Biofuels – Saving the World Or a Waste of Money?

There is a steady buzz about biofuels, and there are some strong opinions about this timely topic. At one extreme are people who believe that biofuels will save the world from a dependence on evil petroleum and stave off global warming. On the other side are those who say that biofuels are uneconomic and just the latest government-subsidized boondoggle. What is the real story? No short article can cover the topic comprehensively, but this short primer will sort out a few facts so that you can decide for yourself.

Typically, the term biofuels means transportation fuels, replacing or at least reducing the requirement for gasoline derived from petroleum. This is worth remembering because biologically generated ethanol, vegetable oils, and animal fats have been used for centuries for cooking and lighting (think of alcohol burners, old-fashioned street lamps, candles). But today, almost no one is thinking about using biofuels for anything other than powering internal combustion engines (The idea is not a novel as it sounds; Henry Ford originally designed the Ford Model T to run on ethanol, not gasoline).

Currently there are two biofuels available in large enough quantities to have an impact: bio-ethanol and biodiesel. Bio-ethanol is essentially the same substance humans have been producing for 6000 years in beverages by fermenting sugars present in almost any starchy vegetable or sugary fruit. The main difference is the refining needed following distillation to produce ethanol to the substantial exclusion of water. Only then can it burn efficiently in a truck or automobile.

Biodiesel is completely different, chemically. It is produced by reacting plant or animal fats with methanol to produce long-chain fatty acid methyl esters, which can be blended in substantial amounts with traditional petroleum-derived diesel and used as a transportation fuel. Biodiesel is, in point of fact, a good fuel, and it is cleaner-burning than traditional diesel. On some farms all the tractors and farm equipment are run on 100% biodiesel.

Both bio-ethanol and biodiesel are considered first generation biofuels: producible now using existing technology. Second generation biofuels are the next wave, comprising compounds that are more fuel-like such as butanol or hydrocarbons. There is a second generation biodiesel as well, using oils produced by algae in place of plant oils derived from soybean, canola or corn.

The real plum will be when biofuels-ethanol first, but eventually second generation biofuels such as butanol or hydrocarbons-can be produced from waste cellulosic materials such as corn stover (the stalk left after corn is harvested), bagasse (the sugar cane stalk left after sugar has been pressed out), corn cobs, wood chips, straw, and the like. These sources are waste products, already produced anyway, so no crowding out of agricultural food products will occur. I don’t care whether this is called third generation or not. What is important is that using waste agricultural materials instead of food materials will essentially eliminate the upward pressure that current biofuels production has exerted on food prices.

What is indisputable is that every gallon of biofuels generated replaces roughly a gallon of fuel that would otherwise come from petroleum (the equation is not exact due to the varying energy value of different biofuels). This both reduces our dependence on foreign oil and extends our domestic oil supply. Economics are another matter. Biofuels cannot compete with petroleum at today’s (February 2009 when this was written) oil prices of less than $ 40 per barrel. But biofuels do help set a cap on the price oil. What that price level is remains a subject for debate and varies from one biofuel to another. Delving into the details of the cost of biofuels is a topic we will address another time. It is important, however, to acknowledge that the capping effect on fuel prices exists as long as biofuels are maintained as a viable alternative.

Regarding greenhouse gas emissions there is also a range of opinion. In general, however, most observers agree that corn-based biofuels provide a relatively small benefit in this regard, if any. Biofuels derived from existing sources of cellulosic waste would provide a larger reduction, simply due to the fact that no additional energy to harvest the raw material is required. How important it is to achieve this reduction in greenhouse gases is also debatable and outside the scope of this article.

One take-away conclusion about biofuels is the following: corn-based biofuels, whether first or second generation, should only be considered as a stop-gap measure, to be used until the cellulose-based technology has been sufficiently developed. If, within 2-5 years, the displacement of corn by cellulose-based technology has taken place in the USA, upward pressure on food prices due to biofuel production will have abated, and an alternative to petroleum will exist that both reduces our dependence on foreign oil and helps to put a cap the market price of oil.