Study: Cellulosic ethanol a long shot

By Kris Bevill
Web exclusive posted March 18, 2008 at 2:01 p.m. CST

Conventional ethanol is the best choice for a sustainable biofuel, according to research recently conducted by Context Network LLC. On March 7, the Iowa-based consulting firm released a 56-page paper, titled "A Review of the Energy Independence and Security Act of 2007, and Its Impact on U.S. Grain and Oilseeds Production", which assessed whether the requirements of the EISA could be met and the impact of those requirements. It was assessed in three time frames: short term (2008 to 2010), medium term (2011 to 2015) and long term (2016 to 2022).

According to the paper's principle author Jim Murphy, the most significant finding was that cellulosic ethanol has little chance of becoming a major contributor to the biofuels market. "While there's high hopes for cellulosic ethanol, it's going to develop much more slowly than people think," he said. The paper noted that there are only two cellulosic ethanol pilot plants currently operating in the United States. Other demonstration plants won't begin producing until 2010 or 2011, making the short-term EISA requirement of having 100 million gallons of cellulosic ethanol by 2012 unattainable.

Medium- and long-term outlooks also failed to provide positive results for cellulosic ethanol. "It becomes a more chronic situation as time goes on," Murphy said. "The law mandates blending of 16 billion gallons [of cellulosic ethanol] by 2022. Our estimate is that, at best, we're going to reach somewhere around 3 billion."

The paper's authors suggest that legislation after 2015 will be more favorable toward cellulosic ethanol and could prompt an increase in production after 2020. Agricultural residues, forest residues and municipal solid waste are expected to be the major cellulosic feedstocks.

The advancement of cellulosic ethanol will be dependant on technology developments and new legislation on greenhouse gases, Murphy said, adding that it will most likely lead to the removal of the current ethanol tariff. "We (Context) are sticking our neck out because it is very much a policy decision that would have to come through Congress, but there's been several mentions of it [recently]," he said. "The fact that sugarcane-based ethanol contributes far less to greenhouse gases than corn-based ethanol is going to give it some advantages."

Murphy said it's very important to note that the EISA requirements are consumption-not production-mandates, and imports could play a substantially large part in U.S. biofuels consumption in the future. The paper's authors predict the number of biofuel gallons imported to the United States could be more than five times greater in the long term.

Biodiesel supply is predicted to meet short- and medium-term requirements, but it's the most vulnerable of all biofuels. "The feedstock, generally speaking, is one that is a direct human consumable," Murphy said. "Because of that, it's always going to have great difficulty as a significant contributor as a biofuel." Murphy added that animal fats as a feedstock can be effective, but biodiesel will continue to be a niche fuel, requiring major government subsidies to exist.

Conventional ethanol is the best choice for fuel when considering EISA requirements, Murphy said. The paper states that researchers expect blenders credits to be renewed until 2015. Murphy pointed to current gas prices as an indication of ethanol's future. "People are now forecasting that ethanol is having a positive effect on gas prices," he said, adding that ethanol's positive effect on the price margin is often overlooked.

The authors noted that an important litmus test for the future of ethanol will be how soon the U.S. EPA determines if E15 or E20 can be used in standard vehicles. Murphy and others may soon be able to see if their prediction is correct. A recent University of Minnesota study determined that E20 can safely be used in nonflexible-fuel vehicles. Minnesota legislators are expected to petition the EPA on that issue later this year.