In the sobering light of the global recession, energy companies are re-examining their commitments to liquid biofuels, with one exception: ethanol.
Worldwide biofuel production topped 100 billion liters in 2010 (Wall St. Journal — 4/7/11) over 80 percent of that being ethanol. The rest is almost all from biodiesel. Still, all biofuels only account for approximately 3 percent of the world’s transportation fuel.
Since the 1970s the United States and Brazil have been incorporating ethanol into their transportation fuel. Today ethanol comprises about 10 percent of American gasoline, while approximately 85 percent of Brazilian vehicles on the road are able to run on any mixture of ethanol or gas.
OIL AND SUGAR
In January, Royal Dutch Shell exited its algae biofuel research project in Hawaii, choosing to rely instead on researching enzymes to produce cellulosic ethanol from wheat stalks and a sugarcane agricultural waste product, called Bagasse.
Cornell’s Dr. David Pimentel has been called an über-biofuel-skeptic. When I spoke with him this month, he talked about bagasse, acknowledging that in Brazil it is used to power the ethanol manufacturing process. This is the only saving grace of sugarcane ethanol, according to Pimentel. Without this, the energy used to make it would exceed the energetic output of the fuel, making it energy negative.
A similar process is used with corn stover. But even this would not save corn from a negative net energy balance, according to Pimentel. He points out that soil erosion from the detritus removal becomes a huge problem in both scenarios, especially for corn, which causes the most erosion and requires the most pesticide and fertilizer of any crop.
Pimentel has written influential and controversial science articles with Tad Patzek of the University of California at Berkeley. A (very) net negative energy balance is found for all liquid biofuels analyzed, except sugarcane ethanol.
An important disclaimer, in my opinion: Patzek’s has had a close relationship with Shell and other oil companies. he worked for Shell Oil Company as a researcher, consultant, and expert witness. He founded and directs the UC Oil Consortium.
A 2007 MIT study sides with Pimentel in the framing of net energy value.
An MIT press release summarizes researcher Tiffany Groode’s research:
Based on her “most likely” outcomes, she concluded that traveling a kilometer using ethanol does indeed consume more energy than traveling the same distance using gasoline… The energy balance is so close that the outcome depends on exactly how you define the problem.
Pimentel has long argued that most studies finding a net positive ethanol energy balance actually omit key factors, such as the energy required to manufacture farm equipment.
What Shell is really relying on is a $12 billion venture with Cosan Ltd. (called the Raizen) to produce and market traditional sugarcane ethanol in Brazil.
In order for this plan to find profits in the U.S., Shell is counting on the Volumetric Ethanol Excise Tax Credit (VEETC) to expire at the end of this year. Included with the tax credit is a 54 cent tariff (per gallon) on importing foreign ethanol (into the U.S.). A resulting arbitrage could lead to very attractive portfolios for stockholders.
Subsidies are being enforced in the U.S. without policy makers having a clear idea of their potential impact on the environment and the economy.
The following study was done for the Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (IISD) in Geneva, Switzerland
The report finds that biofuels are an expensive means to the end reducing greenhouse-gas emissions. It may cost $500 in federal and state subsidies to reduce a ton of CO2-equivalents through the production and use of corn-based ethanol.
What can be done?
ISI Director Simon Upton explains, “We suggest that the U.S. Congress and the States declare a moratorium on programs that would increase or extend subsidies to liquid biofuels, with a view to developing a plan for phasing out subsidies to all transport fuels as quickly as possible.”
Food for thought (pun!): the unsubsidized, taxed crop that produces the most biofuel is, you guessed it, sugarcane.