OBAMA ADMIN, SIERRA CLUB, BIG OIL SEE BETTER BIOFUELS MATURING

Is it a coincidence that a new interest in next-generation biofuels is emerging with the new Secretary of Energy?

Nobel laureate Steven Chu, the Obama Secretary at the U.S. Department of Energy (DOE), was a leading proponent of research into the secrets of refining waste organic materials into liquid fuels when he got the call from the President.

Secretary Chu, as head of the University of California’s Lawrence Berkeley National Laboratory (LBNL), was said to be one of the brokers of the relationship between the University and oil giant British Petroleum (BP) in the 2007 formation of the $500 million Energy Biosciences Institute (EBI) project to advance biofuel technology.

The project, which included the University of Illinois as well as U.C. Berkeley, was blessed, it might be added in passing, by California Governor Arnold Schwarzenegger and Illinois Governor Rod Blagojevich.

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Secretary Chu, whose Nobel-winning research was on lasers and who taught both physics and molecular and cell biology, saw the project as fundamental to the solving of the next generation biofuels problem.

Secretary Chu: "This partnership with BP will develop new, sustainable energy technologies that can transform the landscape…We believe EBI will create a culture where vibrant, interpersonal interactions will generate extraordinarily innovative energy research…and...rapidly explore bold approaches..."

The essential obstacle to economically creating a liquid biofuel from cellulosic materials is the finding of an enzymatic or heat-and-pressure refining process that can efficiently transform weed plants and waste organic matter into hydrocarbonate liquids dense enough to burn in internal combustion engines.

Economic Factors Affecting the Competitiveness of Cellulosic Biofuels and Development of Cellulosic Biofuels describe work done at EBI under Secretary Chu’s leadership.

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During the last 6-to-12 months, the bulk of attention paid to the subject of biofuels was devoted to the failure of present-generation, crop-derived biofuels. The 2007 U.S. energy bill mandated the production of 36 billion gallons of such biofuels by 2022. The EU called for its members to obtain 10% of their transport from such biofuels by 2020. Then studies emerged showing food-crop biofules such as corn ethanol and soybean biodiesel do little, if anything, to reverse greenhouse gas emissions (GhGs) and, in fact, have been worsening global climate change by driving emerging economies to convert GhG-sequestering rainforests to crop lands as part of the biofuels production equation.

But Smart Choices for Biofuels, from the Sierra Club and Worldwatch Institute, is indicative of a new awareness of the failures of today’s crop-derived fuels and a newly emerging effort to turn attention to the next generation of biofuels such as those pioneered by EBI and other researchers.

From the report: “Much of the strong support for biofuels in the United States is premised on the national security advantages of reducing dependence on imported oil…Worldwide, efforts to replace oil with biofuels…has contributed to a rapid increase in food, feed grain, and soybean prices, as well as a sharp environmental backlash. Evidence is building that the biofuels industry is creating a host of ecological problems while failing to deliver real reductions in greenhouse gas emissions…[and] also creating global pressure for carbon-emitting deforestation and land conversion, as food and fuel compete for scarce resources…”

The report only accepts the potential for biofuels to contribute to the New Energy economy and the fight against global climate change if they are developed with sustainable, second-generation technologies.

Switchgrass, a nonfood, next-generation biofuels crop. (click to enlarge)

Second-generation technologies employ (1) biological or chemical enzymes (called biochemical platforms) to break down the hard, nonfood cellulose in grasses and waste wood into ethanol and (2) heat (called a thermochemical platform) to break down animal waste and fat, algae, and urban wastes into biodiesel. Other second generation biochemical and thermochemical processes generate bio-butanol, methanol, liquid hydrogen, bio-gasoline, and synthetic diesel.

Biofuel technologies are sustainable when they have a high positive energy balance, meaning they produce biofuels that provide more energy than is invested in making them (also known as a positive Energy Returned On Energy Invested, EROEI). Such biofuels, according to the report, have the potential to reduce GhGs, be a wise use of land and resources and provide economically valuable benefits like tax revenues and jobs.

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From the report: “In the best-case scenarios, and using current technology, corn ethanol provides only about a quarter more energy than is invested (in worst-case scenarios, more energy is put into production than is returned). In contrast, cellulosic ethanol will generate between 4 and 10 times more energy. Research shows that sustainable, low-input, and low-management switchgrass ethanol in three Midwestern states can yield 5.4 times more energy than invested, though it could be much higher…”

Ultimately, the best use of biomass is as a replacement for coal in the generation of electricity.

From the report: “Converting biomass into heat or electricity instead of transportation fuel is a far more efficient use of this renewable resource, and some experts see biofuels as only a temporary bridge to more-efficient motor fuel technologies. Cellulosic ethanol is estimated to have a conversion efficiency of 35 percent. Although this is a far better ratio than for corn ethanol, burning biomass for electricity or heating rather than for motor fuel offers conversion efficiencies as high as 90 percent (versus 35–40 percent for traditional coal-fired power plants). Because of these higher efficiencies, and because biomass can replace carbon-intensive coal for electricity, using biomass to produce liquid transport fuels is in fact a relatively expensive way to reduce greenhouse gas emissions…"

And the best use of biomass in transportation is as a replacement for coal in the generation of electricity to power battery-driven vehicles.

From the report: “'Plug-in' hybrid electric cars, which could run on a combination of liquid biofuels and electricity from the grid, are one vehicle alternative that may be commercially available within the next year. If the electricity comes mainly from renewable energy sources, such as wind, hydropower, solar, or biomass combustion, plug-in hybrids could significantly lower their emissions compared to conventional cars and hybrids— without even using biofuels…”

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The report closes by identifying 4 goals: (1) Getting sustainability standards, (2) getting production with new technologies, (3) getting green jobs in biofuels production, and (4) getting coherent policy. It offers suggestions for policies to achieve each goal.

Meanwhile, EBI-sponsor BP is moving ahead with the building of a real-world, commercial-scale refinery for next-generation biofuels, suggesting economic processing may be in the offing. BP is partnering with Verenium, the company that built the first U.S. demonstration-scale cellulosic biofuels refining plant in 2007. The BP-Verenium joint venture will build a new Florida facility 25 times larger than the Verenium Louisiana demonstration plant. Verenium believes it can produce cellulosic ethanol at $2/gallon. Others are in a wait-and-see state of mind.

Harry Boyle, biofuels analyst, New Energy Finance Ltd.: “Scientifically, you can make ethanol out of cellulose. [But] can you make it cost competitive? Only scaling up will tell you…”

At a time when big investment capital is hard to find, BP’s $45 million investment is seen as particularly indicative of seriousness of purpose, as opposed to the oil company’s past smaller-scale investments which were often passed off as greenwashing.

Chris Standlee, executive, Spanish cellulosic investor Abengoa SA: “Access to capital is the most critical issue right now…New technologies are hard to finance in good times. Right now, it’s virtually impossible.”

Hang on, Mr. Standlee. It looks like the times they are a-changing.

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BP and Verenium in biofuels joint venture
Sheila McNutty, February 19, 2009 (UK Financial Times)
and
BP Jumps Into Next-Generation Biofuels With Plans to Build Florida Refinery
Russell Gold, February 19, 2009 (Wall Street Journal)
and
Time to Get "Smart" on Biofuels Sierra Club, Worldwatch Institute Outline "Smart Choices for Biofuels" in New Report
Josh Dorner and Julia Tier, February 18, 2009 (Sierra Club)
and
BP selects UC Berkeley to lead $500 million energy research consortium with partners Lawrence Berkeley National Lab, University of Illinois
Robert Sanders, February 1, 2007 (U.C. Berkeley News)

WHO
The Sierra Club (Carl Pope, Executive Director); Worldwatch Institute (Christopher Flavin, President); BP (Sue Ellerbusch, President, BP Biofuels North America); Verenium (Carlos Riva, CEO)

WHAT
Smart Choices for Biofuels describes the requirements for next-generation biofuels for them to more successfully contribute to the fight against global climate change than biofuels like corn ethanol have been. Exemplary of the change is the joint venture by BP and Verenium.

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WHEN
- U.S. biofuels production since 2005: Doubled
- U.S. biofuels production in 2008: 9+ billion gallons (most corn ethanol)
- Congressional mandate for 2022: 36 billion gallons
- October 2007: Sierra Club/Worldwatch Institute report Destination Iowa: Getting to a Sustainable Biofuels Future
- BP & Verenium plan to break ground on the plant in 2009 or 2010 and start production in 2012. The partnership was announced in August 2008.

WHERE
- The report calls for policy changes in 4 categories: (1) sustainability standards, (2) advancing biofuels production and new technologies, (3) creating green jobs, and (4) promoting policy coherence across energy sectors.
- The BP-joint venture is based in Cambridge, Mass.
- The plant, one of the U.S. first commercial-scale cellulosic ethanol facilities, will be built in Florida. A second site is planned for the Gulf Coast region.

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WHY
- The Sierra Club/Worldwatch Institute report identifies this as a critical juncture in America's biofuels project and the need for policy reforms.
- It describes the economic and environmental impacts of first-generation biofuels like corn ethanol.
- It proposes ways to make the biofuels industry sustainable.
- It offers specific policy recommendations for achieving goals to (1) get sustainability standards, (2) get production with new technologies, (3) get green jobs in biofuels production, and (4) get coherent policy.
- It describes the issues associated with the doubling of U.S. biofuels production since 2005 to 9+ billion gallons as well as problems such as the global warming emissions profile of corn ethanol and the effect on the Conservation Reserve Program. It also describes other biofuels issues such as their effects on the air, water, and land; and the lower-than-expected economic benefits for rural communities.
- The report describes ways biofuels can be more environmentally and socially sustainable and contribute to the world’s effort to reduce greenhouse gas emissions (GhGs).
- Steps called for: (1) A faster transition to cellulosic feedstocks (i.e., switchgrass), and (2) more effective agricultural practices (i.e., reducing erosion, avoiding soil nutrient depletion). Complementary steps: (1) Promoting plug-in hybrid vehicles, and (2) promoting investments in mass transit.
Most importantly, revisions to the renewable fuels mandate.
- The BP-Verenium joint venture will focus on the refining of sustainable, next-generation biofuels from non-food feedstocks. It is a 50-50 partnership with each contributing $45 million in funding and assets to the joint venture for developing and securing financing for the 36 million gallon/year Florida ethanol facility which will cost up to $300 million o build. This brings BP’s investment in Verenium to $112.5 million, a 50% ownership.

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QUOTES
- Christopher Flavin, President, Worldwatch Institute: "At a time of volatile gas prices and rising concern about global warming, it has become clear that biofuels can play a role in reducing dependence on oil and curbing climate change…However, the large and growing scale of the industry make it critical that Congress now make smart choices that promote sustainable biofuels-rather than just more biofuels-as part of a clean energy economy."
- Carl Pope, Executive Director, Sierra Club: "The headlong rush toward biofuels, corn ethanol in particular, has had many consequences, some foreseen and others not…The downside risks to our land, air, water, and economy have become readily apparent, but the good news is that with smart choices we can make biofuels work for the environment, economy, and climate, while enhancing our energy security."
- Sue Ellerbusch, President, BP Biofuels North America: “This next stage in our relationship with Verenium demonstrates our real commitment to making cellulosic ethanol a reality in the US fuels market in the new term…’’
- Carlos Riva, CEO, Verenium: “This collaboration represents a critical next step in positioning Verenium and BP at the forefront of commercialising cellulosic biofuels in the United States…This is a true convergence of industrial bio-technology and energy production processes, which will allow us to deliver cleaner, more sustainable fuels.’’
- From the report: “The United States has a real opportunity to adjust course and ensure that clean and sustainable biofuels, rather than just more biofuels, are a priority. Experiences of recent years have demonstrated the dangers of pushing blindly for increased biofuel production without considering the unintended consequences. The challenge is to ensure that second-generation biofuels are developed quickly while avoiding the mistakes of the past.