Can biofuels survive the perfect storm of PR disasters, global recession and a government sceptical about sustainability? Yes—if we want it to. Vincent Heeringa discovers the future of biofuelds still glimmers—especially for wood
It has been the perfect storm.
First, when scientists did the math on the full lifecycle of biofuels, they discovered that subsidising US farmers to grow corn for ethanol actually increases total carbon emissions. And it uses more energy than it produces. Doh!
Then biofuels started to lose the PR war, accused of driving up food prices, causing famine in Africa and committing, said the UN, “a crime against humanity”.
Next, the global economy imploded and the price of its main competitor—oil—collapsed.
On top of that, our new government called a halt on sustainability, delayed the Emissions Trading Scheme and scrapped the biofuels obligation for petrol.
It’s as if a sign went up: biofuels investors exit here.
The net result has been an exodus of interest. US venture capital investment in clean tech fell 35 percent in the fourth quarter of 2008. From their highs of US$25 per share in 2007, US biofuel share prices are scrabbling below US$3.
“New Zealand has about 830,000 hectares of steep, low-quality grass and shrub lands that could be cost-effectively used for forestry. According to the Bioenergy Options for New Zealand report produced by Scion last March, forests planted on this land could create enough biomass to meet all of New Zealand’s projected future needs for transport fuels and heat. And that’s with existing technologies, and without impact on arable land”
In New Zealand the most vocal victim was Tom McNicholl, managing director of Biodiesel Oils New Zealand, the leading biodiesel contender. In the wake of the government’s reversal of the biofuel obligation, McNicholl fumed that $10 million and eight years of investment had just been torched. The company plans to mothball its two new facilities in Waikato and Auckland.
McNicholl claims the industry has been smoked before it even sparked. “There will not be enough sales of biodiesel to warrant the capital investment or even sustain running a plant that’s already built,” he said in December.
Can biofuels survive such a severe pounding?
Look to the hills
Yes. Or at least in time, say proponents.
Tom Richardson, chief executive of Scion (formerly Forest Research), says the long-term imperatives haven’t changed. “I hate to quote Barack Obama—again!— but while it’s politically harder now, it’s no less strategically relevant for biofuels to succeed.”
The imperatives are obvious: global warming, energy independence, growing demand for fuel, a squeeze on natural resources … add your own here.
But there are plenty of roadblocks. So long as oil is cheap, the economics of biofuels look ugly. First-generation biofuels—those derived from food crops such as corn—are incredibly inefficient, costing as much as 41 percent more to generate than they provide in energy (see ‘Much-maligned corn’). And nowhere in the world can biofuels foot it without government subsidies or incentives.
There’s also the problem of feedstock: there just ain’t enough. In the US, biofuels currently supply about 16 billion litres of ethanol, but the US fleet requires 132 billion litres by 2017 and 227 billion by 2030. In New Zealand, we’d need about 1.8 million hectares—more than our total arable land —set aside for the likes of rapeseed.
There’s hope, however, in the hills.
New Zealand has about 830,000 hectares of low-quality grass and shrub lands that could be cost-effectively used for forestry. According to the Bioenergy Options for New Zealand report produced by Scion last March, forests planted on this land could create enough biomass to meet all of New Zealand’s projected future needs for transport fuels and heat. And that’s with existing technologies, and without impact on arable land.
This bold claim seems almost too good to be true: all our cars, trucks and trains, plus factory boilers, vats and furnaces to be powered by wood chips? Really?
Richardson insists the report remains relevant, one year on. “Purpose-grown energy forests of short-, medium- and long-rotation could be established using only 37 percent of the potentially available 8.7 million hectares of medium- and low-quality grazing land available in New Zealand,” he says.
The smallest of the hurdles for such biofuels is the technology. Scion is championing so-called second-generation biofuels, derived from non-food stock such as wood waste, or forests and grasses that grow on marginal land.
Sourcing ethanol from this material is hard, as the sugars for fermentation are locked in cellulose—tough stuff that not even humans can digest. To unlock cellulose’s sugary energy you need a cow’s stomach or a termite’s gut (see ‘Excitement mounds for termites’) or a bunch of enzymes and plenty of heat in a big industrial plant.
Having said that, we’ve been fermenting cellulose for years. It’s called beer. Creating bio-ethanol is not much different. US biotech firm Verenium set up its first cellulose-to-ethanol plant way back in 1999. And last year, using a US$90 million investment from BP (yes, the oil company), it opened a commercial scale cellulosic bio-refinery in Louisiana, where it can source cellulose from fields full of sugarcane and switch grass. PurePower, the Singapore-based alternative energy company, last year purchased BioJoule, an R&D company set up by Dr Jim Watson to derive ethanol and other lignin products from salix trees (see ‘Big Jim’, Idealog #17, page 54). Scion is working with both companies and also with the Chilean government, which is backing cellulose-to-gas technology.
So the technology is less a problem than it was.
The challenge is economic—and political. Establishing the required forest resource will take around 25 years, at an estimated cost of around $2-3 billion a year. No one will invest in such a resource unless there’s a market. And there won’t be market unless the incentives are created. “It needs a kick-start by government,” says Richardson.
The biofuels industry is waiting. Brian Cox, the chief executive of the New Zealand Biofuels Association, says membership is growing and now stands at 200 companies. Most of the investment is small-scale and focused on heat energy—such as burning wood pellets for processing plants. The residential pellet market is also heating up.
For transport energy, don’t hold your breath. There are a few examples. Air New Zealand successfully trialled one engine on fuel 50 percent derived from the jatropha plant. Leopard Coachlines in Christchurch is promising to move its entire fleet over to a five-percent-biodiesel blend. Gull Petroleum is, of course, the only oil company to offer biofuel petrol, containing ten percent ethanol from dairy whey.
“But overall we’re way behind,” says Brian Cox. “In Europe especially, the drive for change, through government policy, has been much stronger.”
If we are to see a significant shift to forests-derived fuels, it will require government intervention. As we said, don’t hold your breath.
Sources: UN State of Food and Agriculture 2008, University of Chicago, and the US Department of Energy
At the height of the rhetoric against biofuels, one United Nations mandarin proclaimed them to be a “crime against humanity” for driving up the price of food. A World Bank estimate put biofuel’s contribution to the increase as high as 75 percent.
More sober analysis by the UN now shows biofuels’ contribution to the food price rises of 2006–2008 were actually about 15 percent. The key culprits were oil and increased demand. A third, less obvious, bogey is the much-loathed US and EU grower subsidies. Tax-funded, first-world farmers drove global food prices downwards for such a long time that the developing world gave up growing its own. The result, when prices skyrocketed, was catastrophic.
But while it may not be the food villain, corn-sourced ethanol still shows woeful maths. Cornell University’s David Pimentel investigated ethanol production for the US Department of Energy. His conclusion: “Adding up the energy costs of corn production and its conversion to ethanol, on average 131,000 BTUs are needed to make one gallon of ethanol. One gallon of ethanol has an energy value of only 77,000 BTU.” That’s a 41 percent energy loss.
What’s more, it may also be a net contributor to greenhouse gases. By including the coal or gas-fired energy sources that drive the ethanol plants, Nobel Prize winner Paul Crutzen found ethanol produced from corn and sugarcane had a ‘net climate warming’ effect when compared to oil. By comparison, cellulosic ethanol produces 85 percent less greenhouse emissions compared to petrol.