As skyrocketing gasoline prices continue to squeeze motorists at the pump and drive up the cost of myriad goods, scientists and industry experts are developing viable alternative fuels.
Corn-based ethanol, once seen as America’s solution to the oil shortage, has a new rival in cellulosic ethanol, which is derived from wood fiber. Not only would advances in cellulosic ethanol be a boon for consumers, but increased demand for wood fiber to produce cellulosic ethanol could revitalize the forest products industry.
The process of making ethanol from wood fiber is complex, but several companies are forging ahead with scientific breakthroughs that make the process easier and more economically feasible. Consumers could benefit from the results of their efforts in as little as a year.
Cellulosic Ethanol Gains Momentum
A handful of companies is forming the basis of an industry devoted to using wood and other biomass in the production of cellulosic ethanol. Although these companies all have slightly different means of developing ethanol, competition will ultimately lead to a showdown based on who can generate the most ethanol at the lowest price.
Colorado-based Range Fuels, for instance, uses a two-step, thermo-chemical process to separate ethanol from the other naturally occurring chemicals in trees and agricultural waste. First, a converter uses heat, pressure, and steam to create a synthetic gas, which is then cleaned to remove excess chemical waste. Then, the synthetic gas is passed over a proprietary catalyst that transforms it into mixed alcohols. Finally, ethanol is separated from the other alcohols. Mitch Mandich, CEO of Range Fuels, said his company’s thermo-chemical approach is “more like a bio-refinery.”
Range Fuels will be more successful than some competitors because the
company does not use an enzymatic process, said Mitch. “The bio-chemical process is expensive,” he said. “In the next four to five years the enzymatic approach might be commercially viable, but it could be four to five dollars per gallon to produce.”
Range Fuels has broken ground on its first plant in Soperton, Ga. The facility, scheduled to begin operating next year, will produce 100 million gallons of cellulosic ethanol annually when it is at full production.
The company plans additional ethanol facilities. “We actually have options on close to half a dozen new sites in the Southeast,” said Mitch. The plants will vary in size and production capacity, depending on the availability of feedstock and transportation to vendors.
The surge of corporate interest in cellulosic ethanol is further demonstrated by companies that are scrambling to provide the highest output of fuel while using fewer raw materials.
Zeachem, based in Lakewood, Colo., has developed a different process of extracting ethanol and other chemicals from wood fiber. According to Zeachem’s Web site, its patented hybrid methodology, which combines thermo-chemical and bio-chemical processing, will potentially yield three times more ethanol per acre than traditional processes used to produce corn-based ethanol. Jim Imbler, president and CEO of Zeachem, expects results to be even more favorable.
“If you take an acre of land and you put corn on it, and you take an acre of land and you put our hybrid poplar trees, you get about five times as much ethanol per acre,” said Jim. “That’s what the real advantage is to our process long term, and we’re not using a food crop, so it’s much better.”
Increased demand for corn for ethanol production has been a contributing factor in global price hikes in food. Corn-based ethanol has been blamed for food shortages worldwide, especially in developing countries that rely on U.S. exports.
Jim dispelled the notion that wood waste material alone would provide enough raw material for large-scale ethanol production. “A lot of people are talking about (wood) residuals or waste products,” he said. “The problem there is that one man’s trash is another man’s treasure. A residual is only a waste product when nobody wants it, and then if somebody wants it, it’s a valuable product.” As production of cellulosic ethanol increases, wood waste will become more valuable, he predicted.
Zeachem is developing a plant in Oregon that will be completed in 2009. It will produce ethanol and other chemicals. In fact, the primary product will be ethyl acetate, a chemical used in paints and lacquers. The company plans to begin supplying ethanol by 2010.
Wood Waste Less Promising
Wood waste was once a hot topic in the growing cellulosic ethanol industry. However, recent demand for residual wood waste has turned it into a value-added commodity. Pellet fuel and mulching operations are turning the market for wood waste more competitive as rising gasoline costs inflate delivery fees.
Jim likened wood waste with excess grease from fast food restaurants, which is now used to make bio-diesel. “That waste grease used to be something (fast food restaurants) had to pay to get rid of. Now they’re charging for waste grease,” Jim said. “That’s what happens with these residual models.”
Instead of relying on wood waste, cellulosic ethanol producers are planning to use dedicated timber and switchgrass feedstocks as raw materials. Zeachem will be using hybrid poplar feedstocks.
“We think long term you need a dedicated crop,” Jim added. “We feel that’s the future of the business.”
Mitch said that Range Fuels will use mostly pine although the process can utilize a combination of hardwoods and softwoods. Mitch explained, “We can use the bark, pine cones, and pine needles. We’re not dependent on a particular kind of tree or a part of a tree. We can use all aspects of it.”
Ethanol at the Pumps
Ethanol is being touted by the National Ethanol Vehicle Coalition (NEVC) as “the road to energy independence.” However, even though considerable progress has been achieved by introducing ethanol to more markets across the U.S., prices for fuel — including ethanol — are still linked heavily to oil prices.
Phil Lampert, director of NEVC, admits that ethanol prices are inextricably linked with petroleum because so far ethanol only supplements gasoline in the marketplace. “Unfortunately, it’s all based on increased demand for petroleum around the world…that’s capitalism.”
According to the U.S. Energy Information Administration, the price for regular unleaded gasoline averaged $3.77 per gallon in late May. The average price for a gallon of ethanol was 65 cents cheaper at $3.12.
Ethanol prices tend to fluctuate across the U.S. because pricing takes into account logistics and proximity to the consumer. The closer that feedstocks and refineries are to consumers, the lower the cost of ethanol-blended gasoline at the pump.
Ethanol’s acceptance continues to grow. The U.S. now has at least 1,560 service stations selling ethanol blends compared to just over 1,200 this time last year.
Naturally, oil companies are trying to get in on the action. In South Carolina, for example, oil companies are demanding that ethanol be blended on-site at their terminals by restricting sales of gasoline to independent ethanol blenders at state terminals.
Essentially, oil companies that own major refineries could deprive ethanol blenders of gasoline, thus taking over ethanol markets in certain parts of the country. Such a move would also allow major oil companies to take advantage of a 5.1 cent per gallon federally mandated tax break for ethanol fuel sales.
Although state legislation has been proposed to protect small ethanol blending businesses, similar tactics are reportedly being used in Florida and other parts of the East Coast, according to the NEVC. Phil’s organization is trying to ensure that smaller companies have an opportunity to blend ethanol, which will ultimately provide consumers with more options.
“The oil companies clearly have a dominance of terminal operations and pipelines,” Phil noted. “As more and more ethanol becomes integrated into the system, we’re going to have to look for alternatives to the basic terminals and refineries. The terminal operators are out there to maximize their profitability, so it’s simply a matter of trying to continue to allow independents to be able to participate.”
Dr. Colin South, president of Mascoma Corp., agreed that oil prices still dictate ethanol pricing. “It lies around the real price of gasoline at the moment, and it depends on supply and demand and crude oil prices. There are also (pricing) elements that come from refining and from distribution channels.”
Massachusetts-based Mascoma is trying to extend the ethanol market to the Northeast by using the patented approach of Consolidated Bioprocessing (CBP) to extract ethanol from biomass. The CPB process utilizes microbes capable of breaking down wood fibers and converting simple sugars into ethanol.
Mascoma is developing cellulosic ethanol facilities in Tennessee, New York, and Michigan. Diverse regional production of ethanol will help further reduce the price of ethanol while also providing ethanol fuels to new markets, said Colin.
General Motors (GM) is backing Mascoma’s cellulosic ethanol research. The automobile manufacturer recently announced an “undisclosed equity investment” to complement an earlier investment in the cellulosic ethanol start-up, according to Mascoma.
GM is the leading U.S. auto maker of ‘flex fuel’ cars that are capable of burning E85 fuel, which is 85% ethanol and 15% petroleum. GM has built 3 million of about 7 million flex fuel vehicles on U.S. roads today.
The developing cellulosic ethanol industry shares characteristics with the forest products industry, said Colin. In fact, ethanol production facilities are likely to begin sprouting in regions of the U.S. that have dense forests, such as the Northwest and Southeast.
Last year, Americans consumed over 140 billion gallons of gasoline, including 8 billion gallons of ethanol. The NAVC expects annual ethanol consumption to reach 30 billion gallons within the next 15 years.
Although considerable grant funds from the U.S. Department of Energy have helped launch the cellulosic ethanol industry, private funding is keeping it afloat. Investors and venture capital firms see an opportunity in cellulosic ethanol to challenge traditional fuel sources.
It may be years before this technology develops into a viable market for most wood waste, but the prospects seem better each day as innovation unlocks new ways to use wood fiber for energy.
While the U.S. is still years away from true energy independence, developments in cellulosic ethanol bring us closer every day. Hopefully we can still afford it by then.
