energy Independence and Security Act passed in December 2007 the U.S. Congress formally adopted 25x’25 as a national goal, affirming that it is the goal of the United States to derive 25 percent of its energy use from agricultural, forestry and other renewable resources by 2025.

The 25x’25 Action Plan Charting America’s Energy Future, authored and released by the 25x’25 National Steering Committee in February 2007, outlines specific steps that need to be taken to put the United States on a path to secure 25 percent of its energy needs from renewables by the year 2025. The 25x’25 goal and Action Plan stand on a foundation of five key principles - efficiency, partnership, commitment, sustainability, and opportunity.

Sustainability has always been considered as central to the success of the 25x’25 renewable energy initiative and is defined as follows in the Action Plan:

Sustainability: To be a long-term solution for America, renewable energy production must conserve, enhance, and protect natural resources and be economically viable, environmentally sound, and socially acceptable.

Underpinning the concept of sustainability is the ideal of stewardship or the responsible use and orderly development of natural resources in a way that takes full and balanced account of the interests of society, future generations, and other species, as well as private needs, and accepts significant answerability to society.

In developing these principles, a number of basic underlying assumptions were identified and agreed to:

Renewable energy production must comply with all existing federal, state, and local laws
and regulations.

All regions will have an opportunity to engage in the production of bioenergy feedstocks
and renewable energy.

Renewable energy production should address the multiple-values of the land-base
including environmental, economic, social, and historical.

Balance of stakeholder interests must be a central theme in renewable energy production.

The principles set forth for sustainability are mutually reinforcing.
The 25x’25 National Steering Committee recommends the following principles to 25x’25
partners and would support their adoption by renewable energy producers and policy makers.

Wind power is already becoming cost competitive with conventional energy. (Photo: 25x’25 Alliance)

25x’25 Sustainability Principles

Access: Renewable energy producers and consumers should have fair and equitable access to renewable energy markets, products, and infrastructure.

Air Quality: Renewable energy production should maintain or improve air quality.

Biodiversity: Renewable energy production should maintain or enhance landscape biodiversity and protect native, rare, threatened, and endangered species and habitat.

Community Economic Benefits: Renewable energy production should bolster the economic foundation and quality of life in communities where it occurs.

Efficiency and Conservation: Renewable energy production should be energy efficient, utilize biomass residues and waste materials when possible, and conserve natural resources at all stages of production, harvesting, and processing.

Greenhouse Gas Emissions: Renewable energy production should result in a net reduction of greenhouse gas emissions when compared to fossil fuels.

Invasive and Non-Native Species: Introduced or non-native species can be used for renewable energy production when there are appropriate safeguards against negative impacts on native flora and fauna, and on agricultural and forestry enterprises.

Market Parity: Renewable energy production should have parity with fossil fuels in access to markets and incentives.

Opportunities: All regions of the nation should have the opportunity to participate in renewable energy development and use.

Private Lands: Renewable energy production on private working farm, forest, and grasslands should improve the health and productivity of these lands and help protect them from being permanently converted to non-working uses.

Public Lands: Renewable energy production from appropriate public lands should be sustainable and contribute to the long-term health and mission of the land.

Soil Erosion: Renewable energy production should incorporate the best available technologies and management practices to protect soils from loss rates greater than can be replenished.

Soil Quality: Renewable energy production should maintain or enhance soil resources and the capacity of working lands to produce food, feed, fiber, and associated environmental services and benefits.

Special Areas: Renewable energy production should respect special areas of important conservation, historic, and social value.

Technology: New technologies, including approved biotechnology, can play a significant role in renewable energy production, provided they create land use and production efficiencies and protect food, feed, and fiber systems, native flora and fauna, and other environmental values.

Water Quality: Renewable energy production should maintain or improve water quality.

Water Quantity: Renewable energy production systems and facilities should maximize water conservation, avoid contributing to downstream flooding, and protect water resources.

Wildlife: Renewable energy production should maintain or enhance wildlife habitat health and
productivity.

Enhanced geothermal using advanced drilling techniques could be a gigantic surprise. (Photo: 25x’25 Alliance)

Reference Materials Reviewed

25x’25 Action Plan: Charting America’s Energy Future. 25x’25 National Steering Committee.
Washington, DC. February 2007.

Achieving Sustainable Production of Agricultural Biomass for Biorefinery Feedstock.
Biotechnology Industry Association. Washington, DC. 2006.

Bioenergy. NCR-SARE Bioenergy Position Paper. Nov. 2007.
http://www.sare.org/ncrsare/bioenergy.htm

Getting Biofuels Right: Eight Steps for Reaping Real Environmental Benefits from Biofuels.
Natural Resources Defense Council. Washington, DC. May 2007.

Ken Cairn, B. Biomass Energy - Critical Issues for Consideration in Developing Biomass
Energy and Energy Policy in Colorado and the West. Community Energy Systems, LLC. Oak
Creek. CO. 2007.

Natural Resources: Woody Biomass Users’ Experiences Offer Insights for Government Efforts
Aimed at Promoting Its Use. U.S. Government Accountability Office. Washington, DC. GA)-06-
336. March 2006.

Principles for Bioenergy Development. Union of Concerned Scientists. Cambridge, MA. April
2007.

Roundtable on Sustainable Biofuels: Ensuring That Biofuels Deliver on Their Promise of
Sustainability. Ecole Polytechnique Federale De Lausanne. July 2007.

Sample, V. Alaric. Ensuring Forest Sustainability in the Development of Woody-Based
Bioenergy. Pinchot Institute for Conservation. Washington, DC. Vol. 12, No. 1, 2007.

Sample, V. Alaric. Bioenergy Markets: New Capital Infusion for Sustainable Forest
Management. Pinchot Institute for Conservation. Washington, DC. Vol. 11, No. 2, 2006.

Science, Biodiversity, and Sustainable Forestry: A Findings Report of the National Commission on Science for Sustainable Forestry. National Commission on Science for Sustainable Forestry.
Washington, DC. January 2005.

Sustainability: Meeting Future Economic and Social Needs While Preserving Environmental
Quality. National Corn Growers Association. Chesterfield, MO. 2007.

The Rush to Ethanol: Not All Biofuels Are Created Equal. Food & Water Watch and Network for New Energy Choices. Washington, DC, and New York, NY. 2007.

The Environmental, Resource, and Trade Implications of Biofuels. Woods Institute for the Environment. Stanford University. Stanford, CA . 2007.
http://woods.stanford.edu/ideas/biofuels.html

Solar power is the wildcard - it possibly could experience exponential growth. (Photo: 25x’25 Alliance)

25x’25 National Steering Committee

William Richards - Circleville, OH (Committee Co-Chair)

Corn and soybean producer; former Chief, U.S. Department of Agriculture Soil Conservation
Service

J. Read Smith - St. John, WA (Committee Co-Chair)

Wheat, small grains and cattle producer; former President, National Association of Conservation Districts

Duane Acker - Atlantic, IA

Farmer; former President, Kansas State University; former Assistant Secretary of Agriculture for Science and Education, U.S. Department of Agriculture

R. Bruce Arnold - West Chester, PA

Consultant, woody biomass utilization for the pulp and paper industry; retired engineer and
manufacturer, Scott Paper Company

Peggy Beltrone - Great Falls, MT

County Commissioner- Cascade County Montana; member, National Association of Counties
Environment, Energy and Land Use Steering Committee

John R. “Jack” Block - Washington, DC

Former Secretary of Agriculture, 1981-1986

Michael Bowman - Wray, CO

Wheat, corn and alfalfa producer; Steering Committee member, Colorado Renewable Energy
Forum; Rural Chair, Colorado Ag Energy Task Force

Charles Bronson - Tallahassee, FL

Commissioner, Florida Department of Agriculture and Consumer Services; member, Florida
Cabinet; member, Florida Governor’s Council on Efficient Government; former President,
Southern Association of State Departments of Agriculture

Glenn English - Arlington, VA

CEO, National Rural Electric Cooperative Association; former Co-Chair, U.S. Department of
Agriculture, DOE Biomass R&D Federal Advisory Committee; former Member of Congress (6th-OK) 1974-1994; Chairman, House Agriculture Subcommittee on Environment, Credit, and Rural Development

Tom Ewing - Pontiac, IL

Immediate past Chairman, USDA, DOE Biomass R&D Federal Advisory Committee; former Member of Congress (15th/IL) 1991-2001; Chairman, House Agriculture Subcommittee on Risk Management and Specialty Crops

Barry Flinchbaugh - Manhattan, KS

Professor of Agricultural Economics, Kansas State University; Chairman, Commission on 21st
Century Production Agriculture

Robert Foster - Middlebury, VT

Dairy farmer, composter, anaerobic digester; President, Vermont Natural Ag Products; Vice-
President, Foster Brothers Farm Inc.; President, AgReFresh

Richard Hahn - Omaha, NE

Retired President, Farmers National Company

Harry L. Haney, Jr. Austin, TX

Consultant, non-industrial private forestland management; emeritus professor, Department of
Forestry, College of Natural Resources, Virginia Tech; past president, Forest Landowners Association

Ron Heck - Perry, IA

Soybean and corn producer; Past President, American Soybean Association

Bill Horan - Rockwell City, IA

Corn and soybean producer; former Board Member, National Corn Growers Association

A.G. Kawamura - Sacramento, CA

Orange County specialty crops, produce grower and shipper; Secretary, California Department of Food and Agriculture; Vice Chairman, Rural Development & Financial Security Policy Committee, National Association of State Departments of Agriculture; founding Partner, Orange County Produce, LLC

Jim Moseley - Clarks Hill, IN

Managing Partner, Infinity Pork, LLC; former Deputy Secretary, U.S. Department of Agriculture; former Director of Agricultural Services and Regulations, Purdue University’s School of Agriculture; Assistant Secretary of Agriculture for Natural Resources and the Environment, U.S. Department of Agriculture

Allen Rider - New Holland, PA

Retired President, New Holland North America; former Vice President, New Holland North
America Agricultural Business Unit

Nathan Rudgers - Batavia, NY

Senior Vice-President, Director, Business Development, Farm Credit of Western New York;
former Commissioner, New York State Department of Agriculture and Markets; former President, National Association of State Departments of Agriculture

Bart Ruth - Rising City, NE

Corn and soybean producer; Past President, American Soybean Association; 2005 Eisenhower
Fellow for Agriculture

E. Dale Threadgill - Athens, GA

Director, Faculty of Engineering, and Department Head, Biological & Agricultural Engineering, the Driftmier Engineering Center, and the Biorefinery and Carbon Cycling Program, University of
Georgia; private forest landowner

Mike Toelle - Brown’s Valley, MN

Chairman, CHS; past Director and Chairman, Country Partners Cooperative; operator, grain and hog farm, Browns Valley

Gerald Vap - McCook, NE

Chairman, Nebraska Public Service Commission; former Chairman, National Conservation
Foundation; President, Vap Seed & Hardware

Don Villwock - Edwardsport, IN

Grain and soybean producer; President, Indiana Farm Bureau Federation; former Chairman,
Farm Foundation

Sara Wyant - St. Charles, IL

President, Agri-Pulse Communications, Inc.; former Vice-President of Editorial, Farm Progress
Companies

Ernest C. Shea - Lutherville, MD (Project Coordinator)

President, Natural Resource Solutions, LLC; former CEO, National Association of Conservation

About the authors: The “25×25 Sustainability Principles” was released in March 2008 by The 25x’25 Alliance, and is republished with permission. The 25x’25 Alliance began in 2004 as a group of volunteer farm leaders who first envisioned the goal of America achieving 25% renewable energy by 2025, and the group quickly gained the support of a broad cross-section of the agriculture and forestry communities. Now leaders from business, labor, conservation and religious groups are joining this alliance as well.

The 25x’25 Alliance is supported financially by the Energy Future Coalition, a non-partisan public policy initiative funded by foundations. For general inquiries, email info@25×25.org. The 25x’25 Alliance is headquartered at 1626 Bellona Avenue, Lutherville, MD 21093, (410) 252-7079.

Additional EcoWorld reports on Biofuel:

- Food vs. Fuel?

- Biofuel’s Mixed Blessings

- The Biofuel Bonanza

- Factory Farmed Biofuel

- Bioethanol vs. Biodiesel

- Growing & Refining Biofuel

- India’s Biodiesel Scene

- Biodiesel: The Alternative Fuel That’s Already Here

- Jatropha in Africa

- Europe Adopts Jatropha

- Jatropha - Biofuel Grown in the Desert

Also reference over 40 Editor’s posts on the topic of biofuel:

- Biofuel Posts, EcoWorld Editor’s Blog

Sugar Cane Probably today’s top bioethanol crop

The biofuel component of the bioenergy sector is certainly an important one.

The International Energy Agency did an analysis and projection of oil consumption measured in Million tons of oil equivalent (Mtoe) from 1971 to 2030. Whereas in 1971 transport consumption of oil to total oil was roughly 50%, by 2030 transport will account for around two thirds of oil consumption. More concerning, total oil consumption is predicted to increase to 5,000 Mtoe, more than doubling the total consumption of 1971 (1). A significant portion of this increase in consumption is driven by the developing economies and is therefore very difficult to reduce due to their rapid economic growth. Both in terms of reduction of CO2 emissions from this increasing consumption as well as reducing the dependency on oil as the primary product the demand for viable biofuels will increase in the years to come. From the same analysis bioethanol production was estimated at around 30 million tons per year in 2004 and biodiesel at only an estimated 2,5 million tons per year as of 2004.

The demand is thus clearly there for a substitute to oil, and would be even more pronounced if this substitute could be “greener.” As regards biofuels however, the key imperative would seemingly remain the economic viability of the substitute. As Nobel prizewinner, Sydney Brenner, once noted “the only ‘omics’ that really counts in Biotechnology is economics. (2)

How then do you consider the viability of a project, whether it be biodiesel or bioethanol?

It should be noted from the outset, that there is a perplexing myriad of country, location, and project specific data that cannot possibly be covered in a short article such as this. Further, it may be quite possible that a specific project may have other factors specific to that project that completely erode the assumptions of this article. This is exacerbated by the lack of published and scientific data available. That is not in any way whatsoever saying that a huge a mount of scientific research has not been done on biofuels, but simply that a) the biofuel field is in itself a huge field of study, b) new technological advances have presented themselves (or are in the pipeline) that affect current assumptions, c) some advances are driven by economics and these will present themselves by way of company performances in the future.

This article focuses on environmental analysis of the biodiesel and bioethanol industries. Focus is mainly placed on a PEEST analysis (Political, Economic, Environmental, Social, and Technical). The Social and Technical factors are covered briefly. This analysis is not intended to be exhaustive and is intended only to highlight some of the salient points pertinent to such an analysis and reflect on some of the current thinking around these factors. Strategists might argue that there are a number of other environmental analytical techniques which should be applied to an environmental scan of the industry; again such an analysis would be so extensive that it falls outside the scope of this article. Further, the focus of this article is mainly on the external environment as it is far too complex a subject to cover internal environmental factors affecting a project, and even the external environment is only approached from a generic approach so as not to create undue complexity.

POLITICAL FACTORS

The environmental benefits of biofuel is especially important in the European Union

The main political drivers for the biofuel industry in Europe is directed towards the environment, and therefore lowering carbon emissions as much as possible. As a secondary objective the Europeans aim to reduce their dependency on petro-energy (3). This perspective is closely related to the objectives and structure of the Kyoto protocol, which is endorsed by the EU. Interestingly, in terms of concrete actions in the EU, the focus seems more to be on developing biofuels in the member states to meet the objectives (4). The objectives include a 5.75% bio-to-petrofuels blend envisaged by the European Union by 2010.

Americans view biofuel as a way to help them achieve energy independence

In contrast, in the US the primary objective is to reduce dependency on imported oil. More specifically, the Department of Energy’s Office of Energy Efficient and Renewable Energy (EERE) invests in research to achieve the following goals:

- Dramatically reduce, or even end, dependence on foreign oil.

- Spur the creation of a domestic bioindustry. (5)

The two main political drivers therefore are energy independence and environmentally friendly energy. It should be noted that on both sides of the Atlantic these drivers concentrate on internal markets/projects. It follows therefore that development of the industries are directed to addressing local concerns and therefore feedstocks and technologies are directed towards that.

Rapidly industrializing nations such as India see biofuel as a source of jobs and wealth

In the developing world it is worthwhile to note that an additional driver is the potential of job creation for the local economies, particularly where labor intensive feedstocks can be utilized such as harvestable nuts and crops for biofuels.

In short, as countries focus on developing their own biofuel industries, the direction of research and development for biofuels will be driven by the countries and their corresponding corporations and financial markets who invest the largest amounts of capital to these endeavors. Thus for example, the primary development in terms of economically viable research and studies in biodiesel and bioethanol centre around the first world countries. This significantly hampers assessment of projects which fall outside this scope as there is much more limited research available, and often the published research available centers more on developmental than commercial factors in contrast to similar research in the developed world.

ECONOMIC/ENVIRONMENT FACTORS

In the particular case of biofuels, Economic and Environmental analysis are often intertwined. Under this heading some of the main measurement criteria to be covered are Life-Cycle Cost Analysis (LCA) and Net Energy Balance (NEB):

LIFE CYCLE COST ANALYSIS

Life cycle cost analysis covers the costs incurred “from cradle to grave of the project.” (6) It focuses mainly on the environmental impact, but the generic methodology could readily be applied to the economic cost-benefit of the project (although this is not done too frequently). LCA can often be complimented by other measurements such as external-cost analysis. The LCA does prove to be a beneficial tool to analyse projects. In terms of biofuels the main focus seems to be towards energy consumption - utilising it as a decision making tool to compare the owning and operating costs for energy using systems. There is relatively limited research still available in this field but most apply the LCA to automobiles, comparing using different fuels as inputs. These studies are however subject to academic limitations and a number of factors have the potential to change the outcomes of the studies such as price of fuel (and also which fuel is the baseline - petroleum or diesel), efficiency of the engine, cost of the vehicle, cost of manufacturing, service costs, fixed costs, end-of-life salvagability of the automobile, etc.

An example of this variance in research output due to varying underlying factors is an LCA conducted in 2000 on alternative biofuels (7). Essentially the article concluded that given the underlying factors at the time biofuels where not cost effective due to their high fuel price. Excluding subsidies, biodiesel from soybeans did prove about 20% more cost-effective than Ethanol (C2 H5 OH). Ethanol from corn was determined to be marginally more effective than herbaceous and woody biomass respectively. Similarly a research paper presented in 1998 utilising both LCA and an External Costs Analysis noted that: “The LCA analysis shows that the benefits in terms of greenhouse gas emissions are being compensated by higher environmental impacts, especially for eutrophication. The External Cost Analysis, shows that external costs of biodiesel and fossil diesel are in the same range and are dominated by the impacts of the use phase.” (8)

Oil Palms in the Niger Delta Probably the top biodiesel crop, but no study can fail to take into account local conditions.

The main problem is that most research done using LCA is fundamentally linked to the economics of the country and region in which it is produced. Therefore, performing a study in the US and attempting to replicate that study in Europe could likely lead to different results. This variations could be attributed, but not limited, to the following factors - cost of input stock, type of input stock, planting, harvesting and processing of input stock, economic factors, subsidies, etc. In a nutshell, although LCA is highly relevant to a specific market or possibly project, it is not necessarily possible to use this data to extrapolate to other countries or projects.

It is important to note that the country conducting the research will typically focus on the crops that are viable within its location - thus for example a study in the UK would not consider a plantation of Palm Oil as input stock as although it is far superior in yields to crops available in Europe it is not suitable for the climate and would hence be disregarded from the specific country perspective.

For these reasons, comparisons of biodiesel vs. bioethanol should be done with extreme caution and the scientific principles behind such a study must be defensible. Furthermore, the LCA studies come with the additional caution that they are time sensitive - the studies referred to above, would quite likely have different outcomes in the year 2006 given changing oil prices, technological advances in agriculture of the input crops, refining, and the end use products (such as automobiles).

NET ENERGY BALANCE EQUATES TO ENERGY INPUT VS. ENERGY OUTPUT

The other factor predominant in literature is the Net Energy Balance (NEB). This represents an overview of production and consumption of primary and secondary biofuels for a specific project, area, country or region. Energy balances should cover all the primary and secondary energy sources, showing clearly the non-energy use of such sources. (9)

NEB is an interesting counterpoint to LCA analyses in that NEB purely focuses on energy input versus energy output of the production cycle and therefore does not take cost variables into consideration. This is helpful in that it focuses on efficiency throughout the energy crop to biofuel cycle. In this sense the main impact on the reliability of the NEB analyses is the development of technology both from an agricultural and refining perspective.

A report by the US Department of Energy comments that the NEB of ethanol is estimated at around 1.38 for ethanol from corn, but that cellulosic bioethanol (from plant mass) can reach 2.62. The same report anticipates an NEB potential of around 5.0 based on further research on cellulosic ethanol production. The same report notes that biodiesel NEB can reach around 3.2 from soybeans. (10)

Low-tech biofuel for lamps and stoves work now, as refining methods and markets evolve. photo: www.jatropha.org

MAKE BIOFUEL? - WHY NOT JUST BURN IT!

A study in the Netherlands noted that it is far more efficient to utilise the feedstock for electricity generation (bioenergy) than it is to use it for the production of biofuels. Further, this study indicated that given the input feedstocks compared (Sugar beet for bioethanol and rapeseed oil for biodiesel) and the country (the Netherlands) that biodiesel was more energy efficient and therefore had a more positive energy balance (11). A similar study focusing on rapeseed oil for biodiesel and wheat for bioethanol production also indicated that biodiesel was the superior fuel in terms of NEB - both crops however were found to be NEB positive (12). Bioethanol in particular has often been held to have a negative NEB, although recent studies do seem to indicate it is possible to produce bioethanol with a positive NEB (13).

The essence however is that it appears with current feedstock output biodiesel consistently has a higher NEB (14). Of course depending on the amount of research and development done on bioethanol, this may likely change if such R&D is invested in ethanol and the technology, processes, and crops are improved. Furthermore, the matter is highly subjective to location and feedstock, so for example, Brazil which has a very large sugar cane industry may prove much higher NEB’s if ethanol is consumed in country. Transport costs and energy consumption of feedstock plays a significant role, and therefore a high NEB crop in say a developing country producing sugar or palm oil may be eroded if such stocks are transported to a refinery in a developed country. Again, if research is not conducted on a sound scientific basis then comparing outside of the scientific parameters can result in incorrect assumptions of the merits of a biodiesel or bioethanol project.

It is reasonable then to expect the NEB’s of crops to improve in the future. The reasons for this are as follows. First, only existing commercial crops are used. These existing crop yields could be improved with further genetic engineering, crop selection, etc. Second, commercial activity has not been undertaken or materially developed yet for specialist biofuel crops such as Jatropha Curcas, Ponga Mia, etc. Large scale commercial activity will likely yield more energy efficient production of feedstocks, which will then improve the NEB. Third, current production primarily concentrates on annual crops. Particularly so in Europe and America where the crops have to be replanted each year to be harvested. If plantations are used less energy is expended to produce the crops because the plantation is harvested annually without having to replant the crop. Of course Palm Oil and to a lesser extent sugar do cater for this requirement and are therefore at a higher NEB level already.

There are of course a host of other measurement factors that should be considered in analyzing the economic and environmental factors, however the above two have been covered in some detail as they are often encountered in literature and do provide a sound basis for analysis.

SOCIAL FACTORS

A pertinent social factor affecting biofuels is that particularly in the developed world society has become increasingly environmentally conscious, and therefore it has become more important for the man on the street to consume greener energy. More importantly the increased public interest in greener energy has translated into political interest and “Green” parties have increasingly come to the fore in politics in some European countries.

Faces of the future: Will biofuel become a vital part of the eventual energy solutions for huge emerging nations such as China? photo: www.pbs.org

In contrast to the already fully industrialized world, there are many countries which are experiencing population booms as well as growing economies. Specifically in India and China the population sizes coupled with strong growth is increasing demand for energy and fuels. In the developing world the demand for energy combined with the pressures of unemployment have made bioethanol and biodiesel popular areas of interest. This interest has been enhanced particularly for biodiesel crops such as Palm oil and Jatropha where manual labor is often utilized for harvesting and thus the development of these industries assists in job creation as well as energy independence.

TECHNICAL FACTORS

Technical advances both in terms of actual crop yields and refining technologies have significantly improved in the past few years. For refining one only has to look at the refining technological improvements companies such as Lurgi (15) have made over the past decade to appreciate this. On the crop side research has improved crop yields for plants such as Palm Oil - see for example the research done by the Palm Oil Research Institute of Malaysia (16) and academic institutions (17) both on crop development as well as increased utilization of crop waste (18).

Again, as noted in the Economic/Environment factors, the research remains context specific, and it is important not to extrapolate data without a sound scientific base and due consideration for all factors influencing the research data. So, for example, a study was conducted for the UK Department of Transport using 2002 as a basis year comparing international resource costs for biodiesel and bioethanol, with extrapolations for 2020. The study was limited in scope to Europe, US and Brazil and concentrated on wood, straw, wheat and corn for bioethanol and oil seeds (soybeans and rapeseed oil) for biodiesel. For the 2002 year it indicated that given the feedstock and environment, that biodiesel produced more energy per investment than bioethanol as regards Europe and the UK, however when the US and Brazil were included bioethanol proved more effective. In their 2020 projections, accounting for technological improvements and using the same input factors, the study anticipated that the most cost-effective solution would be biodiesel produced from biomass (wood & straw) given the technologies anticipated by that time (19).

The importance of the UK study lies not in the predictions of the year 2002, but in the fact that it is realistic to expect significant technological improvements in both the agricultural and processing/refining productivity of biofuels. To this extent it is recommended that biofuels projects be approached on a case by case basis to determine viability and that a definitive position is not taken as regards viability of biodiesel versus bioethanol. There are a number of current views and comparisons drawn for the different feedstock crops for biodiesel and bioethanol, see for example a recent article on this site (20).

BIOFUEL PRODUCTIVITY DATA STILL HARD TO FIND

Current published and scientific data as regards to technological advances both in terms of crops (for example yields per hectare of different crops) as well as processing and refining advances are hard to come by. The main reason for this is that the biofuels field has only received serious attention from commercial investors in the last few years and to this extent it is seen as an exciting market to be entering. Consequently, this has lead to most research being proprietary, patented or not published and utilized for commercial purposes. This is not to say that some of the advances are not scientifically credible, only that they are not always accessible. The consequent risk is that a lot of unsubstantiated data is assumed, either over or under estimating the realistic yields of crops, efficiencies of processes and technologies, etc.

It is possible that the nature of the feedstocks themselves will allow the industry to change, for example, by-products that are now seen as waste or used for one purpose may change to be used for completely different purposes in the future. So for example certain tropical and sub-tropical crops may end up driving a wider bioenergy business rather than a solely biofuels business if the byproducts are converted into electricity. This could in turn effect how the LCA or NEB of a project is calculated and consequently change the economic viability of future projects.

The main issue constraining definitive comment on evaluating biodiesel vs. bioethanol is that both fuels are not fully developed yet. The reasons for this are as follows:

First, only limited existing commercial crops are have recorded data on their NEB. These existing crop yields could be improved with further, crop selection, genetic engineering, etc.

Jatropha seedlings getting a start in India There is much still to learn about this promising crop

Second, commercial activity has not been undertaken or materially developed yet for specialist biofuel crops such as Jatropha Curcas, Ponga Mia, etc. Large scale commercial activity will likely yield more energy efficient production of feedstocks, which will then improve the NEB.

Third, current production primarily concentrates on annual crops. Particularly so in Europe and America where the crops have to be replanted each year to be harvested. If plantations are used, less energy is expended to produce the crops when the plantation is harvested annually without having to replant the crop. Of course Palm Oil and to a lesser extent sugar do cater for this requirement and are therefore at a higher NEB level already.

Regardless of the seeming higher NEB viability in the developing world for biofuels, a number of firms have built or are in the process of building major biofuel refineries in the US, Europe and other developed countries (21).

Conclusion - Bioethanol & Biodiesel are a toss-up - they both work well depending on the crop and the planting environment.

Attempting to analyze an industry such as biofuels is a very complex task. Both bioethanol and biodiesel crops, processes and refining technology is constantly improving. Further, it is important to appreciate that crops and technologies may be developed to a scientifically reliable stage, yet data thereon is not yet available in the public domain. The purpose of this article was to extract and review some of the current data and drivers impacting on the biofuel sector within the conceptual construct of a PEEST analysis to thereby highlight some of the current factors, thinking and research in this field and thereby provide the reader with a basic construct for future analysis of biofuel projects.

Footnotes and Reference Sources:

1 Fulton, L. 20/21 June 2005. (back)

Assessing the biofuels option.

Presented at a conference in Paris - Biofuels for Transport: an International Perspective

2 Whelan, J. November 6, 2004. (back)
The Insider : European Biotech - No Pain, No Gain. New Scientist p54 - 55.
www.newscientistjobs.com

3 Anon. 17 August 2004. (back)

Greencars : Euractiv.com

www.euractiv.com/Article?tcmuri=tcm:29-117504-16

4 British Associations for Bio Fuels and Oils (back)

www.biodiesel.co.uk/babfo.htm

5 Tyson, K.S. et al. June 2004. (back)

Biomass Oil Analysis: Research Needs and Recommendations.

National Renewable Energy Laboratory

www.nrel.gov

6 De Nocker, N. et al. December 3-4, 1998. (back)

Comparison of LCA and external cost analysis for biodiesel and diesel.

Presented at 2nd International conference LCA in Agriculture, Agro-Industry and Forestry.
www.senternovem.nl/mmfiles/30743_tcm24-124248.pdf

7 MacLean, H.L. et al. 2000. (back)

A Life-Cycle Cost Analysis of Alternative Automobile Fuels. Journal of Air & Waste Association (50:1769-1779).

www.msu.edu/~satish/jawma.pdf

8 De Nocker, N. et al. December 3-4, 1998. (back)

Comparison of LCA and external cost analysis for biodiesel and diesel.

Presented at 2nd International conference LCA in Agriculture, Agro-Industry and Forestry.
www.senternovem.nl/mmfiles/30743_tcm24-124248.pdf

9 Food and Agriculture Organisation of the United Nations (back)
www.fao.org/documents/show_cdr.asp?url_file=/docrep/007/j4504e/j4504e10.htm

10 Food and Agriculture Organisation of the United Nations (back)
www.fao.org/documents/show_cdr.asp?url_file=/docrep/007/j4504e/j4504e10.htm

US Department of Energy - Net Energy Balance for Bioethanol Use.

http://eereweb.ee.doe.gov/biomass/printable_versions/net_energy_balance.html

11 Kampman, B.E. et al. November, 2003. (back)

Biomass: for vehicle fuels or power generation? CE: Solutions for environment, economy and technology.

www.cedelft.nl/eng/pdf/4583_Biomass_abstract.pdf

12 Richards, I.R. June 2000. (back)

Energy balances in the growth of oilseed rape for biodiesel and of wheat for bioethanol.

British Association of Biofuels and oils - Levington Agricultural report.
www.senternovem.nl/mmfiles/27781_tcm24-124189.pdf

13 Anon. January 29, 2006. (back)

New Study Makes case for Bioethanol. Euractiv.
www.euractiv.com/Article?tcmuri=tcm:29-152035-16

14 Anon. April 4, 2006. (back)

Net Energy Balance for Bioethanol production and use.

U.S. Department of Energy - Energy Efficiency and Renewable Energy Biomass Program

15 www.lurgi.com/website/index.php?L=1 (back)

16 http://ecoport.org/ep?Plant=972 (back)

17 Corley, H. Est. 1999. (back)

New Technologies for Plantation Crop Improvement. Cranfield University.
www.taa.org.uk/WestCountry/corley.html

18 Khalil, H. et al. 2000. (back)

The effect of various anhydride modifications on mechanical properties and water absorption of oil palm empty fruit bunches reinforced polyester composites. Polymer International. Volume 50, Issue 4 : 395 - 402.

www3.interscience.wiley.com/cgi-bin/abstract/77502740/ABSTRACT?CRETRY=1

19 AET Technologies (back)

International resource costs of biodiesel and bioethanol. UK Department for transport.

www.dft.gov.uk/stellent/groups/dft_roads/documents/pdf/dft_roads_pdf_024054.pdf

20 www.ecoworld.com/Home/Articles2.cfm?TID=380 (back)

21 Winnie, J. June 10, 2005. (back)

Major Biofuel projects.

ttp://jcwinnie.biz/wordpress/?p=845

About the Author: Louis Strydom is an expert in new venture creation and project finance with wide experience on projects in the developing world. One of Louis’ main projects for the last year has been conducting a pre-feasibility study and promotion of a 230,000 acre site for a Jatropha plantation and biodiesel refinery in Kenya. Previously he was Senior Vice President of Project Finance at Decillion - a company listed on the Johannesburg Stock Exchange. Other positions included Senior Economist managing the Credit Policy and Risk Management division of the Export Credit Insurance Corporation of South Africa. Prior to that he was a Director with Triumvirate responsible for Marketing and Consulting on Crisis Management. Louis also has extensive experience in short term insurance with American Insurance Group on fire/casualty risks, niche products and political risks in Africa, Europe, the Middle East, UK and USA.

Fuel from sugar - ethanol from Sugar Cane is one of the world’s most efficient biofuels

Brazil’s successful development of an ethanol-based biofuels sector since the 1980s, hardly noticed at first, has been the envy of other countries more dependent on oil imports.

The government had the foresight to notice, long before the oil paradigm started to shift towards peak production, that its vast hectares of sugar cane could be put to good use as an ethanol source. Hence, it granted heavy subsidies to agricultural and related industries to alter the source of transport fuels.

Years later, many of those other countries are jumping on the biofuels bandwagon in an era where energy security has risen up the agenda - even the oil-rich country of Nigeria. “Nigeria would be $150 million (about N21bn) annually richer when she adopts the development and application of biofuel as an alternative energy source to crude oil,” states Funsho Kupolokun, group managing director of the Nigerian National Petroleum Corporation (NNPC), which has been given the task of creating the new alternative industry.

It might seem surprising that the oil industry itself in this country has taken the job on board. In many nations, oil companies sign contracts with the emerging biofuels suppliers in deals based either on mandated biofuels content or tax incentives. However, in this case, the national oil company has been instructed by the government to develop the potential within cassava and sugarcane crops, both of which are plentiful in Nigeria.

National statistics suggest that more than 400,000 hectares of land could support high yield sugarcane operations, for instance. At the same time, Nigeria is a leading cassava producer. The crops would be used in the first instance to create a 10% biofuel-90% fossil fuel blend.

“Two potential crops have been identified for the fuel ethanol initiative in Nigeria: sugarcane and cassava. Nigeria is currently reputed to be the leading producer of cassava in the world of about 30 million tons annually,” states Onochie Anyaoku, group general manager of NNPC’s Renewables Division. “The potential must be seen against the background that the average yield in Nigeria is put at about 15 tons/hectare as compared to 25-30 tons/hectare obtainable in other countries. Moreover, cassava is most perceived as a food crop in Nigeria and not as an industrial crop, part of which the bio-fuel program is expected to radically change.” A step-by-step approach is being followed with cassava to ensure that all technical and market issues are addressed comprehensively.

The plans will be supported by the Renewable Energy & Energy Efficiency Partnership (REEEP), a public-private clean energy partnership established at the World Summit for Sustainable Development. Headquartered in Vienna, Austria, REEEP is providing part of the funds for detailed feasibility studies to establish the supply chain for several new ethanol production plants.

The second proposed crop is sugarcane. Though the cultivation of industrial sugarcane suffered a serious setback due to the poor performance of the government-owned sugar companies (now privatised), there is no doubt about the huge potential for growing sugarcane on a large scale in Nigeria, particularly along the entire length and breadth of the rivers Niger and Benue. The states of Jigawa (northern Nigeria), Benue and Taraba (middle belt region of Nigeria) are targets for further agricultural development, and further feasibility studies are planned for individual locations within each state.

Kupolokun recently met with the Benue state governor George Akume to discuss how NNPC could work to secure land and kick off initial partnerships in the region to generate a programme which would “improve automotive exhaust emissions in the country, reduce domestic use of petrol, free up more crude for export and position Nigeria for development of the green fuel.”

Nigeria is the world’s top grower of cassava with potential to greatly increase production

He said the company had identified locations in several states suitable for cassava and sugar cane plantations, adding that memoranda of understanding with the government would be signed as soon as agreements had been reached. Akume in his turn said the NNPC’s ethanol project crystallised local development efforts and provided employment opportunities to local people, adding that the programme might also halt the scourge of petroleum product pipeline vandalisation.

Cooperative agreements are on the table between the Renewable Energy Division of NNPC and the International Institute of Tropical Agriculture (a leading research institute for cassava production) as well as the Nigerian Cereals Research Institute (a national research institute with mandate for research on sugarcane). These agreements will focus on the low yield problems typical of many varieties of both sugar cane and cassava in Nigeria.

Once the agreement is signed, researchers will investigate how to produce and multiply cassava and sugarcane seedling varieties showing improved productivity and the higher yields necessary for sound profitability. NNPC is also looking to create commercial partnerships with local businesses so that negative impacts on food markets are minimised, while also building local support for the long term development of this new industry.

The REEEP-funded pilot project will generate a business model for the establishment and cultivation of the plantations themselves - in particular a 10-20,000 hectare sugarcane plantation fitted with an ethanol production unit making 70-80 million litres annually, as well as an 5-10,000 hectare cassava plantation fitted with an ethanol production unit capable of producing 50-60 million litres each year.

Nigeria, Africa’s most populous country, may create thousands of new jobs growing biofuel (Scale: 1 pixel = 5 kilometers)

Like Brazil, Nigeria is taking a more top-down supply-led approach than has perhaps been evident in other countries, many of whose policies are more market-driven. But the government is not just looking to Brazil for information; it also plans to start the industry up using a Brazilian import partnership. Brazil is to initially supply Nigeria with fuel ethanol in order to develop the market and fuel supply infrastructure. Both countries signed a memorandum of understanding in 2005.

The import reception facilities at the Atlas Cove and Mosimi areas are already being modified in preparation for the distribution of biofuel. The REEEP project, which started this April, will develop just as imports arrive from Brazil, allowing the plantations to grow within a rapidly developing market environment.

These events are taking place within a non-consolidated governmental policy framework, though there are campaigns to change this situation. “The policy environment has always been a challenge in Nigeria, and the biofuel industry is no exception. No current policy framework exists that directly addresses the challenges and peculiarities of a biofuel industry in Nigeria, however, a process for putting such a policy is currently in progress,” states Kupolokun.

New policy developments will involve all the ministries and governmental offices necessary, so that they take into account all the issues related to the various links in the value chain. At this stage, the policy emphasis is to stimulate the emergence of integrated operations showing the most potential for good economic performance. At the same time the policy will aim to set out the best conditions for the development of an outgrower scheme (a scheme that will involve the direct participation of local communities in the production of feed stock for the industry). It will also address access to the best international industry skills and financing available to underpin the sustained growth of the industry.

The new industry has the potential to radically change the agricultural sector in Nigeria, which is currently dedicated only to food production, and will create thousands of new jobs as Africa gears up for what is probably one of its first biofuel and certainly one of its many desperately needed agrarian revolutions. Commenting on the impact of the venture, Kupolokun said the entire process is capable of creating over 200,000 jobs, empowering rural farmers by generating greater earnings.

About the Author: Dr. Marianne Osterkorn obtained her Ph.d.in Business Administration at the University of Economics in Vienna, and received a Masters of Arts in Industrial Psychology from the University of Michigan. She started her career in the banking sector as a project manager for organizational projects at several Austrian banks. From 1981-2004, Osterkorn was employed by Verbund, the largest Austrian utility company. During her 23-year stay at this company she held various management positions, including 10 years as the International Relations Manager of Verbund where she was responsible for international lobbying and market development; she followed closely the liberalisation process of the European Energy Market. During these years she was also strongly involved in the development of the European Green certificate market and was for several years President of RECS International, a European green certificate organisation. In 2004 Dr. Osterkorn became the International Director of REEEP, the Renewable Energy and Energy Efficiency Partnership. In 2006 Osterkorn was nominated to become member of the advisory board of the EU technology platform on Smart Grids.