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Energy

The Price of Biofuels

Making ethanol from corn is expensive. Better biofuels are years away from the gas

tank. Farmers are reluctant to change their practices. But do we really have any

alternative to biofuels?

by David Rotman

December 18, 2007

The irrational exuberance over ethanol that swept through the American

cornbeltoverthelastfewyearshasgivenwaytoadrearyhangover,
especiallyamongthosewhoinvestedheavilyinthesprawling
productionfacilitiesnowdottingtherurallandscape.ItstheMidwests
versionofthetechbubble,andinsomeways,itisremarkablyfamiliar:
overeagerinvestorsenamoredofatechnologysseeminglyunlimited
potentialignorewhat,atleastinretrospect,areobviouseconomic
realities.

Morethanahundredbiofuelfactories,
clusteredlargelyinthecorngrowing
statesofIowa,Minnesota,Illinois,
Indiana,SouthDakota,andNebraska,
willproduce6.4billiongallonsof
ethanolthisyear,andanother74
facilitiesareunderconstruction.Just18
monthsago,theywerecashcows,
churningouthighpricedethanolfrom
lowpricedcorn,raisinghopesof
energyindependenceamong

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politicians,andcapturingtheattentionandmoneyofventure
capitalistsfromboththeEastandWestCoasts.

Nowethanolproducersarestruggling,andmanyarelosingmoney.The
priceofabushelofcornrosetorecordhighsduringtheyear,exceeding
$4.00lastwinterbeforefallingbacktoaround$3.50inthesummer,
thenreboundingthisfalltonear$4.00again.Atthesametime,ethanol
pricesplummetedasthemarketforthealternativefuel,whichisstill
usedmainlyasanadditivetogasoline,becamesaturated.Inthefaceof
thesetwotrends,protmarginsvanished.

Thedoldrumsoftheethanolmarketreectthepredictableboomand
bustcycleofanycommodity:highpricesdriveincreasedproduction,
andsoonthemarketisoversupplied,causingpricestocrash.Butthe
largescaleuseofcornderivedethanolasatransportationfuelhas
economicproblemsallitsown.Eventhoughcrudeoilisatnearrecord
prices,andcompaniesthatuseethanolintheirgasolinereceiveafederal
taxcreditof51centspergallon,ethanolstrugglestocompete
economically.Andwithlimitedinfrastructureinplacetodistributeand
sellthebiofuel,demandwillremainuncertainfortheforeseeablefuture.

FormoreinformationreadTechnologyReview'sspecialreporton
biofuels.

Morealarming,theboominethanolproductionisdrivinguptheprice
offood.Oftherecord93millionacresofcornplantedintheUnited
Statesin2007,about20percentwenttoethanol.Sincemostoftherest
isusedtofeedanimals,thepricesofbeef,milk,poultry,andporkareall
aectedbyincreasesinthecostofcorn.TheinternationalOrganization
forEconomicCoperationandDevelopment(OECD)recentlywarned
thattherapidgrowthofthebiofuelsindustrycouldbringabout

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fundamentalshiftsinagriculturalmarketsworldwideandcouldeven
causefoodshortages.

Allthiscomesatatimewhentheneedforalternativesto
petroleum
basedtransportationfuelsisbecomingurgent.Atpresstime,theprice
ofcrudeoilwasnear$90abarrel.Andworriesabouttheimpactof
greenhousegasemissionsfromtheroughly142billiongallonsof
gasolineusedeveryyearintheUnitedStatesaredeepening.Expanded
useofbiofuelsiscentraltothefederalgovernmentslongtermenergy
strategy.InhisStateoftheUnionspeechonJanuary23,2007,
PresidentBushsetthegoalofproducing35billiongallonsofrenewable
andalternativefuelsby2017,citingtheneedforindependencefrom
foreignoil.TheU.S.DepartmentofEnergyhassetthesimilargoalof
replacing30percentofgasolineusewithbiofueluseby2030.

Hittingbothtargets,however,will
requiresignicanttechno
logical

Multimedia

breakthroughs.IntheUnitedStates,
fornow,ethanolmeansthecorn
derivedversion.(Brazilianproducers
wereexpectedtomake4.97billion

Boom or Bust? (PDF: Charts and graphs of

the economics of biofuels)

See images of high-protein grains and the

production of hydrocarbons.

gallonsofethanolin2007,mostly
fromsugarcane;butthat

University of Minnesota researchers

explore the future of biofuels.

semitropicalcropisagriculturally
viableinonlyafewpartsofthe

C. Ford Runge explains the problems of

corn ethanol.

UnitedStates.)Evenproponentsof
cornethanolsaythatitsproduction

Venture capitalist Vinod Khosla details the

market potential of alternative energies.

levelscannotgomuchhigherthan
around15billiongallonsayear,
whichfallsfarshortofBushsgoal.

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WhilePresidentBushandotheradvocatesofbiofuelshaveoftencalled
forethanoltobemadefromalternativefeedstockssuchasswitchgrass
aplantnativetotheU.S.prairiestates,whereitgrowswidelythe
requiredtechnologyis,accordingtomostestimates,atleastfourtove
yearsfromcommercialviability.Meanwhile,advancedbiological
techniquesforcreatingnovelorganismsthatproduceotherbiofuels,
suchashydrocarbons,arestillinthelab.Sofar,researchersaremaking
quantitiesthatwouldntevenllthetankofalargeSUV.

Theeconomicwoesandmarketlimitationsofcornethanolareapainful
reminderoftheimmensedicultiesfacingdevelopersofnewbiofuels.
Thebottomlineisthatyouregoingtohavetomakefuelcheap,says
FrancesArnold,aprofessorofchemicalengineeringandbiochemistryat
Caltech.Wecanallmakealittlebitofsomething.Butyouhavegotto
makealotofit,andyouhavegottomakeitcheaply.Theproblemisso
hugethatyourtechnologyhastoscaleupanddoitatapricethatis
competitive.Everyoneisgoingtobecompetingonpricealone.

Corn Blight

Theremaybenobetterplacetogetarealisticappraisalofbiofuelsthan
theDepartmentofAppliedEconomicsattheUniversityofMinnesota.
Thelargecampushousingthedepartmentandtherestofthe
universitysschoolofagricultureliesonalowhillinaquietSt.Paul
neighborhood.Acresofeldswhereexperimentsareconductedspread
outfromtheedgeoftheuniversity.Nearbyarethegroundsofthe
MinnesotaStateFair,a12dayeventthatdrawsmorethanamillionand
ahalfvisitorsattheendofthesummer.

ThestateisthefourthlargestproducerofcornintheU.S.,andmuchof
itseconomy,evenitsculture,isintimatelytiedtothecrop.Therunup
ofcornpriceshasbeenaboonforMinnesotasruralagricultural

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communities.Andthegovernorandotherstatepoliti
cianshavestrongly
pushedtheuseofethanolasatransportationfuel.Still,youwontnd
muchcheerleadingforcornethanolintheplainbrickbuildingthat
housesthedepartment.

Inhisorderlyocewithitsneatstacksoftechnicalpapersandfarm
reports,VernonEidman,anemeritusprofessorofagricultural
economics,combinestheauthorityofascholarwiththesternnessofa
Midwesternbanker.Wecouldseethiscoming,hesays,describingthe
currentmarketplightoftheethanolproducers.Itsnotlike
[producers]didntknowitwascoming.Atleast,theyshouldhave
knownit.In2006theymadeprotsliketheyneverhadbefore,
Eidmansays.Andthatsamajorfactorthatledtothistremendous
buildup.

Thenumbersspeakforthemselves.Eidmanscalculationsshowwhatit
costs,givenvaryingpricesofcorn,foranew,moderate
sizefacilityto
produceethanol.At$4.00abushelofcorn,ethanolproductioncosts
$1.70agallon;togaina12percentreturnonequity,theproducersneed
tosellethanolat$1.83agallon.ThenEidmanshowshisguresforthe
pricesthatpetroleumcompaniesarepayingwhentheybuyethanolto
blendwiththeirgasoline:thisDecember,priceswereabout$1.90a
gallon,andbidsfor2008rangebetween$1.75anda$1.80agallon.In
otherwords,theprotmarginsforethanolproducersareextremely
tight.Tomakemattersworse,Eidmansays,productioncapacity,which
wasaround5.4billiongallonsatthebeginningof2007,isexpectedto
reach12.5billiongallonsby2010.

Whileswellingethanolproductionhasledtoworriesaboutoversupply,
theothersideofthemarketequationisactuallyacauseforgreater
concern:thefuturedemandforethanolfuelisbynomeanscertain.Ina

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fewpartsofthecountry,particularlyinthecornbeltstates,driverscan
buyfuelthats85percentethanol.Butforthemostpart,petroleum
companiesuseethanolataconcentrationof10percent,toincreasethe
oxygencontentoftheirgasoline.Notonlyissuchamarketlimited,but
the10percentethanolblenddeliversslightlyreducedgasmileage,
potentiallydampingconsumerappetiteforthefuel.

Itisnotjusttheshorttermeconomicsofethanolthatconcern
agriculturalexperts.Theyalsowarnthatcornderivedethanolisnotthe
greenfuelitsadvocateshavedescribed.Thatsbecausemakingethanol
takesalotofenergy,bothtogrowthecornand,evenmoreimportant,to
runthefermentationfacilitiesthatturnthesugargleanedfromthecorn
kernelsintothealcoholthatsusedasfuel.Exactlyhowmuchenergyit
takeshasbeenthesubjectofintenseacademicdebateinvarious
journalsduringthelastfewyears.

AccordingtocalculationsdonebyMinnesotaresearchers,54percentof
thetotalenergyrepresentedbyagallonofethanolisosetbytheenergy
requiredtoprocessthefuel;another24percentisosetbytheenergy
requiredtogrowthecorn.Whileabout25percentmoreenergyis
squeezedoutofthebiofuelthanisusedtoproduceit,otherfuelsyield
muchbiggergains,saysStephenPolasky,aprofessorofecologicaland
environmentaleconomicsatMinnesota.Makingetha
nolisnotacheap
process,hesays.Frommyperspective,thebiggestproblem[withcorn
ethanol]isjustthestraightouteconomicsandthecosts.Theenergy
input/outputisnotverygood.

Thehighenergyrequirementsofethanolproductionmeanthatusing
ethanolasfuelisntallthatmuchbetterfortheenvironmentthanusing
gasoline.Onemightthinkthatburningthebiofuelwouldreleaseonly
thecarbondioxidethatcorncapturesasitgrows.Butthatsimplied

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picture,whichhasoftenbeenconjureduptosupporttheuseofethanol
fuel,doesntwithstandcloserscrutiny.

Infact,Polaskysays,thefossilfuelsneededtoraiseandharvestcorn
andproduceethanolareresponsibleforsignicantcarbonemissions.
Notonlythat,butthecultivationofcornalsoproducestwootherpotent
greenhousegases:nitrousoxideandmethane.Polaskycalculatesthat
cornderivedethanolisresponsibleforgreenhousegasemissionsabout
15to20percentbelowthoseassociatedwithgasoline:Thebottomline
isthatyouregettingaslightsavingintermsofgreenhousegas
emissions,butnotmuch.

Ifcornderivedethanolhashadlittleimpactonenergymarketsand
greenhousegasemissions,however,itsproductioncouldhave
repercussionsthroughouttheagriculturalmarkets.Notonlyarecorn
pricesup,butsoaresoybeanprices,becausefarmersplantedfewer
soybeanstomakeroomforcorn.

IntheMay/June2007issueofForeignAairs,C.FordRunge,a
professorofappliedeconomicsandlawatMinnesota,cowroteanarticle
titledHowBiofuelsCouldStarvethePoor,whicharguedthatthe
enormousvolumeofcornrequiredbytheethanolindustryissending
shockwavesthroughthefoodsystem.Sixmonthslater,sittinginalarge
ocefromwhichhedirectstheuniversitysCenterforInternational
FoodandAgriculturalPolicy,Rungeseemsbemusedbythecriticism
thathisarticlereceivedfromlocalpoliticiansandthoseintheetha
nol
business.Butheissteadfastinhisargument:Itisclearlythecasethat
milkprices,breadprices,areallrisingatthreetimestheaveragerateof
increaseofthelast10years.Itsappreciable,anditisbeginningtobe
appreciated.

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TherecentOECDreport,releasedinearlySeptember,isjustthelatest
conrmationofhiswarnings,saysRunge.Andbecausealarger
percentageoftheirincomegoestofood,hesays,thisisreallygoingto
hitpoorpeople.SincetheUnitedStatesexportsabout20percentofits
corn,thepoorintherestoftheworldareatparticularrisk.Rungecites
thedoublinginthepriceoftor
tillasinMexicoayearago.

Allthesefactorsargueagainstthepromiseofcornethanolasasolution
totheenergyproblem.Mytake,saysPolasky,isthat[ethanol]isonly
goingtobeabitplayerintermsofenergysupplies.Hecalculatesthat
evenifallthecornplantedintheUnitedStateswereusedforethanol,
thebiofuelwouldstilldisplaceonly12percentofgasolineconsumption.
IfImdoingthisforenergypolicy,Idontseethepayback,hesays.If
weredoingthisasfarmsupportpolicy,theremaybemoremeritthere.
Butweregoingtohavetogotothenextgenerationoftechnologyto
haveasignicantimpactontheenergymarkets.

Superbugs

Sincetheoilcrisisofthe1970s,whenthepriceofabarrelofpetroleum
peaked,chemicalandbiologicalengineershavechasedafterwaysto
turnthenationsvastreservesofcellulosicmaterialsuchaswood,
agriculturalresidues,andperennialgrassesintoethanolandother
biofuels.Lastyear,citinganotherofPresidentBushsgoalsreducing
U.S.gasolineconsumptionby20percentin10yearstheU.S.
DepartmentofEnergy(DOE)announcedupto$385millioninfunding
forsixbioreneryprojectsthatwillusevarioustechnologiesto
produceethanolfrombiomassrangingfromwoodchipstoswitchgrass.

Accordingtoa2005reportbytheDOEandtheU.S.Departmentof
Agriculture,thecountryhasenoughavailableforestandagricultural
landtoproduce1.3billiontonsofbiomassthatcouldgotoward

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biofuels.Beyondprovidingavastsupplyofcheapfeedstock,cellulosic
biomasscouldgreatlyincreasetheenergyandenvironmentalbenetsof
biofuels.Ittakesfarlessenergytogrowcellulosicmaterialsthantogrow
corn,andportionsofthebiomasscanbeusedtohelppowerthe
productionprocess.(ThesugarcanebasedethanolproducedinBrazil
alsooersimprovementsovercornbasedethanol,thankstothecrops
largeyieldsandhighsugarcontent.)

Butdespiteyearsofresearchandrecentinvestmentinscalingup
productionprocesses,nocommercialfacilityyetmakescellulosic
ethanol.Theeconomicexplanationissimple:itcostsfartoomuchto
buildsuchafacility.Cellulose,alongchainpolysaccharidethatmakes
upmuchofthemassofwoodyplantsandcropresiduessuchas
cornstalks,isdicultandthusexpensivetobreakdown.

Severaltechnologiesforproducingcellulosicethanoldoexist.The
cellulosecanbeheatedathighpressureinthepresenceofoxygento
formsynthesisgas,amixtureofcarbonmonoxideandhydrogenthatis
readilyturnedintoethanolandotherfuels.Alternatively,industrial
enzymescanbreakthecellulosedownintosugars.Thesugarsthenfeed
fermentationreactorsinwhichmicrorganismsproduceethanol.Butall
theseprocessesarestillfartooexpensivetousecommercially.

Evenadvocatesofcellulosicethanolputthecapitalcostsofconstructing
amanufacturingplantatmorethantwicethoseforacornbasedfacility,
andotherestimatesrangefromthreetimesthecosttove.Youcan
makecellulosicethanoltoday,butatapricethatisfarfromperfect,says
ChristopherSomerville,aplantbiologistattheUniversityofCalifornia,
Berkeley,whostudieshowcelluloseisformedandusedinthecellwalls
ofplants.

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Cellulosehasphysicalandchemicalpropertiesthatmakeitdicultto
accessanddiculttobreakdown,explainsCaltechsArnold,whohas
workedonandoonthebiologicalapproachtoproducingcellulosic
ethanolsincethe1970s.Foronething,cellulosebersareheldtogether
byasubstancecalledlignin,whichisabitlikeasphalt,Arnoldsays.
Oncetheligninisremoved,thecellulosecanbebrokendownby
enzymes,buttheyareexpensive,andexistingenzymesarenotidealfor
thetask.

Manyresearchersbelievethatthemostpromisingwaytomake
cellulosicbiofuelseconomicallycompetitiveinvolvesthecreationorthe
discoveryofsuperbugs,microrganismsthatcanbreakdowncellulose
tosugarsandthenfermentthosesugarsintoethanol.Theideaistotake
whatisnowamultistepprocessrequiringtheadditionofcostlyenzymes
andturnitintoasimple,onestepprocess,referredtointheindustryas
consolidatedbioprocessing.AccordingtoLeeLynd,aprofessorof
engineeringatDartmouthCollegeandcofounderofMascoma,a
companybasedinCambridge,MA,thatiscommercializingaversionof
thetechnology,theconsolidatedapproachcouldeventuallyproduce
ethanolat70centsagallon.Itwouldbeatransformational
breakthrough,hesays.Theresnodoubtitwouldbeattractive.

Butndingsuperbugshasproveddicult.Fordecades,scientistshave
knownofbacteriathatcandegradecelluloseandalsoproducesome
ethanol.Yetnonecandothejobquicklyandecientlyenoughtobe
usefulforlargescalemanufacturing.

Nature,Arnoldexplains,oerslittlehelp.Therearesomeorganisms
thatbreakdowncellulose,shesays,buttheproblemisthattheydont
makefuels,sothatdoesntdoyoumuchgood.Analternative,shesays,
istogeneticallymodifyE.coliandyeastsothattheysecreteenzymes

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thatdegradecellulose.Butwhilemanydierentkindsofenzymescould
dothejob,mostthemdontliketobeinsertedintoE.coliandyeast.

Arnold,however,isoptimisticthattherightorganismwillbe
discovered.Youneverknowwhatwillhappentomorrow,shesays,
whetheritsdoneusingsyntheticbiologyorsomeonejustscrapesone
othebottomoftheirshoe.

Shedidntquitescrapeitohershoe,butSusanLeschine,a
microbiologistattheUniversityofMassachusetts,Amherst,believesshe
justmighthavestumbledonabugthatwilldothejob.Shefounditina
soilsamplecollectedmorethanadecadeagofromthewoods
surroundingtheQuabbinReservoir,about15milesfromherlab.The
Quabbinsamplewasjustoneofmanyfromaroundtheworldthat
Leschinewasstudying,soitwasseveralyearsbeforeshenished
analyzingit.Butwhenshedid,sherealizedthatoneofitsbacteria,
Clostridiumphytofermentans,hadextraordinaryproperties.It

decomposesnearlyallthecomponentsoftheplant,anditformsethanol
asthemainproduct,shesays.Itproducesprodigiousamountsof
ethanol.

LeschinefoundedacompanyinAmherst,
SunEthanol,thatwillattempt
toscaleupethanolproductionusingthebacterium.Theresalongway
togo,sheacknowledges,butsheaddsthatwhatwehaveisvery
dierent,andthatgivesusalegup.Wealreadyhaveamicrobeandhave
demonstrateditonrealfeedstocks.Leschinesaysthatotheruseful
microbesareprobablywaitingtobediscovered:asinglesoilsample,
afterall,containshundredofthousandsofvarieties.Inthiszooof
microbes,shesays,wecanthinkthatthereareotherswithsimilar
propertiesoutthere.

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Blooming Prairies

Whetherethanolmadefromcellulosicbiomassisgoodorbadforthe
environment,however,dependsonwhatkindofbiomassitisandhowit
isgrown.

InhisoceinSt.Paul,DavidTilman,aprofessorofecologyatthe
UniversityofMinnesota,pullsoutalargeaerialphotoofaeld
sectionedintoaneatgrid.Evenfromthecamerasvantagepointfar
abovetheground,thelandlookspoor.Inoneplotarethinrowsof
grasses,thesandysoilvisiblebeneath.Tilmansaysthelandwasso
infertilethatagriculturaluseofithadbeenabandoned.Thenheandhis
colleaguesscrapedoanyremainingtopsoil.Nofarmerhaslandthis
bad,hesays.

Inaseriesoftests,Tilmangrewamixtureofnativeprairiegrasses
(includingswitchgrass)insomeoftheeldsplotsandsinglespeciesin
others.Theresultsshowthatadiversemixofgrasses,evengrownin
extremelyinfertilesoil,couldbeavaluablesourceofbiofuels,hesays.
Youcouldmakemoreethanolfromanacre[ofthemixedgrasses]than
youcouldfromanacreofcorn.Betteryet,inapaperpublishedin
Science,Tilmanshowedthattheprairiegrassescouldbeusedtomake
ethanolthatiscarbonnegative:thegrassesmightconsumeandstore
morecarbondioxidethanisreleasedbyproducingandburningthefuel
madefromthem.

Thendingsarestrikingbecausetheysuggestanenvironmentally
benecialwaytoproducemassiveamountsofbiofuelswithout
competingwithfoodcrops.By2050,accordingtoTilman,theworld
willneedabillionhectaresmorelandforfood.Thatsthelandmassof
theentireUnitedStatesjusttofeedtheworld,hesays.Ifyoudidalot
ofbiofuelson[arable]landitisveryeasytoenvisionabillionhectares

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forbiofuelsyouwillhavenonatureleftandnoreserveoflandafter50
years.Instead,
Tilmanargues,itmakessensetogrowbiomassforfuels
onrelativelyinfertilelandnolongerusedforagriculture.

ButdownthehillfromTilmansoce,hiscolleaguesintheapplied
economicsdepartmentworryaboutthepracticalissuesinvolvedin
usinglargeamountsofbiomasstomakefuel.Foronething,theypoint
out,thetechnologyandinfrastructurethatcouldecientlyhandleand
transportthebulkybiomassstillneedtobedeveloped.Andsincethe
plantmaterialwillbeexpensivetomovearound,biofuelproduction
facilitieswillhavetobebuiltclosetothesourcesoffeedstockprobably
within50miles.

Theamountofbiomassneededtofeedevenonemediumsizeethanol
facilityisdaunting.Eidmancalculatesthatafacilityproducing50
milliongallonsperyearwouldrequireatruckloadedwithbiomassto
arriveeverysixminutesaroundtheclock.Whatsmore,hesays,the
feedstockisnotfree:itwillcostaround$60to$70aton,orabout75
centspergallonofethanol.Thatswherealotofpeoplegetfooled,he
adds.

Sincenocommercialcellulosicfacilityhasbeenbuilt,says
Eidman,itis
diculttoanalyzethespeciccostsofvarioustechnologies.Overall,he
suggests,theeconomicslookinterestingbutcellulosicethanolwill
havetocompetewithcornderivedbiofuelsandgetdowntosomething
like$1.50agallon.Eidmanbelievesitwillbeatleast2015before
biofuelsmadefromcellulosearemuchofafactorinthemarket.

Exiled

Whilechemicalengineers,microbiologists,agronomists,andothers
struggletondwaysofmakingcellulosicethanolcommercially

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competitive,afewsyntheticbiologistsandmetabolicengineersare
focusingonanentirelydierentstrategy.Morethanfteenhundred
milesawayfromtheMidwestscornbelt,severalCaliforniabased,
venturebackedstartupsfoundedbypioneersintheedgingeldof
syntheticbiologyarecreatingnewmicrorganismsdesignedtomake
biofuelsotherthanethanol.

Ethanol,afterall,ishardlyanidealfuel.Atwocarbonmolecule,ithas
onlytwothirdstheenergycontentofgasoline,whichisamixoflong
chainhydrocarbons.Putanotherway,itwouldtakeaboutagallonanda
halfofethanoltoyieldthesamemileageasagallonofgasoline.And
becauseethanolmixeswithwater,acostlydistillationstepisrequiredat
theendofthefermentationprocess.Whatsmore,becauseethanolis
moreeasilycontaminatedwithwaterthanhydrocarbonsare,itcantbe
shippedinthepetroleumpipelinesusedtocheaplydistributegasoline
throughouttheUnitedStates.Ethanolmustbeshippedinspecialized
railcars(trucks,withtheirrelativelysmallpayloads,areusuallyfartoo
expensive),addingtothecostofthefuel.

Soinsteadofethanol,theCaliforniastartupsareplanningtoproduce
novelhydrocarbons.Likeethanol,thenewcompoundsarefermented
fromsugars,buttheyaredesignedtomorecloselyresemblegasoline,
diesel,andevenjetfuel.Wetookalookatethanol,saysNeil
Renninger,seniorvicepresidentofdevelopmentandcofounderof
AmyrisBiotechnologiesinEmeryville,CA,andrealizedthelimitations
andthedesiretomakesomethingthatlookedmorelikeconventional
fuels.Essentially,wewantedtomakehydrocarbons.Hydrocarbonsare
whatarecurrentlyinfuels,andhydrocarbonsmakethebestfuels
becausewehavedesignedourenginestoworkwiththem.Ifthe
researcherscangeneticallyengineermicrobesthatproducesuch

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compounds,itwillcompletelychangetheeconomicsofbiofuels.

Theproblemisthatnatureoersnoknownexamplesofmicro

rganismsthatcanfermentsugarsintothetypesofhydro
carbonsuseful
forfuel.Sosyntheticbiologistshavetostartfromscratch.Theyidentify
promisingmetabolicreactionsinotherorganismsandinsertthe
correspondinggenesintoE.colioryeast,recombiningmetabolic
pathwaysuntiltheyyieldthedesiredproducts.

AtLS9inSanCarlos,CA,researchersareturningE.coliintoa
hydrocarbonproducerbyrengineeringitsfattyacidmetabolism(see
BetterBiofuels,Forward,July/August2007).Stephendel
Cardayr,

LS9svicepresidentofresearchanddevelopment,saysthecompany
decidedtofocusonfattyacidsbecauseorganismsnaturallyproduce
theminabundance,asawayofstoringenergy.Wewantedtotake
advantageofapathwaythat[naturally]makesalotofstu,del
Cardayrsays.Justgrabyourmiddle.Del
Cardayrandhiscoworkers
usemanyoftheexistingpathwaysinE.colisfattyacidmetabolismbut
divertthemneartheendofthemetaboliccycle.Sincefattyacidsconsist
ofahydrocarbonchainwithacarboxylgroup,itisrelatively
straightforwardtomakethehydrocarbonfuels.Thinkofitasa
highway,saysdelCardayr.Neartheendofthehighway,weadda
detour,apathwaywedesignedandstuckthere,sothefattyacidshavea
betterplacetogo.Wepullthemoandchemicallychangethem,using
thisnewsyntheticpathwaythattakesthemtoproductsthatwewant.

Amyris,too,istakingthesyntheticbiologyapproach,butinsteadof
tweakingfattyacidmetabolism,itisworkingonpathwaysthatproduce
isoprenoids,alargeclassofnaturalcompounds.Sofar,however,both
LS9andAmyrisaremakingtheirbiofuelsafewlitersatatime.And
whilethecompanieshaveambitiousschedulesforcommercializing

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theirtechnologiesbothclaimthattheirprocesseswillbereadyby
2010improvingtheyieldandthespeedoftheirreactionsremainsa
criticalchallenge.Itswheremostofthebiologicalworkisgoingon,
saysRenninger.Westillhavealittlewaytogo,andthatlittlewayis
veryimportant.

Ifeventuallycommercialized,thehydrocarbonbiofuelsmadebyLS9
andAmyriscouldovercomemanyoftheeconomicdisadvantagesof
ethanol.Unlikeethanol,hydrocarbonsseparatefromwaterduringthe
productionprocess,sonoenergy
intensivedistillationstepisnecessary.
Andhydrocarbonbiofuelscouldbeshippedinexistingpetroleum
pipelines.Itsallaboutcost,saysRobertWalsh,presidentofLS9.Buta
criticalfactorwillbethepriceoffeedstock,hesays.Wewantdirtcheap
sugars.

Indeed,thesyntheticbiologystartupsfacethesameproblemthat
establishedethanolproducersdo:cornisnotaninexpensivesourceof
biofuels.Thenextgeneration[offeedstock]willbecellulosic,says
JohnMelo,CEOofAmyris.Butwearenotsurewhichcellulosic
technologywillemergeasthewinner.Whichevertechnologyprevails,
Melosays,Amyrisexpectstobeabletoboltitontoitsfermentation
process,givingthecompanytheadvantagesofbothcheapcellulosic
feedstocksandpracticalhydrocarbonfuels.

Fornow,though,thelackofanalternativetocornisdrivingAmyris
rightoutofthecountry.Thecompany,whichplanstoretro
texisting
ethanolplantssothattheycanmakehydrocarbons,willinitiallywork
withBrazilianbiofuelfacilitiesthatareusingsugar
caneasafeedstock.
Giventhepriceofcornandtheamountofenergyneededtoproduceit,
Melosays,Braziliancaneoersthemostviable,sustainablewayto
makebiofuelstoday.

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No Choice

EveninaSiliconValleyculturethatreveressuccessfulventure
capitalists,VinodKhoslahasaspecialplaceofhonor.Acofounderof
SunMicrosystemsintheearly1980s,Khoslalaterjoinedtheventure
capitalrmKleinerPerkinsCaueldandByers,whereinthelate1990s
andearly2000shegainedareputationforignoringthedotcom
excitementinfavorofaseriesofesotericstartupsinthefarless
glamorouseldofopticalnetworking.Whenseveralofthestartupssold
forbillionsofdollarstolargecompaniesgearinguptheirinfrastructure
fortheInternetboom,Khoslabecame,inthewordsofoneoverheated
headlineofthetime,TheNo.1VConthePlanet.

ThesedaysKhosla,whoisnowamongtheworldsrichest
people(the
Forbes400listshimat317,withanetworthof$1.5billion),isputting
mostofhisinvestmentsinalternativeenergies.Hecountsamonghis
portfoliocompaniesmorethanadozenbiofuelstartupssynthetic
biologycompaniesLS9andAmyris,cellulosiccompanieslikeMascoma,
andcornethanolcompanieslike
Cilion,basedinGoshen,CA.Buttocall
Khoslasimplyaninvestorinbiofuelswouldgreatlyunderstatehis
involvement.Inthelastseveralyears,hehasemergedasoneofthe
worldsleadingadvocatesofthetechnology,promotingitsvirtuesand
freelydebatinganydetractors(seeQ&A,March/April2007).

Khoslaseemsexasperatedbythebiofuelsnaysayers.Climatechange,he
says,isbyfarthebiggestissuedrivinghisinterestinbiofuels.Ifwe
wanttoheadoclimatechangeanddecreaseconsumptionofgasoline,
therearenoalternativestousingcellulosicbiofuelsfortransportation.
Biomassistheonlyfeedstockinsucientquantitiestocosteectively
replaceoil,hesays.Nothingelseexists.Hybridandelectricvehicles,
headds,arejusttoys.

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Inparticular,arguesKhosla,anytransportationtechnologyneedsto
competeinChinaandIndia,thefastestgrowingautomotivemarketsin
theworld.Itsnobigdealtosellamillionpluginelectricsinaplace
likeCalifornia,hesays.Thedicultyissellinga$20,000hybridvehicle
inIndia.Nofrigginchance.Andanytechnologynotadoptableby
ChinaandIndiaisirrelevanttoclimatechange,hesays.
Environmentalistsdontfocusonscala
bility.Ifyoucantscaleitup,itis
justatoy.Hencetheneedforbiofuels.Hencebiofuelsfrombiomass.

Inanumberofopinionpaperspostedonthewebsiteof
Khosla
Ventures,armhestartedin2004thathasinvestedheavilyinbiofuels
andotherenvironmentaltechnologies,Khoslaenvisionsbiofuel
productionrapidlyincreasingoverthenext20years.Accordingtohis
numbers,productionofcornethanolwillleveloat15billiongallonsa
yearby2014,butcellulosicethanolwillincreasesteadily,reaching140
billiongallonsby2030.Atthatpoint,hepredicts,biofuelswillbecheap
andabundantenoughtoreplacegasolineforalmostallpurposes.

WhileKhoslareadilyacknowledgesthelimitationsofcornderived
ethanol,hesaysithasbeenanimportantsteppingstone:themarket
forcornethanolhascreatedaninfrastructureandmarketforbiofuelsin
general,removingmanyofthebusinessrisksofinvestingincellulosic
ethanol.ThereasonthatIlike[cornethanol]isthatitstrajectoryleads
tocellulosicethanol,hesays.Withoutcornethanol,noonewouldbe
investingincellulosics.

ButbackintheMidwest,thereisashowmeattitudetowardsuch
blueskyprojections,andtherearelingeringquestionsaboutjusthow
thenationsvastagriculturalinfrastructurewillswitchovertobiomass.
IfKhoslasprojectionsproveout,thenwonderful,saystheUniversity
ofMinnesotasRunge.Meanwhile,werestuckinreality.Perhapsthe

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mainpointofcontention,Rungesuggests,iswhethercornethanolwill
infactleadtonewtechnologiesorstandintheirway.Itismyopinion
thatcornethanolisabarriertoconvertingtocellulosics,hesays,
pointingtotheinertiacausedbypoliticalandbusinessinterestsheavily
investedincornethanolanditsinfrastructure.

Rungeisnotaloneinhisskepticism.Unlessthecostisreduced
signicantly,cellulosicethanolisgoingnowhere,saysWallyTyner,a
professorofagriculturaleconomicsatPurdueUniversity.Making
cellulosicethanolviablewillrequireeitherapolicymechanismto
encourageinvestmentinnewtechnologiesoraphenomenal
breakthroughandthelikelihoodofthatisnottoohigh,Tynersays.
Farmersandethanolproducerscurrentlyhavenoincentivetotakeon
therisksofchangingtechnologies,headds.Thereisnopolicybridge
tohelpmakethetransition.Thestatusquowontdoit.

Despitethesharpdierencesofopinion,theresstillsomecommon
groundbetweenpeoplelikeKhosla,whoseunbridledfaithininnovation
hasbeennurturedbythesuccessesofSiliconValley,andthe
Midwesternerswhosepragmatismwasforgedbythecompetitive
economicsofagriculture.Inparticular,mostobserversagreethat
annualproductionofcornderivedethanolwilllevelowithinafew
years.Afterthat,anygrowthinbiofuelproductionwillneedtocome
fromnewtechnologies.

Butifcellulosicbiofuelsaretobeginreplacinggasolinewithinvetoten
years,facilitieswillneedtostartconstructionsoon.Thisfall,Range
Fuels,acompanybasedinBroomeld,CO,announcedthatithadbegun
workinGeorgiaonwhatitclaimsisthecountrysrst
commercialscale
cellulosicethanolplant.TheRangefacility,whichwilluse
thermochemicaltechnologytomakeethanolfromwoodchips,is

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scheduledtoreachacapacityof20milliongallonsin2008and
eventuallyincreaseto100milliongallonsayear.Meanwhile,
Mascoma
hasannouncedseveraldemonstrationunits,includingafacilityin
Tennesseethatwillbetherstcellulosicethanolplantbuilttouse
switchgrass.Buttheseproductionplantsarefederallysubsidizedorare
aresultofpartnershipswithstatedevelopmentorganizations;attracting
privateinvestmentforcommercialscaleproductionwillbeanother
matter.

Indeed,rampingupthecapacityofcellulosicethanolproductionwillbe
ahugeandriskychallenge,saysColinSouth,presidentofMascoma.
Whenpeopletalkaboutcellulosicethanolasifitisanindustry,itisan
unfairportrayal,hesays.Thereareanumberofpilotplants,butnone
ofthemhavegottenoutofthepilotscale.Westillneedtoshowwecan
actuallyruntheseintheformofanoperatingchemicalplant.South
saysthatMascomahopestobeginconstructionofacommercialplantin
2009andhaveitupandrunningbyearly2011.Butheaddsthatthe
companywillonlyproceedwhenthenumbersaregoodenough.

Perhapsthemostcrucialnumber,however,willbethepriceofcrudeoil.
Ifitstayshigh,cellulosicethanolproductioncouldbecome
economicallycompetitivemuchsooner.Butfewpeople,leastofallthe
investorswhowouldriskhundredofmillionsofdollarsonnewplants,
arewillingtotakethatbet.Manyrememberthelate1970s,whenthe
federalgovernmentearmarkedroughlyabilliondollarstofund
biomassrelatedresearch,onlytoabandonitwhencrudeoilpricesfell
intheearly1980s.Andwhilethepriceofabarrelofcrudehoveredin
themid$90sthisfall,andwholesalegaspricesreached$2.50agallon,
biofuelexpertssaytheycannotcountonsuchhighprices.Many
producersofnextgenerationbiofuelssaytheywanttobecompetitive

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withcrudeoilataround$45abarreltoensurelongtermviabilityinthe
market.

Indeed,announcementsaboutnewcellulosicethanolplantstendto
obscurethefactthatthetechnologyisstillnoteconomically
viable.
GregoryStephanopoulos,aprofessorofchemicalengineeringatMIT,
describeshimselfasveryoptimisticaboutthefutureofbiofuels.But
evenheisquicktoaddthatitwilltakeanother10yearstooptimize
productionprocessesforcellulosicbiofuels.Among
myriadother
problems,hesays,istheneedformorerobustandversatilemicrobesto
makethem.

Inasmallconferenceroomoutsidehisoce,
Stephanopoulostakesout
apencilandpaperandbeginstodrawaseriesofcircles.Youcan
imagine,hesays,abiorenerysurroundedbysourcesofdierenttypes
ofbiomass.Heconnectsthecirclesatacentralpoint,makinglineslike
spokesonawheel.Youcould,hegoeson,imaginepipelinesfromthese
sources.Whatifthebiomassweretreatedandpipedtothebiorenery
asaslurry?Stephanopouloswouldbethersttoacknowledgethatsuch
anambitiousinfrastructurewouldtakeyearstoputinplace,andthat
theidearaisesnumeroustechnicalandengineeringquestions.Butfor
therestoftheinterview,thedrawingsitspatientlyonthetableasimple
target.

Energy

Getting Cheap Wind Power Where Its

Needed Shouldnt Be This Hard

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State regulators have blocked several big transmission projects to bring wind

power to the upper Midwest and the Southeast.

by Richard Martin

April 25, 2016

The wind power industry had another banner year in 2015, and the outlook

forthefutureisstrong.TheU.S.DepartmentofEnergysnationalwind
powerplancallsforwindtosupply20percentofthecountrys
electricityby2030,upfromlessthan5percenttoday.

Theresonemajorobstacleintheindustryspath,though:muchofthat
electricityisgeneratedinremote,windsweptareasoftheGreatPlains,
andthetransmissionsystemtosendittomarketdoesntexist.Getting
powerfromwindfarmsinWyoming,Kansas,Oklahoma,andIowato
thepopulouscitiestotheeastandwesthasprovenfarmoredicult
thanwinddevelopersenvisionedafewyearsago.

Inthe[Oklahoma]panhandle,youcantbuildnewwindfarmsbecause
theresnowheretogowiththeelectricity,saysMichaelSkelly,CEOof
CleanLineEnergyPartners,whichwasfoundedin2009tobuildbig
linestotransportpowerfromthePlainstotheupperMidwest,the
Southeast,andtheWestCoast.

CleanLineisoneofseveralcompaniestryingtobuildmassivehigh
voltage,directcurrent,longdistancetransmissionlinesthatwould
representsomeofthelargestgridinfrastructureeverbuiltinthis
country.Severalofthesebigoverlandprojectshavebeenblockedin
recentmonths,though,bystatelegislatorsandpublicutilities
commissions.

Unlikenaturalgaspipelines,whichareoftenroutedusingthepowerof

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theFederalEnergyRegulatory
Commissiontoexerciseeminent
domain,electricaltransmissionlines
mustwinapprovalonastatebystate,
oftenpropertybypropertybasis.Clean
LinesGrainBeltExpressproject,
designedtobringwindpowerfrom
KansastoIllinoisandIndiana,was
blockedbyMissourisPublicService
Commission,whichvotedearlierthis
yeartodenyCleanLineeminent
domainauthoritytocrossthestate,
basedostensiblyonobjectionsfrom
landownersalongtheproposedroute.
Thethreeotherstatesinvolvedhad
alreadyapprovedtheproject.Clean
LinehasalsofacedresistanceinitsattempttobuildtheRockIsland
line,fromIowatoIllinois.

Wereseeingsinglestatesholdinguptheselargeinterstatetransmission
systems,saysMichaelGoggin,seniordirectorofresearchatthe
AmericanWindEnergyAssociation.Asitstandsnow,anystatecan
essentiallyhijacktheprocess.

InMissouri,oppositiontothetransmissionlineincludedaBlockGrain
BeltExpresswebsite,yardsigns,andTshirtsthathelpedconvince
regulatorstovote32toblocktheproject(CleanLinesaysitplansto
reapply).St.LouisishometobothPeabodyEnergy,thelargestcoal
producerintheU.S.,whichrecentlyledforbankruptcy,andAmeren,
oneofthemostcoaldependentlargeutilities(seePeabodyEnergys

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BankruptcyShowstheLimitsofCleanCoal).Evenwiththecostof
transmission,Plainswindpowerisoftencheaperonaperkilowatthour
basisthanelectricityfromagingcoalplants.

Relief,however,maybeonthewayintheformofalittleknown
provisionofthe2005EnergyPolicyAct.InlateMarchtheDepartment
ofEnergysaidthat,ifnecessary,itwoulduseitseminentdomain
authorityunderthe2005legislationtoacquirerightsofwayforClean
LinesPlainsandEasternproject,whichwillconnectwindfarmsinthe
OklahomapanhandlewiththeTennesseeValleyAuthoritysgridvia
Arkansas.Thefederalpartnershipeectivelygreenlightsthe705mile,
4,000megawattline.

ThePlainsandEasternprojectwillbethelargesttransmissionlinein
theU.S.ever,intermsofcostandvoltage,saysSkelly.Constructionis
expectedtobeginin2017,andtherstpowerwillbetransmittedin
2020,thecompanysays.

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