U.S. slow on goals for more, greener biofuel

updated 3:26 p.m. ET Oct. 16, 2008

MARION, Ohio - It may be one of the biggest green gambles of the century: a national goal of converting wood, grass, corn stalks and garbage into 16 billion gallons of cellulosic biofuels annually by 2022.

No commercial-scale refineries exist, researchers have yet to agree on the best technology for fuel conversion and there is no distribution network to handle fuel once it is made.

Add it all up and the country's not even close to meeting the EPA's renewable fuel standards a mere 14 years from now.

"The United States could not move that much ethanol today if it had to," said biofuel consultant Bill Caesar, a principal with McKinsey & Co. "There are a lot of other pieces of the puzzle which need to fall in place over time before we hit these very big numbers."

The government has ordered that 36 billion gallons of biofuel be blended into the fuel supply by 2022. Of that, 16 billion must be cellulosic ethanol. No more than 15 billion can be corn ethanol, with the rest coming from other biofuel sources, such as the residue left from sugar production.

Increased use of renewable fuel is one of the major roads to the country's new energy goals, which include reducing reliance on foreign oil, shrinking greenhouse gas emissions and keeping basic transportation affordable.

An estimated 200-plus large-scale facilities are needed to meet the Environmental Protection Agency's standards — each capable of producing about 100 million gallons a year.

A few dozen biofuel projects are on the drawing table across the country, almost all of them cellulosic. Those include 13 biofuel plants funded by the Department of Energy, and only four are commercial scale.

BlueFire Ethanol, based in Irvine, Calif., produces fuel from lawn trimmings and other landfill waste products. Arnold Klann, co-founder and chief executive officer, says he could open dozens of commercial-scale plants from now until 2022 and produce only 5 billion gallons a year. His first plant, the recipient of $40 million in federal startup money, won't open until late next year.

Pros, cons of cellulosic
Ethanol advocates all agree that cellulosic ethanol is the next step for the biofuel industry for a variety of reasons.

Cellulosic-based fuel isn't made from food, such as corn, dodging the food vs. fuel debate. Corn, which was selling at around $4.10 a bushel this week, has more than doubled in price in the past two years.

Cellulosic ethanol also results in fewer greenhouse gas emissions during production. And there's a lot more of it, from wood chips to grass to garbage. It can be grown in places where corn can't, and doesn't require the same maintenance of a food crop.

Those are all selling points but don't get the nation any closer to 16 billion gallons of fuel.

Shipping the raw material is complicated because it generally is lighter than corn, so more is needed to make a shipment financially feasible. Some of the material, such as switchgrass, deteriorates more quickly.

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