CELLULOSIC BIOFUELS FOR VEHICLES ARE JUST TOO EXPENSIVE TODAY

Prophetically, on July 6 I revealed how poorly ethanol from cellulose was doing, mostly because it was just too expensive to produce.  Well, today, both British Petroleum and Shell Oil essentially threw in the towel for a gasoline substitute that doesn't drain the food supply.

How poorly is this field now doing?  From a peak of $7.6 billion invested in the final quarter of 2007, only a sum of $57 million was spent during the first quarter of this year--or less than 1%.  According to Phil New, Chief Executive Officer of BP Alternative Energy:

  This is capital intensive.  There's lots of difficult engineering.  It will take time for scale-up.

These systems to produce fuel from woody plants and wastes won't be economical until 2020 or beyond.

According to International Energy Agency Executive Director Maria van der Hoeven:

  Progress in deploying these technologies has been slower than many had anticipated and what's needed to keep on track with our aspirations.

The IEA goal is for road fuels to be 27% biofuels by 2050.  But the United Nations is particularly concerned that ethanol from corn was cutting the supply of food to the poor.  Thus the quest to biofuels from corn stalks, jatropha, switch grass, lumber, etc., while experimenting with bacteria and algae, which are even more long term.

Earlier, BP specifically scrapped a four year project to spend $300 million on a cellulosic ethanol refinery in Florida and ended any efforts with jatropha.  BP still holds hope in a partnership with DuPont for a $520 million wheat to biobutanol factory.  

Similarly, Shell cancelled it's ties with the overhyped Canadian Iogen Corp cellulosic ethanol program.  In addition, Shell stopped funding for biofuel enzymes at Codexis and left the algal venture with HR BioPetroleum.  

American petroleum firms, Exxon Mobil and Chevron also have pared back.  Exxon spent $100 million over four years on algae fuels.

The obvious disappointment is that BP and Shell were the two most progressive oil companies involved with biofuels.  Their abandonment is a disastrous omen for next generation green transportation fuels. Said Roberto Rodrigues Labastida of Bloomberg New Energy Finance:

  Growth opportunities for first-generation biofuels are close to exhausted, while a series of next 

  generation technologies are not quite ready.

Why did cellulosic ethanol come so far and fall so short?  Mostly because the U.S. Congress was brilliantly influenced by the Farm Lobby to shore up grain prices by providing tax incentives for producing a green fuel that reduced oil importation.  When the world woke up to the insanity of converting corn to ethanol, the industry then used their power to shift the funding to the cellulosic portion of the plant, which was from the beginning obviously lacking in commercial competitiveness.  At least I've been saying this for more than a decade (click on just one of my Huffington Post articles on this subject.)

There were also incredibly rosy analyses by the private sector, with the Chief Economist of the USDA showing a table that suggests the cost of cellulosic ethanol dropping to $1.10/gallon by 2011-2012. How  can you miss by several hundred percent?  That is the story of biofuels today.

So should we totally abandon R&D on biofuels?  No!  No!  No!  These systems take a generation to develop, hopefully in time making commercial inroads, especially if the price of oil increases...which is inevitable.  As embarrassing and hopeless as the situation looks above, the effort must be continued, and, even expanded.  But is the future ethanol or biobutanol through fermentation?  While I think not, it will take a range of options, and we must continue.  However, I am becoming more convinced than ever that a national mini-Manhattan project at a billion dollars/year for a decade should be expended on biomethanol through the gasification of biomass, with the parallel improvement of the direct methanol fuel cell.

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Typhoon Soulik is now at 140 MPH and heading for northern Taiwan late Friday.

Here is the headline a few hours ago:

  TYPHOON SOULIK TO DEVASTATE NORTHERN TAIWAN

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