Areas for innovation

“Biofuels” was named as one of the Top 12 areas in which significant innovation is expected. Such innovation in biofuel production will increase the potential to shift a portion of the global fuel supply away from conventional fossil–fuel resources. In addition to biofuels being a CO2–neutral fuel source, innovations will make biofuel production increasingly cost competitive with conventional fuel resources.
   

Biofuels are liquid fuels that are created from the chemical transformation of plants and other forms of biomass. Currently, two primary biofuels are in commercial production: ethanol (a gasoline alternative) and biodiesel. Ethanol is commonly produced by the fermentation of plant sugars contained in corn, sugarcane, or beets. Biodiesel is produced through the synthesis of vegetable oils from crops like soy, rapeseed, and palm trees.

New technologies for biofuel production are expanding the range of potential biomass feedstocks to include agricultural wastes, timber wastes, switchgrass, and biomass wood crops like willow and poplar. Another technology – biomass gasification – gasifies any form of biomass to create a synthesis gas that can be refined into liquid fuels. These new technologies can improve production efficiencies and widen the potential resource base for biofuel production. According to a study by the US Department of Energy, the US has biomass resources that have the potential to displace more than 30 percent of petroleum fuels by 2030.

State of the art

The existing infrastructure for producing ethanol and biodiesel is mature and well established, although it represents only a small niche within overall fuel production. One reason that this is the case is that existing technologies are currently not capable of producing biofuels that are cost competitive with conventional fuels – with the single exception of ethanol production in Brazil.

• Corn ethanol. Biofuels in the US are dominated by the production of ethanol from corn. Corn is harvested and fermented to extract sugars, which are distilled to create liquid fuels for transportation. In 2006, more than 5 billion gallons of ethanol were produced, triple the amount in 2001. The surge in US production is being driven by new mandates to use ethanol as a gasoline additive to boost fuel octane and reduce the fuel particulates that can cause urban smog.The vast majority of ethanol is currently used in fuel blends containing up to 10 percent ethanol. These blends can be used in conventional vehicles. According to a forecast by the National Corn Growers Association, by 2015 US corn– ethanol production could double or triple again, reaching 12–16 billion gallons per year, without affecting food–related corn supplies.

• Ethanol from sugarcane. Brazil has spent decades developing an extensive domestic biofuels industry focused primarily on ethanol produced from sugarcane. Sugarcane is a highly efficient biofuel crop in Brazil as local conditions reduce the need for fertiliser inputs and provide a long tropical growing season. Because its sugarcane crops are highly productive, Brazil’s production costs for ethanol are 40 percent lower than those in the US. Brazil currently fuels one–third of its transportation fleet with ethanol, and exports more than 500 million gallons to a dozen different countries. According to a Brazilian energy task force, its ethanol industry has the potential to produce enough fuel to substitute ethanol for 10 percent of the gasoline consumed worldwide by 2025.

• Biodiesel. Biodiesel is produced from vegetable oils through a relatively simple chemical process. Biodiesel fuel can be run in conventional modern diesel engines without modifications, and it has the additional benefit of having low levels of sulphur and pollution–causing particulates compared to conventional diesel fuels. Europe is a dominant global producer of biodiesel, producing 4.8 million tonnes of biodiesel in 2006, primarily in Germany, France, and Italy. Biodiesel demand is likely to further grow in Europe, since the EU has issued a directive to increase the proportion of biofuels used in Europe’s transport fuels from two percent in 2005 to 5.75 percent by 2010 and 20 percent by 2020. Future growth in global biodiesel production is expected to be strong in Brazil, India, and China, all of which have plans to scale up their biodiesel production in the next decade. By 2020, 20 percent of the diesel transport fuel used by the EU, China, India, and Brazil could from biodiesel sources.

• Flex–fuel vehicles. Flex–fuel vehicles are vehicles with fuel–system modifications that enable both gasoline and E85 ethanol blends to be used. Over the past decade, US automakers have produced more than six million flex–fuel vehicles, and have announced plans to double production to two million annually by 2010. Modifying an engine to be “flex–fuel” only involves a few simple upgrades to the fuel lines and fuel–control system and costs only a few hundred dollars.

However, the infrastructure for ethanol fuel distribution has been slow to grow, with only 1,100 US fuel stations – mostly clustered in the Midwest – offering E85 ethanol. Conventional vehicles can run on up to a 10 percent ethanol mixture, and therefore much of today’s ethanol production is being used as a gasoline additive to reduce vehicle emissions.
   
Challenges ahead

Biofuels are more expensive than conventional fuels, but costs are likely to drop as technological innovations boost production efficiency. Even with prospective price reductions, there will be other challenges for biofuels in the future:

• Food–versus–fuel concerns. Current use of food crops like corn as the feedstock for biofuel production is causing price increases in several agricultural commodities. During 2006–2007, the price of corn has nearly doubled to $4 per bushel, in part as a result of the demand for corn from new ethanol plants in the US Midwest. These costs are being transferred down the agricultural production chain to the dairy and meat industries that rely on corn meal for animal feeds. Higher corn prices have also led to rising prices in Mexico for consumer staples like tortillas, which resulted in street demonstrations involving upwards of 75,000 protestors. In the short term, food–versus– fuel concerns could generate negative public backlash against the biofuel industry.

However, in the longer term new, nonfood biofuel feedstocks will emerge, such as switchgrass, coppiced willow, and agricultural wastes. Greater diversification of biomass feedstocks will partially relieve the pressure on prime agricultural lands, and reduce food–versus–fuel concerns over the long run.

• Energy return on energy invested (EROEI).

Biofuel production is an energy–intensive process, requiring energy inputs into farm equipment, crop fertiliser, biomass transport, and in the biofuel refining process. While estimates can vary, one recent study suggested that corn–derived ethanol requires an input of one unit of energy for every 1.25 units of energy created (with much of the energy surplus in the form of waste products that can be sold as cattle feed); biodiesel from soybean has a slightly higher energy return of 1.93 units for every one unit used in its creation. Both corn ethanol and soy biodiesel offer low returns compared to the Brazilian production of ethanol from sugarcane, which has an EROEI between eight and 10. The relatively low energy return of corn ethanol makes biofuel production costs rise in line with overall energy costs, and impedes corn ethanol biofuels from making a large contribution to the energy supply. However, researchers are actively seeking to improve efficiencies at every stage of biofuel production, including more–productive biomass crops, reductions in fertiliser input, and more–efficient processes for the fermentation or distillation of biofuels. Expansion of marketable co–products from biofuel production could also improve the cost–effectiveness of biomass–to–fuel processes.

• Logistics problems. Biomass crops are seasonally harvested, requiring bio–refineries to store biomass off–season in order to ensure continuous refinery production. In addition, biomass crops are bulky and become increasingly costly to transport as the distance from the field to the refinery lengthens. This creates inherent logistics challenges for large–scale biomass facilities. For example, according to one study an 80–million–gallon cellulosic–ethanol plant would need corn stover feedstocks from 500,000 acres of corn within a 50–mile radius of the plant and 500 acres to store it after harvest. Logistical challenges could be improved through the diversification of feedstocks and by creating efficient small–scale processing facilities that are closer to abundant supplies of feedstocks.

High prices for oil have made the economics of biofuel production much more favourable, and have accelerated commercial efforts to find ways of producing biofuels. New technologies offer the potential to expand the range of biomass inputs to include a variety of waste streams, which could increase the total supply of biomass without impinging on prime agricultural lands. New technologies for biofuel production hold the potential to change the balance of market and technology power among existing players. Currently, both energy companies and large agribusiness companies are expanding their investments in the biofuel sector. Agribusiness companies have a large depth of expertise in the logistical management and marketing of bulk foods and food products. Energy companies excel in fuel–refining technologies and the production and distribution of fuels and fuel–production byproducts. How these two different industries compete – or cooperate – in the biofuel sector will significantly impact the future evolution of the sector through 2025. Further complicating the competitive landscape for biofuels will be the emergence of new technologies that have the potential to be a disruptive force in the biofuel production industry:

Conventional ethanol production uses fermentation to create sugars that can be distilled into ethanol fuels. However, conventional ethanol fermentation cannot process the cellulose in plant cells. Cellulosic ethanol technologies use tailored enzymes to convert the cellulose in biomass into sugars that can be fermented. This expands the feedstocks available for ethanol production to include a wider range of woody crops, such as switchgrass and coppiced willow, or agricultural wastes, such as straw or corn stover. Cellulosic ethanol production is rapidly maturing, and in early 2007 the US Department of Energy announced $385m in funding for the construction of six cellulosic ethanol facilities in the US. However, production costs for cellulosic ethanol remain high, with the US Department of Energy finding that it costs about $2.20 per gallon to produce cellulosic ethanol, double the cost of producing ethanol conventionally from corn. Reductions in the cost of production for cellulosic ethanol are likely to come from innovations in refining processes that will boost efficiency and productivity. Advances are already underway, with multiple companies investigating ways to select or genetically engineer organisms that boost process efficiency during three key stages of the production process: breaking down cellulose; converting cellulose to sugar; and fermenting sugar into ethanol. Another approach being explored is genetically modified crops that are capable of breaking down their own cellulose.

Biomass gasification (biomass to liquid fuels)Biomass gasification involves high–temperature combustion of biomass feedstocks to produce a synthesis gas that can be turned into liquid fuels through the Fischer–Tropsch process. Gasification technologies have been commercialised for coal and natural gas inputs, but biomass–to–liquid (BTL) facilities still remain small–scale research prototypes. Currently, fuel–maker Choren is planning construction of a BTL facility in Germany that is expected to produce 4,500 barrels per day of BTL fuels by 2010. Biomass gasification facilities have high capital costs as a result of the inherent difficulties of handling biomass feedstocks and the need to scale down BTL facilities to be appropriate for the local biomass fuel supply.

However, biomass gasification does have advantages in that it can use a wide variety of biomass feedstocks, including conventional biomass crops, agricultural wastes, and wood and forestry wastes.

Future commercialisation of BTL will require innovations that improve process efficiency and reduce capital costs. One promising approach is a low–temperature gasification technology, which can efficiently produce a hydrogen–rich gas that can be converted into bio–hydrogen, bio–methane (natural gas), or liquid fuels.

Another approach being explored by Range Fuels (formerly Kergy) involves building an ethanol production plant that uses a modular biomass gasification system; this system can achieve energy conversions upwards of 75 percent processing up to 1,000 tonnes of biomass a day. Such levels of volume and efficiency could allow small–scale facilities to be located closer to biomass production areas. The ethanol produced from the Range Fuels biomass gasification process is expected to be competitive in costs with corn ethanol.

Municipal solid waste (MSW) might soon be utilised as the input feedstock in biofuel production. As a potential biomass resource, MSW has the advantage of having an existing infrastructure for collection and transport, and is a resource that the public is willing to pay to have collected. Two emerging technologies could turn urban garbage into energy and fuels: plasma arc gasification and thermal depolymerisation.

Plasma arc gasification uses an electric plasma arc to gasify wastes at temperatures of up to 30,000 °F. Plasma arc gasification accepts unsorted waste inputs and safely breaks down hazardous wastes into benign compounds. The outputs of plasma gasification are inert slag, excess electricity for the power grid, and synthesis gas that can be converted into a variety of liquid fuels via BTL processes. Startech Environmental Corporation is planning to construct a facility in St. Lucie County, Florida, that will be capable of handling 2,000 tonnes of new trash daily, as well as 1,000 tonnes per day of garbage from an existing landfill. Thermal depolymerisation uses a combination of heat and high pressure to convert complex molecular compounds into short–chain hydrocarbons. The process can digest agricultural wastes, sorted garbage, or even sewage into component molecules and hydrocarbons. A pilot plant built by Clean World Technologies is using thermal depolymerisation to process poultry processing wastes: 270 tonnes of turkey waste and 20 tonnes of pig fat are rendered into 500 barrels of fuel oil, a fertiliser compound, and trace wastes that can be safely discharged into water. ConocoPhillips and Tyson Foods are also collaborating on constructing a thermal depolymerisation plant that would extract low–sulphur diesel fuels from animal wastes.

Researchers at Purdue University are exploring the use of supplemental hydrogen during biofuel gasification to triple the yield of biofuel. During conventional biomass gasification, up to 60–70 percent of the carbon content in the biomass is converted to CO2 or CO instead of being converted into fuel.

“Adding hydrogen to the gasifier essentially suppresses the CO2, so that all the carbon that came with [the] biomass ends up in liquid fuel,” says lead researcher Rakesh Agrawal. In theory, if widely adopted this process could allow the US to replace fossil fuels with biofuels by using only about six–10 percent of the available land in the US, compared to land requirements upwards of 25–55 percent of US land in conventional biofuel production. The primary reason for the higher efficiency of hydrogen injection is that it is much more energy efficient to generate hydrogen through the electrolysis of water than it is to “harvest” the hydrogen in biomass crops. Hydrogen injection offers a potential new avenue of evolution for the oft–touted “hydrogen economy”: extensive use of hydrogen to create liquid biofuels would minimise the need to build out an extensive distribution infrastructure for hydrogen. Instead, hydrogen production could be concentrated next to biofuel refineries, producing liquid biofuels that are compatible with the existing energy infrastructure and transportation fleets.

Algae biofuel

Today, biodiesel is generally produced from oil–rich farm crops like soybeans (in the US) and rapeseed (in the EU). However, soybeans only produce 50 gallons of useable oil per acre, and rapeseed only produces 150 gallons. Researchers are studying using oil–rich algae as a source of biomass for biodiesel production. Theoretically, an algae pond could produce up to 10,000 gallons of vegetable oil per acre, since algae can grow exponentially and some strains of algae can accumulate oils in quantities of up to 50 percent of their weight.

Several companies are currently investigating algae biofuel production, and are expecting to build pilot plants in the next few years.LiveFuels is exploring an approach that uses shallow ponds for algae production. The open pond approach to algae production faces the challenge of minimizing the growth of invading micro–organisms that can thrive and potentially crowd out the oil–producing algae microbes.

LiveFuels is attempting to address this hurdle by identifying algae strains able to better resist infiltration. Solix and Greenfuel Technologies are exploring an approach that involves “photo–bioreactors”– enclosed miniature greenhouses that prevent algae infiltration and allow for higher concentrations of CO2. In both approaches, efficient production of biofuels from algae requires high concentrations of CO2 to be injected to maximise algae growth. Therefore, algae biofuel production has the important potential of being integrated into carbon capture systems at fossil fuel powerplants.

The cost–effectiveness of biofuel production could be enhanced by integrating biorefining capabilities into the existing refining and petrochemical production infrastructure. Integration of biorefining capability into existing petrochemical refineries could lower the costs of both capital investment and end products. Integration of biomass–processing equipment with existing petroleum refining equipment could enable biomass processing to utilise hydrogen and low–grade waste heat from oil refining. Additional efficiencies could be achieved by sending partially refined hydrocarbons from the biorefinery over to the petrochemical refining equipment for further processing into commercial end products.

Currently, biofuels are typically produced in dedicated biomass conversion units that are designed for very specific biomass inputs and product outputs. Integrated biorefining could bring additional flexibility to the biomass refining process, allowing a wider diversity of biomass inputs to be used, and a wider range of end–products to be produced. Development of commercial byproducts for biomass refining could improve the payback for biorefining facilities. Already, researchers have found ways to transform glycerin, a byproduct of biodiesel production, into an edible transparent film for use in food packaging.

Biofuel technology innovations described will potentially impact a wide variety of industries between today and the year 2025.

• The automobile industry already plays an important role in adapting vehicle designs to accommodate wider use of biofuels. However, wider availability of biofuels could have more–direct impacts on engine designs. MIT researchers are studying small turbocharged engines that run on gasoline but have a separate fuel injection system for ethanol. This approach to ethanol injection can boost engine efficiency and enable fuel savings of up to 20–30 percent. This potential alternative to hybrid powertrains or fuel cell systems could offer equivalent fuel efficiencies at lower costs. Widespread availability of biodiesel fuels could improve the prospects for growth of the diesel car fleet in the US, with low–emission biodiesel reducing the “dirty” reputation for diesels in the US, and offering fuel efficiencies that rival hybrid vehicles. Combining hybrid powertrains and diesel engines can result in cars with energy efficiencies that rival fuel cell vehicles, using relatively inexpensive existing technologies.

• Agribusiness companies may be better positioned than energy companies to capitalise on growth in biofuels. Biofuel production involves logistical challenges like the harvest and transport of biomass crops, as well as expertise in the bulk processing of agricultural materials.

Biofuel production also creates waste byproducts that have economic value as animal feeds or organic fertilisers. For example, the production of ethanol generates a protein–rich byproduct that is marketed as “distillers dry grains,” a cattle feed. Agribusiness is better positioned to develop, package, market, and distribute co–products from biofuel production.

• Current biofuel industries tend to be nationally oriented, in part because biofuels have been used by nations as a means to support the agricultural sector. As more countries begin to engage in production of biofuel, greater quantities of biofuels for export will be entering world markets. Greater internationalization in the trade of biofuels could allow World two and World three nations to utilise their biomass resources as an export industry. This could accelerate economic development and income growth in developing countries. In time, biofuel exporters may see merits in forming a production cartel (along the lines of OPEC) in order to better manage global biofuel supply and pricing. If such an approach were successful, Brazil would be poised to play a role in the biofuel industry similar to the role Saudi Arabia plays in oil production.

• The creation of biofuels from municipal solid wastes has strong future potential. Global urban growth continues to accelerate, especially in World two and World three. In World one, environmental concerns constrain the availability of landfill space. Waste–to–fuel facilities could take advantage of the existing infrastructure for garbage collection and benefit from getting paid to receive garbage–biomass shipments. Waste–to–fuel technology could transform waste disposal and tap biomass resources that are independent of agricultural or plant resources.

• Algae biodiesel technology could play an important role as a carbon sequestration aid or alternative. Several current approaches to sequestration involve injection of captured CO2 into stable underground areas or into depleted oilfields to boost production. However, the sites of power plants are not always located near suitable geological features, creating challenges for transporting the sequestered carbon. Channeling the sequestered CO2 into the production of algae biofuel could address some of the logistical challenges in disposing of sequestered carbon. More importantly, algae biofuel production could allow the wastes of carbon sequestration to be transformed into fuel byproducts that could defray the overall costs of sequestration. To the extent that biofuels derived from sequestered carbon can displace conventional fossil fuels, algae biofuel production could offer a means to offset carbon emissions that does not involve long–term storage or disposal of carbon dioxide.