While some cellulosic ethanol producers, such as Coskata, may be able to survive in a $2.00/gallon gasoline world, most ethanol and biofuel producers are teetering on the brink of disaster. Meanwhile, a 2007 energy law championed by President George W. Bush mandates that the U.S. produce 11.1 billion gallons of biofuels this year, 60 percent more than in 2007.
President Barack Obama is looking to enforce this mandate and is creating a special task force to come up with ways to keep biofuels competitive at current gas prices. He faces a steep uphill battle.
Food crop-based VeraSun Energy, a partner of GM, filed for bankruptcy protection in November. Since that time, three other major ethanol producers have filed for bankruptcy protection. While the $787B USD federal stimulus law offers some relief in the form of $786.5M USD in funding to accelerate biofuels research and boost commercialization by providing additional funding for commercial biorefineries, many fear it won't be enough to save the industry.
On Tuesday, President Obama announced the new task force and called on Americans to embrace ethanol. He states, "We must invest in a clean energy economy that will lead to new jobs, new businesses and reduce our dependence on foreign oil. The steps I am announcing today help bring us closer to that goal. If we are to be a leader in the 21st century global economy, then we must lead the world in clean energy technology. Through American ingenuity and determination, we can and will succeed."
He hopes the stimulus package will kick off such a revival, with $480M USD for pilot- and demonstration-scale biorefineries; $176.5M USD for commercial-scale biorefinery projects; and $130M USD for research, among other things. By 2022, the 2007 energy law requires the U.S. to use 36 billion gallons of biofuels, including 16 billion gallons of cellulosic biofuels and 1 billion gallons of biodiesel.
One key obstacle for the food-crop ethanol industry is that it has been accused both of raising food prices and contributing to global warming. The Environmental Protection Agency is currently evaluating whether the large amounts of energy expended on crop harvest, processing, and the water and energy spent during fermentation or other methods equates to more net emissions of greenhouse gases than gasoline well to pump to tailpipe emissions.
Renewable Fuels Association President and CEO Bob Dinneen disputes such claims stating, "EPA has reconfirmed the fact that when directly compared to gasoline, ethanol significantly reduces greenhouse gas emissions. This apples-to-apples comparison reaffirms the substantial greenhouse gas reductions offered by ethanol calculated in numerous studies including one done recently for the International Energy Agency."
The current EPA figures he refers to do include impact from growing corn and the impact on land use -- such as cutting down forests to grow crops. California already considers such indirect factors in its own emissions standard. Jeremy Martin, of the Union of Concerned Scientists says that such consideration is essential, stating, "The best biofuels take a big bite out of global warming emissions without gobbling up our food crops."
Food-crop ethanol, despite its downsides, does provide a key nationalistic advantage of moving production inside the U.S. and protecting our nation's fuel source from unstable foreign national influences. Ultimately, cellulosic ethanol may be the best bet as it is both cheap, doesn't use food crops, features lower emissions (in many cases), and offers the same national security benefits. While no companies currently offer production-level cellulosic ethanol production, a handful, like Coskata, are on the verge of production-level commercial deployment.