Dec 07 2009

Don't Hold Your Breath for Biofuels

Posted by: Jonathan Marshall

Here's another reason to hope that electric-powered vehicles make a big splash next year: advanced biofuels that could replace gasoline or diesel won't be ready for prime time until 2020, according to the CEO of Royal Dutch Shell.

Although Shell is a big investor in alternative fuel technologies--hedging its bet for the day when oil starts running out or new laws restrict carbon pollution--its chief executive, Peter Voser, now predicts that it will take "quite a number of years" before the next generation of biofuels starts significant commercial production.

Ethanol made from corn is widely used today as an additive to gasoline, but many critics claim it raises the price of food without helping the environment, taking into account the energy and water required to grow the crops and the carbon released by tilling the soil.

That's why everyone is eagerly awaiting (or investing in) the next generation of biofuels. These include "cellulosic ethanol" produced from hardy plants such as switchgrass, which require little tending, and fuels produced by ponds of genetically engineered algae. Dozens of companies have issued breathless press releases, but none is yet producing commercial quantities of fuel from such technologies.

Shell's warning about the slow progress of second-generation biofuels was foreshadowed by a report from the International Energy Agency, which concluded that "given the complexity of the technical and economic challenges involved, in reality, the first commercial plants are unlikely to be widely deployed before 2020." 

The IEA guessed that with another decade or more of technology development and commercialization, ethanol could become competitive with gasoline if oil climbs above $70 a barrel. The report emphasized that significant government support would be needed in the interim.

The farm lobby and the clean tech lobby together are likely to ensure that such support is forthcoming. The House of Representatives is scheduled this week to vote on a one-year extension of production tax credits ($1 per gallon) for biodiesel.

And more dramatically, the Department of Energy on Friday announced $564 million in grants for 19 biomass projects aimed largely at achieving the government's goal to produce 36 billion gallons of biofuel by 2022.

Bay Area grant winners included Solazyme of South San Francisco, a leader in algae-based technology, and Amyris Biotechnologies in Emeryville, which hopes to convert sorghum into renewable fuels and chemical products.

But in light of the cautionary comments from Shell and the IEA, this comment from Katie Fehrenbacher of Earth2Tech seems apt: "A big question to consider is how far this funding can take some of these firms -- given that commercialized advanced biofuel plants can cost hundreds of millions to a billion dollars to build, a $25 million grant for a pilot project will only help move that plant partway to the next stage."

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