News From My Backyard: OSU Study Burns Biofuels

[From the Eugene Register-Guard:]

A new analysis by a team of Oregon State University economists concludes that biofuels offer only marginal progress toward energy independence and reduction of greenhouse gases and do so at a much higher cost than other alternatives.

The study found that the "net energy" from biofuels - the amount of energy in the end product after subtracting the amount of energy used to produce and distribute it - is as low as 20 percent for corn-based ethanol. That compares with 75 percent for standard gasoline.

Also, although each of the three types of biofuels studied would help reduce greenhouse gas emissions, the reduction would be as much as 200 times more expensive than other options, such as improving gas mileage or establishing a carbon tax.

Biofuel supporters don't necessarily dispute the numbers but suggest that the math would tilt in alternative fuels' favor by changes in existing production and distribution systems and future improvements in technology. They say the biofuels market is a necessary first step and that rising consumer demand will help bring about advances that will improve cost effectiveness.

"We must keep in mind that biofuels are not the end answer to our liquid fuel problems," said Ian Hill, founder and a managing partner of SeQuential Biofuels. "What they are is a progressive step in the right direction."

The study was done by professors William Jaeger and Thorsten Egelkraut and research associate Robin Cross in OSU's College of Agricultural and Resource Economics. Jaeger said its purpose was not to tell people whether it makes economic sense to put biofuels in their gas tanks, but to help in the debate over steps Oregon can take as a state to address energy and environmental needs, such as encouraging development of biofuel refineries.

He said the report probably won't be welcome news for those who advocate greater use of biofuels, but he said it helps show where investments are needed to help make such fuels a more viable alternative.

The analysis looked at three types of biofuels: corn-based ethanol, wood cellulose-based ethanol and canola-based biodiesel. It looked at the cost of growing and processing the crops used to produce and transport the fuel, the net energy of the fuel and the effect on greenhouse gas emissions.

Importantly, the study did not factor in the environmental cost of refining and burning gasoline or of producing biofuels.

According to the study, only wood cellulose ethanol has a greater net energy return than gasoline, 84 percent, but it still produces fewer Btus per gallon, and with current technology it costs more to produce than it would generate in sales. Canola biodiesel has a net energy of 69 percent, 6 1/2 times that of corn ethanol, which is 20 percent.

But a big part of the net energy calculation comes from the byproducts of biofuel production. Both biodiesel and corn ethanol produce large amounts of left over vegetable matter that is used as animal feed, and that adds substantially to net energy because it reduces overall feed production.

Biodiesel also creates glycerin as a byproduct, which contributes to the net energy figure.

But producing biofuels in large quantities could flood the market for such products, dramatically lowering their price or creating more than can be used. If that happens, the net energy of biofuels will drop dramatically.

The study also found that the cost of greenhouse gas reduction is very high using biofuels. It said policy changes such as carbon sequestration, carbon taxes and "cap and trade" rules would cost about $50 per ton of carbon while corn ethanol would cost $10,700 per ton, biodiesel $580 per ton and wood ethanol $350 a ton.

The study said the energy benefit from increasing automobile fuel efficiency by one mile per gallon in Oregon alone would be equivalent to the gain from building three or four large-scale corn ethanol plants or 13 biodiesel plants.

Also, the study said, to meet 1 percent of Oregon's current petroleum energy consumption with biodiesel would require 400,000 acres of canola, 100 times the current acreage. That would produce 600 million pounds of leftover canola meal, enough to feed five times the numbers of cows currently raised in the state.

The gloomy findings aren't likely to deter biofuel supporters, who see alternative fuels in terms of environmental costs avoided as much as overall cost effectiveness. They say today's cost structure will change.

Hill said feedstocks other than canola could change the economics of biodiesel and increased corn production in Oregon could do the same for ethanol. The important thing, he said, is to keep moving ahead.

"We don't have a perfect solution today, but we do have some solutions that take us toward a sustainable system and move us away from the fossil fuel system," he said. "Is it better to take that step now or not? We would argue as a company that it's absolutely better to take that step and always be critical of where we are and push for greater efficiency."

This is a surprisingly good article, for the ole' Eugene R-G. The OSU study's energy figures are pretty much in line with my thesis research findings, and the economic numbers make sense.

And the quotes from the biofuels supporters are pretty good too. Clearly, biofuels can't be THE solution - to either energy independence, or global warming. They can help make an incremental difference and get us one (maybe small) step closer, but they certainly aren't a silver bullet. The guys at Sequential know this (I've heard both of the Oregon-based biofuels company's founders speak a several of times now), and their quotes in the article are pretty spot on.

The study's findings are yet another indicator that if we are really serious about energy independence and climate solutions, we need to be looking at increased efficiency first - raise fuel economy standards, increase appliance, lighting and building codes and capture all cost-effective industrial efficiency. This will be by far the most cost-effective effort to reduce energy use and greenhouse gas emissions.

And while the study did not focus on other alternative transportation options (see my thesis for a comparison of the energy use and emissions of a much broader set of alternative transportation options), it is also clear that plug-in hybrid electric vehicles will trump the energy and emissions savings of biofuels, especially corn-based ethanol. Plug-in hybrids fueled with cellulosic ethanol are even better...