Why Biofuels? Why Now? Joel West Keck Graduate Institute blog.SolarProf.com Nov 3, 2011
Why are biofuels in demand? <ul><li>Economics </li></ul><ul><li>Technology </li></ul><ul><li>Politics </li></ul>
What’s holding them back? <ul><li>Economics </li></ul><ul><li>Technology </li></ul><ul><li>Politics </li></ul>
Economics
Key issues of energy economics <ul><li>Energy prices </li></ul><ul><ul><li>Income to producers </li></ul></ul><ul><ul><li>...
US 20 th  century energy use <ul><li>Electricity </li></ul><ul><ul><li>Coal, natural gas, oil </li></ul></ul><ul><ul><li>N...
US Electricity Sources Source: US Energy Information Administration 2008 data
Energy impact on US economy <ul><li>Urban pockets and vast expanses </li></ul><ul><ul><li>High transportation costs </li><...
Demand for renewable energy <ul><li>Oil embargo (1973, 1979) </li></ul><ul><ul><li>Shortages </li></ul></ul><ul><ul><li>Pr...
What drives RE usage <ul><li>Cost </li></ul><ul><li>Cost </li></ul><ul><li>Cost </li></ul>
What drives RE relative costs <ul><li>Cost of RE </li></ul><ul><ul><li>Inputs (e.g. feedstocks) </li></ul></ul><ul><ul><li...
Volatile oil costs Source: “Crude Oil Price History 1950-2008,” oilism.com
Technology
What are biofuels? <ul><li>Biofuels are liquid fuels that substitute for petroleum products </li></ul><ul><ul><li>(Sometim...
Greenhouse gases & biomass <ul><li>Fossil fuels, biomass emit CO 2 </li></ul><ul><ul><li>Linked to global warming </li></u...
How to make biofuels? <ul><li>Turn sugar into alcohol </li></ul><ul><ul><li>Simpler sugars are cheapest </li></ul></ul><ul...
What do you do with it? <ul><li>Ethanol: blend in automotive gasoline </li></ul><ul><ul><li>Every car using ~10% ethanol <...
Fuel chemistry Source: “Properties of Fuels,” www.afdc.energy.gov ~0 n/a 100% ~0 ~0 Water solubility 16k 20k 12k 19k 19k H...
Feedstock considerations <ul><li>Water </li></ul><ul><li>Soil, nutrients </li></ul><ul><li>Sun, length of growing season <...
Biofuel feedstocks <ul><li>Ethanol </li></ul><ul><ul><li>Corn (Midwestern voters) </li></ul></ul><ul><ul><li>Sugar cane (B...
Success of ethanol <ul><li>Domestic politics </li></ul><ul><ul><li>Iowa primary, corn state senators </li></ul></ul><ul><l...
Problems with ethanol <ul><li>Not a drop-in fuel </li></ul><ul><ul><li>Less heat, reduces MPG </li></ul></ul><ul><ul><li>M...
Biofuel technology issues <ul><li>Reducing operational costs </li></ul><ul><ul><li>Conversion of cellulose </li></ul></ul>...
Politics
Industry is policy driven <ul><li>Hottest industry topics (11/2011): </li></ul><ul><li>Feedstocks </li></ul><ul><li>BRIC d...
Policy Landscape <ul><li>Make oil more expensive </li></ul><ul><ul><li>Oil company taxation </li></ul></ul><ul><ul><li>Fue...
Politics of Biofuels Policy <ul><li>California </li></ul><ul><ul><li>Local industry </li></ul></ul><ul><ul><ul><li>Bay Are...
Main policy levers <ul><li>VEETC: 45¢/gallon subsidy </li></ul><ul><ul><li>Volumetric Ethanol Excise Tax Credit </li></ul>...
Resources
News <ul><li>BiofuelsDigest.com </li></ul><ul><li>AlgaeIndustryMagazine.com </li></ul><ul><li>RenewableEnergyWorld.com </l...
Department of Energy <ul><li>EE/RE program </li></ul><ul><ul><li>eere.energy.gov </li></ul></ul><ul><li>Biomass program </...
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Why Biofuels? Why Now?

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An introductory tutorial on the biofuels industry, focusing on the economic, technical and policy issues facing the industry.

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Why Biofuels? Why Now?

  1. 1. Why Biofuels? Why Now? Joel West Keck Graduate Institute blog.SolarProf.com Nov 3, 2011
  2. 2. Why are biofuels in demand? <ul><li>Economics </li></ul><ul><li>Technology </li></ul><ul><li>Politics </li></ul>
  3. 3. What’s holding them back? <ul><li>Economics </li></ul><ul><li>Technology </li></ul><ul><li>Politics </li></ul>
  4. 4. Economics
  5. 5. Key issues of energy economics <ul><li>Energy prices </li></ul><ul><ul><li>Income to producers </li></ul></ul><ul><ul><li>Cost (economic drag) to buyers </li></ul></ul><ul><ul><ul><li>Demand inelastic in short term </li></ul></ul></ul><ul><li>Low costs </li></ul><ul><ul><li>Make goods and services cheaper </li></ul></ul><ul><ul><li>Improve personal lifestyles </li></ul></ul><ul><ul><li>Encourage waste </li></ul></ul>
  6. 6. US 20 th century energy use <ul><li>Electricity </li></ul><ul><ul><li>Coal, natural gas, oil </li></ul></ul><ul><ul><li>Nuclear </li></ul></ul><ul><ul><li>Hydroelectric </li></ul></ul><ul><li>Heating: natural gas, oil </li></ul><ul><li>Transportation </li></ul>
  7. 7. US Electricity Sources Source: US Energy Information Administration 2008 data
  8. 8. Energy impact on US economy <ul><li>Urban pockets and vast expanses </li></ul><ul><ul><li>High transportation costs </li></ul></ul><ul><ul><li>More use of air travel </li></ul></ul><ul><li>Cheap, plentiful energy </li></ul><ul><ul><li>Fueled growth </li></ul></ul><ul><ul><li>Improved living standards </li></ul></ul><ul><ul><ul><li>Home appliances, travel, larger homes </li></ul></ul></ul><ul><ul><li>Recessions at times of shortages </li></ul></ul>
  9. 9. Demand for renewable energy <ul><li>Oil embargo (1973, 1979) </li></ul><ul><ul><li>Shortages </li></ul></ul><ul><ul><li>Price increases </li></ul></ul><ul><ul><li>Economic disruption </li></ul></ul><ul><li>Environmentalism </li></ul><ul><ul><li>1960s, 1970s: pollution </li></ul></ul><ul><ul><li>1990s-present: global warming </li></ul></ul>
  10. 10. What drives RE usage <ul><li>Cost </li></ul><ul><li>Cost </li></ul><ul><li>Cost </li></ul>
  11. 11. What drives RE relative costs <ul><li>Cost of RE </li></ul><ul><ul><li>Inputs (e.g. feedstocks) </li></ul></ul><ul><ul><li>Processing: capital and operating </li></ul></ul><ul><ul><li>Distribution </li></ul></ul><ul><li>Cost of traditional energy </li></ul><ul><li>Subsidies/taxes (and mandates) </li></ul>
  12. 12. Volatile oil costs Source: “Crude Oil Price History 1950-2008,” oilism.com
  13. 13. Technology
  14. 14. What are biofuels? <ul><li>Biofuels are liquid fuels that substitute for petroleum products </li></ul><ul><ul><li>(Sometimes natural gas) </li></ul></ul><ul><li>Part of larger biomass category </li></ul><ul><ul><li>Grow things, burn things </li></ul></ul><ul><ul><li>Also wood, peat, ag. waste </li></ul></ul><ul><li>See http://biomass.energy.gov </li></ul>
  15. 15. Greenhouse gases & biomass <ul><li>Fossil fuels, biomass emit CO 2 </li></ul><ul><ul><li>Linked to global warming </li></ul></ul><ul><li>Fossil fuels use old carbon </li></ul><ul><ul><li>Buried for 300-400 million years </li></ul></ul><ul><ul><li>Natural gas: least emissions per BTU </li></ul></ul><ul><li>Biomass uses new carbon </li></ul><ul><ul><li>Can be continued indefinitely </li></ul></ul>See also “How Green are Biofuels?” http://dx.doi.org/10.1126/science.115310
  16. 16. How to make biofuels? <ul><li>Turn sugar into alcohol </li></ul><ul><ul><li>Simpler sugars are cheapest </li></ul></ul><ul><ul><li>Ethanol is by far most common </li></ul></ul><ul><li>Turn fat into biodiesel </li></ul><ul><li>Often combined with producing other chemicals (proteins, hydrocarbons) </li></ul>
  17. 17. What do you do with it? <ul><li>Ethanol: blend in automotive gasoline </li></ul><ul><ul><li>Every car using ~10% ethanol </li></ul></ul><ul><ul><li>Some cars can run E85 (85%) </li></ul></ul><ul><li>Biodiesel </li></ul><ul><ul><li>Diesel: trucks, cars </li></ul></ul><ul><ul><li>Kerosene: </li></ul></ul><ul><ul><ul><li>Jet A: commercial aviation </li></ul></ul></ul><ul><ul><ul><li>JP5, JP8: military aviation, ships </li></ul></ul></ul>
  18. 18. Fuel chemistry Source: “Properties of Fuels,” www.afdc.energy.gov ~0 n/a 100% ~0 ~0 Water solubility 16k 20k 12k 19k 19k Heat content (BTU/lb) 77% 75% 52% 87% 85-88% Carbon % C 12 to C 22 CH 4 C 2 H 5 OH C 4 to C 12 C 4 to C 12 Formula Biodiesel CNG Ethanol Diesel Gasoline
  19. 19. Feedstock considerations <ul><li>Water </li></ul><ul><li>Soil, nutrients </li></ul><ul><li>Sun, length of growing season </li></ul><ul><li>Yield per acre </li></ul><ul><li>Cultivation/harvesting labor </li></ul><ul><li>Capital intensity </li></ul><ul><li>Supply elasticity </li></ul>
  20. 20. Biofuel feedstocks <ul><li>Ethanol </li></ul><ul><ul><li>Corn (Midwestern voters) </li></ul></ul><ul><ul><li>Sugar cane (Brazil) </li></ul></ul><ul><ul><li>Cellulose, e.g. switchgrass </li></ul></ul><ul><li>Biodiesel </li></ul><ul><ul><li>Recycled cooking oil </li></ul></ul><ul><ul><li>Rapeseed, jatropha, jajoba </li></ul></ul><ul><ul><li>Coconut, palm trees </li></ul></ul><ul><ul><li>Algae </li></ul></ul>
  21. 21. Success of ethanol <ul><li>Domestic politics </li></ul><ul><ul><li>Iowa primary, corn state senators </li></ul></ul><ul><li>Environmental (replacing MBTE) </li></ul><ul><li>Known technology </li></ul><ul><li>Reasonably effective </li></ul>
  22. 22. Problems with ethanol <ul><li>Not a drop-in fuel </li></ul><ul><ul><li>Less heat, reduces MPG </li></ul></ul><ul><ul><li>Miscibility: corrosive, hard to store and transport </li></ul></ul><ul><li>Mostly made from food feedstocks </li></ul><ul><ul><li>Increases food prices </li></ul></ul><ul><li>(Possibly) net negative energy output </li></ul>
  23. 23. Biofuel technology issues <ul><li>Reducing operational costs </li></ul><ul><ul><li>Conversion of cellulose </li></ul></ul><ul><ul><li>Cultivation of algae </li></ul></ul><ul><ul><li>Processing feedstocks to fuel </li></ul></ul><ul><li>Scaling up production </li></ul><ul><li>Reducing capital costs </li></ul>
  24. 24. Politics
  25. 25. Industry is policy driven <ul><li>Hottest industry topics (11/2011): </li></ul><ul><li>Feedstocks </li></ul><ul><li>BRIC development </li></ul><ul><li>Nutrients and water </li></ul><ul><li>Fuels vs. chemicals </li></ul><ul><li>Policy, subsidies (6 topics) </li></ul>Source: “…10 hottest topics,” Biofuels Digest, Nov 2
  26. 26. Policy Landscape <ul><li>Make oil more expensive </li></ul><ul><ul><li>Oil company taxation </li></ul></ul><ul><ul><li>Fuel taxes </li></ul></ul><ul><ul><li>Carbon tax, carbon trading </li></ul></ul><ul><li>Make biofuels cheaper </li></ul><ul><ul><li>R&D subsidies </li></ul></ul><ul><ul><li>Fuel subsidies </li></ul></ul><ul><ul><li>Fuel mandates </li></ul></ul>
  27. 27. Politics of Biofuels Policy <ul><li>California </li></ul><ul><ul><li>Local industry </li></ul></ul><ul><ul><ul><li>Bay Area: Amyris, LS9, Solazyme </li></ul></ul></ul><ul><ul><ul><li>S.D.: Sapphire, Synthetic Genomics </li></ul></ul></ul><ul><ul><li>State is broke </li></ul></ul><ul><li>Federal </li></ul><ul><ul><li>R&D subsidies are cheap </li></ul></ul><ul><ul><li>Ethanol subsidies are controversial </li></ul></ul><ul><ul><li>US going broke </li></ul></ul>
  28. 28. Main policy levers <ul><li>VEETC: 45¢/gallon subsidy </li></ul><ul><ul><li>Volumetric Ethanol Excise Tax Credit </li></ul></ul><ul><ul><li>Signs it’s going away </li></ul></ul><ul><li>2.5% tariff on imported ethanol </li></ul><ul><li>RFS: Renewable Fuel Standard </li></ul><ul><ul><li>9b gallons in 2008 to 36b gallons in 2022 </li></ul></ul><ul><ul><li>Currently allows corn ethanol </li></ul></ul><ul><ul><li>Excludes algae-based fuels </li></ul></ul>
  29. 29. Resources
  30. 30. News <ul><li>BiofuelsDigest.com </li></ul><ul><li>AlgaeIndustryMagazine.com </li></ul><ul><li>RenewableEnergyWorld.com </li></ul><ul><li>GreenTechMedia.com </li></ul><ul><li>Xconomy.com/san-diego </li></ul>
  31. 31. Department of Energy <ul><li>EE/RE program </li></ul><ul><ul><li>eere.energy.gov </li></ul></ul><ul><li>Biomass program </li></ul><ul><ul><li>biomass.energy.gov </li></ul></ul><ul><li>Bioenergy research centers </li></ul><ul><ul><li>genomicscience.energy.gov </li></ul></ul>

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