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National Defense > Blog > Posts > Who Is Responsible for Making Biofuels Affordable?
Who Is Responsible for Making Biofuels Affordable?
By Dan Parsons

When it comes to producing affordable alternative energy sources, the U.S. military and industry are at a standstill, caught in a self-perpetuating cycle of arguing over which is the chicken and which is the egg.

Military leaders, particularly within the Navy, want to find a drop-in alternative fuel that will reduce their dependence on foreign oil, but do not want to pay a premium for it. Industry is poised to deliver, but will require a massive infusion of capital to scale emerging technologies, thereby bringing down the price of biofuels that can cost many times more than petroleum products.

Navy and Marine Corps leaders delivered the message at an industry conference Oct. 17 that renewable energy is an essential strategic need. Industry representatives countered that the Defense Department would have to swallow paying as much as $40 per gallon until they can shell out serious investment dollars.

“If Americans don’t invest in figuring out how to produce renewable fuels at scale and then invest in the infrastructure needed to produce billions of gallons, we will be in a world of hurt,” Mike Ritzenthaler, a senior research analyst for Piper Jaffray, a global investment bank, said at the National Defense Industrial Association’s annual Naval Energy Forum.

“In theory, you could see some astronomically lower fuel prices. We could easily see $2-per-gallon jet fuel, but to get the scale that’s necessary and to get all the learning under our belts, we’re at least 35 years out.”

There is no “green premium” in the American capitalist economy. Consumers who drive across town to save 2 cents on a gallon of gasoline will not pay upwards of $20 a gallon for alternative fuels simply because they are environmentally sustainable, Ritzenthaler said. It is up to public and private investment to scale biofuels technologies and drive the cost down, he said.

That is where the U.S. government, and the Navy in particular, can play a leading role, Sir Richard Branson, chairman of Virgin Group and an advocate for renewable energy, told the conference in a prerecorded video.
“The U.S. Department of Defense has enabled many of the most transformational technologies of our age,” Branson said. “We need to invest today to enable payoffs in the future.”

Branson likened biofuels and other renewable energy technologies to government sponsored development successes like the Global Positioning System and  computers — both technologies that grew out of defense programs that were seen as prohibitively expensive in their infancy.
“Technologies are always more expensive at their earliest stages of development, but those costs drop rapidly as they are scaled up and achieve commercial markets,” he said. “The Navy’s work to advance [renewable energy] technology is invaluable.”

Private investment is already ramping up biofuels production. At least three refineries of advanced biofuels — those that achieve a 50-pecent reduction in greenhouse gas emissions versus petroleum — have come online in the U.S. since 2007, said Mike McAdams, president of the Advanced Biofuels Association. Together those three factories can produce 225 million gallons of fuel annually, he said. McAdams’ association boasts 51 member companies, each chasing some form of biofuels manufacturing using everything from algae and corn to timber waste.

“These fuels are here today,” though still not on a scale that can compete with oil and gasoline, he said.

The Navy’s role in ramping up production is “substantial,” McAdams said. Not only can the service provide large collateral agreements wherein a certain production run is subsidized up front, but Navy ships and planes can also demonstrate the fuel’s effectiveness, he said. Still, “commercializing new technologies is remarkably, remarkably hard,” Ritzenthaler said. “Biofuels will only garner the required public support when oil prices are high enough to drive a meaningful disparity between incumbents and alternatives.”

With sufficient capital, the United States could produce as many as 2 billion gallons per year, Ritzenthaler said. Reeling from the one-two punch of a depressed economy and rising oil prices, industries that consume large amounts of petroleum are getting into the biofuels game, regardless of current outsized prices. Airlines, like shipping companies, predict oil prices will continue to climb. That realization has spurred investment in renewable fuels, said Jimmy Samartzis, managing director of global environmental affairs for United Airlines. United has instituted as commercial aviation alternative fuels initiative that promotes the use of biofuels to power commercial flights. The airline has increased the number of planes that carry biofuels mixtures since, he said.

The shipping industry has seen fuel prices jump 700 percent in the past 15 years, said Gordan Evans Van Hook, senior director of innovation and concept development for Maersk Line. With a total 1,400 ships plying the seas under the Maersk Group flag, “there’s no question that energy efficiency is crucial to profitability,” he said.

“Biofuels are one component of our overall strategy to be cost-efficient and environmentally friendly,” he said. “The current economic downturn and low shipping rates have left us with “razor-thin” profit margins. We can’t afford to operate without looking for ever-increasing energy efficiency.”

But given the premium price of biofuels, they don’t yet meet the shipping industry's desired profit margins. Van Hook said shipping, like the Navy, would eventually benefit from a biofuels industry that offers economy of scale, and could see costs driven down in the near term by tapping the “clean, cheap, readily available natural gas” and including that energy source into its overall energy strategy.

Small steps like augmenting petroleum-based fuels with natural gas can create near-term efficiencies that will open the door to larger, long-term investments in renewable energy, said John Burrow, executive director of Marine Corps Systems Command.

“We tend to look for the big bang, the big game changer that is going to take quite some time and quite some investment,” Burrow said. “That’s important, don’t get me wrong. But there are things we can be doing today to help drive the energy solutions of the future."

Industry should be focused on delivering technologies that take energy efficiency into account from day one, he said. Increasing fuel efficiency in existing vehicles by pitching low-power systems and new fuels is important. In the future, such strategies will be imperative to win contracts, he added.

“You want to win contracts and to win a contract, I would argue that energy is a key enabler, it’s a discriminator,” Burrow said. “It gives you a competitive advantage in terms of design. If you can drive down our life cycle cost … you’re going to be in there.”

Photo Credit: Istockphoto


Re: Who Is Responsible for Making Biofuels Affordable?

It is a fundamental misunderstanding of modern intensive agriculture and thermodynamics to think of biofuels as an energy source.  They are in fact massive parasites of fossil fuel energy with only a small fraction of their energy content from photosynthesis.   If biofuels were an energy source, we would see ethanol used to make more ethanol and biodiesel used to make more biodiesel.  Instead we use huge amounts of fossil fuel natural gas and petroleum to make the ammonia fertilizer, herbicides, pesticides, farm equipment fuel, bio-refinery process energy, and hydrogen gas to hydrotreat the final product into the drop-in fuels the airlines and military require.  Petroleum is even the feedstock for the organic chemicals used to synthesize the designer enzymes for the most advanced biofuel processes.  In the end, biofuels are a hugely wasteful transformation of fossil fuel energy to generate a false fig leaf of being clean and green.  After more than $6B a year in subsidies since 2005, corn ethanol, the most productive US biofuel per acre of cropland, is still 40 cents more a gallon than premium gasoline when corrected for MPG energy content. (see E85 price in "AAA’s Daily Fuel Gauge Report." ).  The laws of physics won't change no matter how many billions of dollars are thrown at them.  Despite the hype and misinformation spread by advocates, even algae needs ammonia or urea as energy inputs and huge amounts of fresh water (evaporation make-up water for even saline algae must be fresh or salinity will rise), and the lifecycle studies are showing worse than a 1:7 EROI, which means the end product hydrotreated biodiesel has less than one-seventh of the energy input to create it.  Time to stop fleecing the taxpayer and driving up the food prices to boot.  This is epic failure.  Dr. Chu and Secretary Panetta and Sir Richard Branson need to take a high school physics and chemistry refresher, and then force any prospective biofuel producer to walk them through the hydrogen and carbon mass balance stoichiometry and enthalpies of their process and show where all the energy inputs and outputs are happening.  They would inevitably see that biofuels are attempts at perpetual motion in chemistry--turning hydrocarbons into carbohydrates and then back into hydrocarbons, and it is hidden or disguised inputs of petroleum energy that make this parlor trick work.
Cliff Claven at 10/20/2012 12:45 PM

Re: Who Is Responsible for Making Biofuels Affordable?

Cliff, can you provide any references for the argument you are making?  It is very intriguing and something I would be interested in researching further.
Karl Allen at 10/20/2012 3:19 PM

Re: Who Is Responsible for Making Biofuels Affordable?

Some of the more thorough studies:
1. Hill, J., E. Nelson, D. Tilman, S. Polasky, and D. Tiffany. “Environmental, Economic, and Energetic Costs and Benefits of Biodiesel and Ethanol Biofuels.” Proceedings of the National Academy of Sciences 103, no. 30 (2006): 11206.
2. Murphy, David J, and Charles A. S. Hall. “Year in review—EROI or Energy Return on (energy) Invested.” Annals of the New York Academy of Sciences 1185, no. 1 (January 1, 2010): 102–118.
3. Patzek, Tad W. “A First-Law Thermodynamic Analysis of the Corn-Ethanol Cycle.” Natural Resources Research 15, no. 4 (February 22, 2007): 255–270.
4. Clarens, Andres F., Eleazer P. Resurreccion, Mark A. White, and Lisa M. Colosi. “Environmental Life Cycle Comparison of Algae to Other Bioenergy Feedstocks.” Environmental Science & Technology 44, no. 5 (March 2010): 1813–1819.
5. Kloeck, Gerd. “It’s the Process, Stupid. Biofuels from Microalgae Are Not yet Sustainable.” Genetic Engineering and Biotechnology News, January 5, 2010.
6. Murphy, Cynthia Folsom, and David T. Allen. “Energy-Water Nexus for Mass Cultivation of Algae.” Environmental Science & Technology 45, no. 13 (July 2011): 5861–5868.
7. Patzek, Tadeusz W. “A Probabilistic Analysis of the Switchgrass Ethanol Cycle.” Sustainability 2, no. 10 (September 30, 2010): 3158–3194.
And read up on the non-performance of Cello, Range Fuels, Amyris, Gevo, Choren, Cellana (and stand by for similar news from KiOR, Solazyme, Syntroleum, Iogen, etc.).
Cliff Claven at 10/20/2012 6:24 PM

Re: Who Is Responsible for Making Biofuels Affordable?

So, "Cliff," I understand you to say that because we don't make enough ethanol or renewable diesel or biodiesel fuel to power our farm equipment and refineries and because we haven't yet converted our chemical industries to using bio-inputs instead of fossil fuel inputs, that we are still using fossil fuels and hydrocarbons as the basis of our power/chemical economy.  And because of that current state of affairs, you would halt all effort to get to the point where we do not rely on fossil-based inputs?

Take a look at for information on efforts to make this transition.
Joanne Ivancic at 10/23/2012 5:03 PM

Re: Who Is Responsible for Making Biofuels Affordable?

"Biofuels" is not limited to ethanol fermentation, or soybean oil esterification. These are indeed using "food" agriculture, and can be shown as having small, or negative energy balance. By the way, the starchy corn we are feeding the cows (and our kids, in the form of high fructose corn syrup, in any sweet beverage) should be really called a chemical, not food. There is a vastly better solution in using energy crops like miscanthus and switchgrass, which can grow today 10 Tonnes/acre/year, for thermo-chemical processing. Namely, gasification into synthesis gas (carbon monoxide and hydrogen, mostly) and then synthesis gas into gasoline via Mobil's 1972 "Methanol to Gasoline" (MTG) patent. This was already demonstrated in NZ in the 1980s, in a 14,000  BPD gasoline plant built by Bechtel. The feedstock there was natural gas, but the process, from Methanol and on, is exactly the same. I should know, as I have built a 40 kg/h pilot for biomass-gasification and gasoline synthesis at Primus Green Energy, in Hillsborough NJ. Careful mass & energy balances show that you CAN make a cost effective conversion, with a yield of 90 gallons gasoline per 1 Tonnes of dry biomass. Yes, this can save our grand children from suffocation, and no, it does not need to have huge government subsidies. This mechanism can be quite profitable, even without levies or the Ethanol blending bonus ($0.51/gallon), or the EPA RIN (Renewable Index Number).
Dr. Moshe Ben-Reuven at 10/24/2012 2:02 PM

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