Earlier this month, the Senate finally did the right thing--it voted, by a large majority, to kill the absurd 45-cent-per-gallon subsidy refiners get for corn ethanol, and also deep-sixed the unfair 54-cent-per-gallon tax on imported ethanol. Among other things, that prevented us from bringing in Brazil's sugarcane ethanol, which is made in a much more sustainable process.
Right now we churn out 13 billion gallons of corn ethanol annually, and also have millions of "flex-fuel" cars capable of burning the stuff on the road. Sounds good, right? It isn't. Because the ethanol fueling stations are concentrated in the Midwest, most flex-fuel cars burn gasoline, and their manufacturers rake in lucrative federal clean car credits. That boondoggle is reportedly going away as the 2017-2025 fuel economy standards are negotiated.
Don't count corn farmers out, because the House passed a different measure and President Obama is threatening a veto if the anti-ethanol bill ever reaches his desk. Argghh. Will no one rid me of these meddlesome subsidies? Because there's a better option. It's called cellulosic ethanol, with a five times better energy balance than its corn cousin.
As my esteemed Car Talk colleague Jamie Kitman points out, ethanol is feedstock neutral--it can be made from all sorts of fast-growing plants (including switchgrass), from crop waste and garbage.
Congress could send a powerful message by defunding the corn ethanol that consumes 40 percent of our most important food crop and sends prices soaring. And it could send another signal by putting research money into sustainable cellulosic ethanol, which is made from the fibrous parts of plants and avoids the disastrous "food vs. fuel" competition.
Congress ordained that refiners deliver 16 billion gallons of cellulosic ethanol by 2022, but it's not likely to happen. Cellulosic ethanol producers haven't been able to ramp up their lab research into a proliferation of commercial-grade plants, and certainly not with anything like the volume required. But things are happening. DuPont should have a big plant in Nevada ready by 2013 that will use, in place ocorn, the corn stalks, cobs and leaf waste (collectively called "stover") that is often burned. DuPont isn't getting butkus from the Feds--the plant is in Nevada instead of Iowa because the gambling state ponied up $8.7 million in tax abatements over 10 years.
This rather glossy DuPont video shows how the company plans to ramp up cellulosic ethanol production in farm states:
Another big producer, with the evocative name Poet, points out that there is more than 1.3 billion tons of biomass ready and waiting to be made into cellulosic ethanol, replacing "all gasoline made from imported oil." It's gearing up to build a commercial plant in Emmetsburg, Iowa capable of producing 25 million gallons a year. It's also using corncobs, and investigating wood chips and switchgrass that will be broken down with enzyme action.
Last year, major player Novozymes said it was producing enzymes for about 50 cents a gallon, which could yield cellulosic ethanol at $2 a gallon. "A year ago [that cost] was $1, and three years ago it was as high as $3," the company's North American president, Adam Monroe, said. That big leap forward was supposed to happen this year, but I don't think we've yet reached the goal--which would put cleaner ethanol on a par with gasoline.
Jamie is also right in pointing out that our "energy policy" is dictated by forces other than doing the right thing. If Midwestern farmers didn't (and still do) have their hands out, corn ethanol would never have happened in the first place. But those folks are still out there, they vote, and that's why Obama is threatening a veto.
And it should be pointed out that cellulosic ethanol has one really huge challenge that could cause it to lose out to other alternative fuels, including algae. Ethanol, no matter how it's made, is corrosive to gasoline fuel lines, so it can't simply link in to our existing network of 160,000 gas stations. The same problem is holding back hydrogen, which has far less of a refueling network than ethanol. Automakers are gearing up to produce large numbers of fuel-cell cars as early as 2014, but Japan and Germany are funding fueling stations, and the U.S. is cutting hydrogen funds.
Andrew Chung, a principal at clean-tech investor Lightspeed Venture Partners, told me that one of its companies, Solazyme, can use synthetic biology and existing distilling equipment to make cost-effective diesel fuel that, you guessed it, can be pumped out of existing diesel pumps. That's a game changer, right there. Interestingly enough, algae oil can also be used to make a lot of other things, including food (Chung sampled the algae brownies) and cosmetics.
To really get up to speed, cellulosic ethanol has to address the big infrastructure problem. We reached the 1,000th public ethanol station in 2006, which is a start, but they're not geographically well distributed. The production part is getting on track, but no fuel has ever triumphed unless there's an easy way to get it to the people who are going to use it. We're in a race to practicality--the fuel that overcomes all the problems wins.