Signs of Collapse for Biofuel Movement
In recent years, many argued that the path away from Middle East oil and toward reduced vehicle greenhouse gas emissions would be led by a switch to ethanol and biodiesel. That argumentand the biofuels movement championed by entrepreneurs, industry leaders, and some researchersis quickly dying. In the past year, VeraSunthe largest public ethanol producer in the countryfiled for bankruptcy and was sold, and Germany became the first country to formally scale back its commitment to biofuels.
From the beginning of the biofuels movement, three critical questions have remained unanswered:
Can biofuel be produced in quantity at a competitive price to conventional fuels?
- Food Prices
Can biofuel feedstockthe stuff used to make fuelavoid being diverted from use for food?
Can you produce biofuels without harming the environment?
The answers to these questions appear to be: no, no, and noespecially for ethanol derived from corn, and biodiesel from soy or palm oil.
The first question is the one crippling much of the US biofuels industry. VeraSun, which filed for bankruptcy in late 2008 and secured some bank financing to reorganize, said its only alternative was to shut down productiondespite its large-scale operations and the United States commitment to ethanol. In April, VeraSun cleared bankruptcy and closed on the sale of assets to refining giant Valero.
The numbers just werent there, as prices for corn and natural gasthe main feedstock and the fuel used to turn it into ethanolincreased this past year while retail prices for ethanol failed to keep pace. As companies cancel planned ethanol and biodiesel plants, the road to viability for biofuel alternatives becomes rockiereven with government subsidies.
The so-called second generation of biofuels, such as cellulosic ethanol made from feedstocks including wood chips and switchgrass, faces similar financial challenges. One company, Xethanol, changed its name and is switching its strategy from cellulosic ethanol to methane.
Biofuels with a Tarnished Image
Meanwhile, as biofuels disrupt food supplies in developing nationssee As the prices for soybeans rise, so does hunger in Indonesiathe image of biofuels becomes tarnished. The latest poster child for biofuels' negative image is palm oil, the rising demand for which had some countries chopping down rainforest to plant palm trees. Negative press led Germany to rescind its commitment to using a higher percentage of biofuel in its dieselwhile outright banning biodiesel derived from soy or palm.
With Germany backing away from its biofuel commitment, the focus turns to the United States. California air regulators approved the world's first Low Carbon Fuel Standard (LCFS) in April. The California Air Resources Board's 9-1 decision was aimed at achieving a 10 percent reduction in motor vehicles' emissions of greenhouse gases by 2020 and spurring commercial development of low-carbon fuels like hydrogen and cellulosic ethanol. The final regulation contains several concessions to the biofuels industry, such as moving a review of a measurement of indirect land-use effects from gasoline to 2011 from 2012.
Obama on Ethanol
While on the campaign trail, President Obama expressed his support for a National Low Carbon Fuel Standard, and his commitment to the corn ethanol industry.
Obama wants a carbon copy of the California goals as part of a National Low Carbon Fuel Standardwith the additional requirement of 60 billion gallons of advanced biofuels to be phased into our fuel supply by 2030. In his campaign, Obama expressed support for the multi-billion dollar annual government subsidies that domestic ethanol has long enjoyedas well as the 54-cent-a-gallon tariff that the United States slaps on imports of ethanol made from sugar cane.
The outcome of debates in Sacramento and Washington, DCand the resulting government mandates, incentives, and subsidieswill likely determine if biofuels can be brought back from the brink of collapse.
Photo: Any generic ethanol shot will do, possibly use this from flickr creative commons:http://www.flickr.com/photos/cote/3130646389/