The Buzz on Biofuels

By: Andrew Brengle

Biofuels are hot!  Or so their stocks were just a few months ago.  You couldn’t open a newspaper or financial journal without seeing some story touting their environmental virtues and financial potential.  Predictably, as oil prices have fallen, so has the heated ardor of the securities market for biofuel stocks and IPOs.

The hyperbole over biofuels—which include biodiesel and bioethanol—during the spring and summer of 2006 was not necessarily such a bad thing, however.  It focused needed attention on a fuel source that the U.S. and other industrialized nations would do well to develop.  Biofuels are here to stay, and their potential for addressing important challenges such as energy independence and climate change is real. 

As with any promising energy source, biofuels do not offer a panacea to our environmental and geopolitical problems.  They are only part of the solution, and pitfalls abound for those who try to recklessly exploit biofuels as a get-rich-quick scheme.

What’s In Biofuels

A variety of vegetable materials can be squashed, cooked, and fermented into biofuels.  Biodiesel is the product of vegetable oils derived from soybeans, sunflowers, rapeseed, palm, coconuts, and other more exotic sources such as jatropha tree seeds.  Bioethanol, a.k.a. ethanol, comes from the fermentation of corn, sugar beet and sugar cane,  switchgrass, and wheat, as well as other “cellulosic” vegetable matter.

Ethanol use far outstrips biodiesel globally, as ethanol has more mature markets and infrastructure.  In the U.S., where it is mostly fed by corn, ethanol has been blended with gasoline for decades. 

The U.S. phase-out of emissions reduction additive, methyl tertiary-butyl ether (MTBE), has boosted demand, as ethanol is the primary replacement for MTBE.  Brazil produces nearly half of the world’s ethanol from sugar cane and uses it to fuel “flex-fuel” cars running on 85% ethanol-gasoline mix.

What are the Benefits?

Recent celebration of U.S. ethanol stocks by bullish market analysts reflected ethanol’s potential as a lever for energy independence and a lucrative investment play more than for its potential as a clean fuel.  But cleaner it is.  In the U.S., ethanol use emits between 10% and 38% fewer emissions than gasoline. 

Environmentalists believe it can and should be more efficient.  Measuring the efficiency of biofuels involves considering not only the actual fuel mileage of the vehicles in which they run, but also the inputs needed to grow the crops supplying the fuel. 

These include fossil fuels for tractors and trucks, electricity for production plants, petroleum based fertilizers and pesticides, and land.  Also factored in are the carbon-sequestering qualities of the plants grown.

The large-scale fossil-fuel energy inputs and transport requirements to bring U.S. corn-based ethanol to market currently undermines its promise as a climate hedge.  Some schemes to set up ethanol production in fact depend on coal and diesel energy to run ethanol plants. 

Ethanol made in Brazil, on the other hand, stands on an efficient process honed over decades, and reduces greenhouse gas emissions by 80%.  Ethanol made from wheat in Britain is 60% less emissions intensive than petroleum-based gasoline. 

Cellulosic ethanol, from crop residues, wood chips, switchgrass, or municipal garbage, promises the most energy efficiency since it requires low to no energy inputs.  Nevertheless, the science of converting low-grade cellulosic materials to ethanol is young and will take more years to research.

Biodiesel the More Efficient Choice

Biodiesel on the whole remains more fuel-efficient and less emissions-intensive than ethanol.  Studies show that biodiesel on average is about four times as efficient as petroleum diesel when considering all energy inputs and fuel mileage and carbon uptake of plants.  Ethanol is about twice as efficient. 

Production and use of biodiesel results in a 78% reduction in carbon dioxide emissions, and unlike petroleum diesel also avoids emission of lead, sulfur or toxic aromatics such as benzene, toluene, and xylene.  Biodiesel does emit high amounts of nitrogen oxides (NOx), a main constituent of smog, but engines tuned for biodiesel can cut down on NOx.

In Europe, where diesel technology is more advanced and widespread, biodiesel currently has more potential for commercial and civilian transport than it does in the U.S.  Biodiesel production in Europe far outdistances production in the U.S. 

The ease with which biodiesel can be blended with conventional petrodiesel is perhaps its best selling point.  Vehicles with conventional diesel engines can run on 20% blends without need for modifications. 

Biodiesel has been tested in busses, tractors, trucks, boats, trains, and in furnaces with varying degrees of success.  For the long-term, machines designed for biodiesel in mind would succeed.  The other major hurdle is the lack of a biodiesel production and fueling infrastructure.  There just aren’t many biodiesel pumps to pull up to yet.

Pandora’s Boxes: Land Use and Commodity Prices

Calculating total energy efficiency of biofuels is easy relative to predicting its implications for land use and other social consequences.  A large-scale increase or shift to crop cultivation for fuel has observers concerned about competition with food crops.  Will we sacrifice food for fuel?  And what does a lucrative biofuels market portend for the biodiversity of forests cut down to make way for monocultures such as soybean or palm trees?

With energy demand dictating the pace of agriculture, will such new pressures accelerate experimentation and use of genetically modified plant species?  Will we see even greater fertilizer and pesticide use? 

Critics of agri-business see another potential boon to industrial farming and added incentive for manipulation of commodity prices by the large players.  Thus, biofuels’ promise for small farmers could be erased if conglomerates control markets and bid prices for corn, soybean, and other commodities to lows unsustainable for small competitors.

One company, D1 Oils, of the U.K. has included land use and employment considerations into its plan for generating biodiesel supply.  D1 Oils uses oil produced from the jatropha tree, a species that can grow on marginal land. 

The company will not have to seek out highly fertile land or replace forests to grow its supplier crop.  It also is considering the employment opportunities for jatropha seed gatherers and processors in several developing countries to provide livelihoods for rural populations. 

D1 Oils is in the minority of companies thinking as far down the supply chain and along humanitarian lines.

To avoid land use abuses and negative social impacts, governments and business will have to agree on suitable regulation for this new fuel arena.  No matter what the emissions benefit captured, it will be meaningless if it comes at the expense of exhausted land, increased pollution, and impoverished farm communities.