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Review of the Research Strategy for Biomass-Derived Transportation Fuels

Committee to Review the R&D Strategy for Biomass-Derived Ethanol and Biodiesel Transportation Fuels

Board on Energy and Environmental Systems Commission on Engineering and Technical Systems National Research Council

NATIONAL ACADEMY PRESS Washington, D.C. Copyright © 2003 National Academy of Sciences. All rights reserved. Unless otherwise indicated, all materials in this PDF File provided by the National Academies Press (www.nap.edu) for research purposes are copyrighted by the National Academy of Sciences. Distribution, posting, or copying is strictly prohibited without written permission of the NAP. Generated for [email protected] on Fri Aug 8 08:07:55 2003

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NATIONAL ACADEMY PRESS

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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. This report and the study on which it is based were supported by Contract No. DE-FG0198EE50561 from the U.S. Department of Energy. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the organizations or agencies that provided support for the project. Available in limited supply from: Board on Energy and Environmental Systems National Research Council 2101 Constitution Avenue, N.W. HA-270 Washington, D.C. 20418 202-334-3505

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National Academy of Sciences National Academy of Engineering Institute of Medicine National Research Council

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. William A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. William A. Wulf are chairman and vice chairman, respectively, of the National Research Council.

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COMMITTEE TO REVIEW THE R&D STRATEGY FOR BIOMASS-DERIVED ETHANOL AND BIODIESEL TRANSPORTATION FUELS

DAVID L. MORRISON (chair), Office of Nuclear Regulatory Research (retired), Cary, North Carolina GARY COLEMAN, University of Maryland, College Park BRUCE E. DALE, Michigan State University, East Lansing ANTHONY J. FINIZZA, Atlantic Richfield Company (retired), Los Angeles, California ROBERT HALL, Amoco Corporation (retired), Winfield, Illinois DONALD JOHNSON, NAE,1 Grain Processing Corporation, Muscatine, Iowa ROBERTA NICHOLS, NAE, Ford Motor Company (retired), Plymouth, Michigan DANIEL SPERLING, University of California, Davis STEVEN H. STRAUSS, Oregon State University, Corvallis Liaison from the Board on Energy and Environmental Systems KATHLEEN C. TAYLOR, General Motors Corporation, Warren, Michigan Project Staff JAMES ZUCCHETTO, director, Board on Energy and Environmental Systems MARY JANE LETAW, program officer and study director CRISTELLYN BANKS, project assistant

1

NAE = National Academy of Engineering.

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BOARD ON ENERGY AND ENVIRONMENTAL SYSTEMS ROBERT L. HIRSCH (chair), Advanced Power Technologies, Inc., Washington, D.C. RICHARD MESERVE (vice chair), Covington and Burling, Washington, D.C. RICHARD E. BALZHISER, NAE,1 Electric Power Research Institute, Inc. (retired), Menlo Park, California EVERETT H. BECKNER, Lockheed Martin Corporation, Albuquerque, New Mexico E. GAIL DE PLANQUE, NAE, U.S. Nuclear Regulatory Commission (retired), Potomac, Maryland WILLIAM L. FISHER, NAE, University of Texas, Austin CHRISTOPHER FLAVIN, Worldwatch Institute, Washington, D.C. WILLIAM FULKERSON, University of Tennessee, Knoxville ROY G. GORDON, NAS,2 Harvard University, Cambridge, Massachusetts EDWIN E. KINTNER, NAE, GPU Nuclear Corporation (retired), Norwich, Vermont ROBERT W. SHAW, JR., Aretê Corporation, Center Harbor, New Hampshire K. ANNE STREET, Alexandria, Virginia JAMES SWEENEY, Stanford University, Stanford, California KATHLEEN C. TAYLOR, NAE, General Motors Corporation, Warren, Michigan JACK WHITE, The Winslow Group, LLC, Fairfax, Virginia JOHN J. WISE, NAE, Mobil Research and Development Company (retired), Princeton, New Jersey

Liaisons from the Commission on Engineering and Technical Systems RUTH M. DAVIS, NAE, Pymatuning Group, Inc., Alexandria, Virginia LAWRENCE T. PAPAY, NAE, Bechtel Technology and Consulting, San Francisco, California

Staff JAMES ZUCCHETTO, director RICHARD CAMPBELL, program officer SUSANNA CLARENDON, financial associate CRISTELLYN BANKS, project assistant

1 NAE 2 NAS

= National Academy of Engineering. = National Academy of Sciences.

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Acknowledgments

The committee wishes to thank the representatives from the U.S. Department of Energy and the national laboratories who contributed significantly of their time and effort to this National Research Council study by giving presentations at meetings and responding promptly to committee requests for information (see Appendix C). The committee also acknowledges the valuable contributions of organizations outside the U.S. Department of Energy that provided information relevant to the study. Finally, the chairman wishes to recognize the committee members and the staff of the Board on Energy and Environmental Systems of the National Research Council for their hard work organizing and planning committee meetings and for their individual efforts in gathering information and writing sections of the report. This report has been reviewed by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the National Research Council’s Report Review Committee. The purpose of this independent review is to provide candid and critical

Copyright © 2003 National Academy of Sciences. All rights reserved.

comments that will assist the authors and the NRC in making the published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The content of the review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the follow individuals for their participation in the review of this report: William G. Agnew, General Motors Corporation (retired); Dan Binkley, Colorado State University; David Bodde, University of MissouriKansas City; Toby Bradshaw, University of Washington College of Forest Resources; Robert Epperly, Epperly Associates, Inc.; Michael R. Ladisch, Purdue University; Ronald A. Sills, BP Amoco P.L.C.; Charles E. Wyman, Dartmouth College Thayer School of Engineering. While the individuals listed above have provided constructive comments and suggestions, responsibility for the final content of this report rests solely with the authoring committee and the NRC.

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Contents

EXECUTIVE SUMMARY ............................................................................................................ 1 1

INTRODUCTION ................................................................................................................ 5 Production and Manufacture of Bioethanol, 5 Role of Government, 6 Strategic Objectives for the Office of Fuels Development, 7 Budget of the Office of Fuels Development, 9 Study Goals, 9

2

CONTEXT FOR BIOMASS-DERIVED FUELS .............................................................. 11 Historical Background and Public Policy, 11 Advantages and Disadvantages of Biofuels, 11 Alternative Fuels and Vehicle Technologies, 14 Markets for Biomass-Derived Ethanol, 14 Manufacturing Biomass-Derived Ethanol, 18 Conclusions, 20

3

FEEDSTOCK DEVELOPMENT ....................................................................................... 22 Program Objectives and Overview, 22 Allocation of Funding, 23 Shift in Strategic Direction, 23 Genomics, 24 Conclusions, 26 Recommendations, 26

4

PROCESSING TECHNOLOGIES .................................................................................... 27 Program Objectives and Overview, 27 Back to Fundamentals, 27 Improving Conversion, 28 Opportunities for Coproducts, 29 Biodiesel, 30 Conclusions, 30 Recommendations, 30

5

CROSSCUTTING OPPORTUNITIES .............................................................................. 32 Systems Analysis, 32 Technology Integration, 32 Increasing Links, 33 Improved Peer Review, 33

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ix

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x

CONTENTS

REFERENCES ............................................................................................................................. 34 APPENDICES A B C D E

Biographical Sketches of Committee Members, 39 Office of Fuels Development Fiscal Year 1999 Budget, 41 Committee Meetings and Other Activities, 44 Barriers to Using Ethanol, 45 Major Components of a Poplar Genomics Initiative, 47

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Tables, Figures, and Boxes

TABLES 1-1 2-1 2-2 3-1 3-2

Funding Allocations for the Office of Fuels Development Biofuels Program, 10 Markets for Cellulosic Biomass-Derived Fuels, 15 Cost Estimates for Bioethanol Manufacturing, 18 Participants in the Feedstock Development Program, 1996–1999, 23 Allocation of Funds for Feedstock Development Projects, 24

FIGURES 1-1 1-2 2-1 4-1

Relative costs of processing steps in the NREL bioethanol process of 1991, 7 Appropriations for the National Biomass Ethanol Program, 9 Estimated manufacturing costs and the market value of cellulosic biomass-derived ethanol, 20 Schematic diagram of the conversion of biomass feedstock to ethanol fuel, 28

BOX 3-1 What Is Genomics? 25

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1

EXECUTIVE SUMMARY

Executive Summary

The Office of Fuels Development (OFD), a component of the U.S. Department of Energy’s (DOE) Office of Transportation Technologies, manages the federal government’s effort to make biomass-based ethanol (bioethanol) and biodiesel a practical and affordable alternative to gasoline. Through the National Biomass Ethanol Program, the OFD is overseeing key research and development (R&D) and industry-government partnerships for the establishment of a cellulosic biomass ethanol industry. Cellulosic biomass resources being investigated include agronomic and forest crop residues, woody crops, perennial grasses, and municipal wastes. Starch-based sources, such as cereal grains (e.g., corn grain), are not included in this program. The objective of the program is to promote the commercialization of enzyme-based technologies to produce cost-competitive bioethanol for use as transportation fuel. The OFD requested that the National Research Council estimate the contribution and evaluate the role of biofuels (biomass-derived ethanol and biodiesel) as transportation fuels in the domestic and international economies, evaluate OFD’s biofuels strategy, and recommend changes in this strategy and the R&D goals and portfolio of the OFD in the near-term to midterm time frame (about 20 years). During this period, a number of complex, interacting factors, including advances in the technologies used to produce biofuels at a competitive cost, the elimination of tax incentives, advances in vehicle and engine technologies, growing concerns about solid waste disposal and air pollution, and global measures to reduce emissions of greenhouse gases to the atmosphere, will affect the position of biofuels in transportation fuel markets.

until 2007. Bioethanol is used today as a blending agent in some gasolines and as a neat fuel in internal combustion engines in a few vehicles. In the future, bioethanol may also be used in fuel-cell vehicles. In all cases, the comparative cost of bioethanol will be the controlling factor, although the competitiveness of bioethanol could improve if stringent regulations on the emission of greenhouse gases are adopted. The current OFD program is based on the immediate exploitation of low-cost feedstocks, such as residues from agricultural and forest products and municipal solid waste. In the long term, other sources of cellulosic biomass, such as dedicated energy crops, may become available at competitive cost. The following program objectives are outlined in the OFD National Biomass Ethanol Program Plan for Fiscal Years 1999–2005: • Near-term objectives (2000–2003). Demonstrate the commercial-scale production of cellulosic ethanol by using one or more low-value waste feedstocks, such as agricultural or forest residues. • Midterm objectives (2005–2010). Demonstrate commercial-scale ethanol production for one or more ethanol plants using agricultural/forest residues together with components of dedicated biomass supply systems, such as the energy crop switchgrass or residues from woody crops, that have been used for fiber. • Long-term objectives (2015–2020). Demonstrate that ethanol manufactured from dedicated energy crops, such as switchgrass and specific woody crops, is cost competitive with gasoline. Beyond 2010, OFD will seek cost reductions through genetic improvements in feedstocks to increase process efficiencies and enhance the value of coproducts.

STRATEGIC PROGRAM OBJECTIVES The OFD has established strategic program objectives to promote the steady development of bioethanol technologies. Currently, bioethanol cannot compete with gasoline, and markets are scheduled to be subsidized by tax credits at least Copyright © 2003 National Academy of Sciences. All rights reserved.

To achieve these objectives, the OFD believes that it will have to (1) meet the technology cost-reduction targets demanded by the marketplace, (2) leverage the corn-ethanol industry’s business and technical resources to expand the 1

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2 ethanol market base, and (3) engage in cost-shared demonstration projects with industrial partners to encourage the acceptance of new technology and reduce market barriers. The projected cost of ethanol production from cellulose declined significantly in the 1980s as the technology was improved. However, since about 1991, there has been little if any drop in the projected cost of about $1.28 per gallon (1995 dollars) based on the technology that OFD has been pursuing. OFD maintains that this result arises from different bases used for the 1991 cost estimate and more recent cost estimates. Nevertheless, even taking into account different bases, the committee believes that a leveling off has occurred and is concerned that this may reflect the inherent limits of the process technology being pursued in the OFD program. Required cost reductions will require major, not incremental, improvements in the current processes and/or breakthroughs (i.e., the replacement of current process steps by much less expensive, much more efficient alternatives). In the committee’s view, widespread market acceptance of biobased ethanol is not achievable with DOE’s current technology base. OFD’s most recent cost analysis indicates that potentially lower cost technologies are being developed outside of the government program. Therefore, the OFD’s milestones should be used not only to track its progress toward the production of bioethanol but also to compare OFD’s costs with industry costs. OFD should consider working with more scientists and engineers outside of OFD to improve biomass conversion technologies. OFD provides some support for several large-scale bioethanol plants that use both currently available, well demonstrated technology and some new technology, notably recombinant organisms to ferment both five-carbon and sixcarbon sugars to ethanol. The knowledge and experience from these large-scale demonstrations should help identify the risks and reduce the costs of bioethanol production. However, scale-up is a much more expensive proposition than fundamental investigation. Once the program supporting commercialization has been completed, OFD should reestablish its leadership role by focusing on providing a technical basis for the next generation of commercial ventures. Recommendation. To reduce the cost of bioethanol and increase competitiveness with other energy sources in the near term (2000–2010) and midterm (2010–2020), the Office of Fuels Development should redirect the focus of its research and development programs from demonstrations to technology fundamentals for both feedstock development and ethanol conversion. Continued technical support should be provided to the demonstration plants now in place to test and evaluate the results of this fundamental research and development. As industrial firms commercialize these lower cost technologies, the role of the Office of Fuels Development in biofuels research should be refocused on overcoming the remaining technical barriers.

BIOMASS-DERIVED TRANSPORTATION FUELS

MARKET POTENTIAL FOR BIOMASS-DERIVED FUELS The motivation for developing bioethanol as a transportation fuel is based on concerns about energy security, environmental quality, and trade deficits. Current research is focused on the potential for bioethanol to reduce net emissions of greenhouse gases to the atmosphere from dedicated energy crops (e.g., woody crops, herbaceous perennials). The impact of the entire fuel cycle, which includes growing, harvesting, processing, and consuming bioethanol, is expected to add very little net carbon dioxide to the atmosphere. However, the magnitude of net reductions of greenhouse gases produced by biomass is still the subject of heated debate, and the entire life cycle of the fuel, including feedstock production, combustion, and transportation, has been the subject of research on greenhouse gas emissions from bioethanol manufactured from corn starch, woody crops, and herbaceous crops. Although the benefits from the production of bioethanol from corn or other residues have not been determined, the benefits from dedicated energy crops are expected to reduce net emissions of carbon dioxide to the atmosphere. One concern about the introduction of biofuels is that the diversion of land to energy production could reduce the acreage devoted to food production. In the case of biofuels, however, the coproduction of biobased ethanol, biobased chemicals, and human food and animal feed products in “biorefineries” could actually reduce conflicts between the production of food and the production of fuels. A possible disadvantage is that the large-scale harvesting of crop residues could increase soil and wind erosion. With proper soil management techniques, however, biofuels based on crop residues may not degrade topsoil. In some cases, production of perennial bioenergy crops could provide local benefits to biofiltration (removal of unwanted nutrients from soil or groundwater via plant root uptake and metabolism), erosion control, and the creation of wildlife habitat. Thus, the economics and environmental effects of cellulosic biomass production will vary with the characteristics of the site. Market factors will determine the effectiveness of OFD’s launch of a new biofuels industry based on cellulosic biomass conversion. The current low price of oil, for example, would limit the success of a “technology push” program. The current subsidized market for ethanol as a blend stock in gasoline to satisfy octane and oxygenate requirements is subsidized by federal and some state tax incentives that should be considered temporary. In the long run, all aspects of the cellulosic biomass-based fuel industry will have to be competitive with petroleum-based fuels. Meeting this difficult challenge will require that OFD’s program achieve significant technical breakthroughs that lead to sharp reductions in manufacturing costs. Although the displacement of gasoline by neat ethanol is a long-term proposition, the subsidized use of ethanol as a blend agent has created near-term opportunities. The OFD

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3

EXECUTIVE SUMMARY

has taken advantage of this market to encourage the commercialization of cellulosic biomass-conversion technology by at least three companies that plan to use waste biomass, which is available at low cost. The establishment of commercial cellulosic biomass conversion can reinforce the credibility of the concept and provide valuable information for future commercialization. However, the long-term commercial viability of cellulosic biomass ethanol as a blending agent, as well as a neat fuel, will require that the product be competitive without government subsidies. Unlike bioethanol, biodiesel is not likely to become an economically viable fuel in the near future because the costs of raw material for biodiesel are very high. In Europe, biodiesel is produced from rapeseed oil, but without the European Union’s subsidy for farmers, rapeseed-based biodiesel would not be competitive in the marketplace. U.S. biodiesel manufacturing processes rely on soybean oil as a source of biomass. One gallon of biodiesel requires approximately seven pounds of soybean oil; therefore, without the addition of methanol and before processing, the cost of biodiesel would be more than $1.50 per gallon. The high cost of oilseed compared to starchy cereals and the high value of soybean oil for food and feed products makes it an unattractive raw material for a low-cost commodity, such as biodiesel. Although some niche markets have been established by legislation in response to environmental concerns, soybean-based biodiesel will remain too expensive to become an economically viable fuel. Recommendation. Because of a lack of foreseeable opportunities for reducing the production cost of biodiesel, the Office of Fuels Development should consider eliminating its biodiesel program and redirecting those funds into the bioethanol programs.

REDUCING THE COST OF BIOETHANOL Now that OFD has helped launch several new plants, the committee strongly believes that the focus of OFD’s program should be shifted to fundamental scientific and engineering studies in search of breakthroughs that would reduce the cost of producing bioethanol. Breakthroughs will require a thorough understanding of the basic science and technical characteristics of materials and processing steps. This fundamental understanding will also provide a firm basis for scaling up from small experimental-sized units to commercial plants. To benefit from advances in genetic engineering, a strong research program in the production of cellulosic feedstocks and the manufacture of ethanol will require time to mature. The engineering expertise of OFD is located at the National Renewable Energy Laboratory. The committee is concerned that some of the processing technologies currently in the National Renewable Energy Laboratory program have reached their inherent limitations and that even though incremental improvements may be achievable, much less

expensive and more effective alternatives will replace these technologies. For example, pretreatment in the OFD program has been largely overlooked for the last two decades because a particular configuration was decided upon, and R&D has focused on downstream processing, even though pretreatment is a significant contributor to the overall cost of ethanol. In addition to OFD’s program, a broad range of innovative research is being done outside of OFD that could improve the manufacture of bioethanol. The committee agrees with scientific assessments that advances in pretreatment and biological processing of biomass feedstocks will make a major impact on total cost of bioethanol and recommends that OFD support research and development on pretreatment of feedstocks, increasing pentose sugar yields, improving enzyme activity, consolidated bioprocessing, feedstock engineering to improve processing, and fundamental studies of coproducts. A better fundamental understanding of underlying phenomena in all of these areas will be crucial to breakthroughs and the development of innovative approaches for reducing costs. Because diverse approaches can make a positive impact on biomass processing, the committee cannot provide a complete list of fruitful areas for research or accurately predict where breakthroughs might occur. Another area for useful research is feedstock development. Currently, feedstock development is being pursued at Oak Ridge National Laboratory and at regional feedstock development centers to increase yields and other desirable traits of willow, switchgrass, and poplar; establish sustainable crop management systems; and evaluate potential environmental and economic impacts of the production of cellulosic biomass feedstocks. Because of the many scientific opportunities for genetic improvement in the midterm, OFD should consider expanding its genetic engineering and genomics programs, building on its established programs in breeding and biotechnology. Compared to the conversion and processing programs, however, the feedstock development program is modestly funded. The committee believes that the current program configurations may have to be reevaluated to determine if additional funding for feedstock development is warranted. Recommendation. The Office of Fuels Development should focus on fundamental research in the following areas for reducing the costs of manufacturing bioethanol: (1) advanced pretreatments; (2) consolidated bioprocessing; (3) digestive enzyme activity; (4) the development of diversified products and coproducts during biomass processing or via plant metabolism; (5) reductions in the cost of raw materials via improved yield or the development of pest-resistant and stressresistant plants; and (6) changes in feedstocks to make processing and conversion more efficient by modifying plant biochemistry. Recommendation. Because of the many opportunities for genetic improvement in the midterm, the Office of Fuels

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4 Development should seriously consider expanding its applied biotechnology and genomics programs to improve feedstock yields, pest resistance, quality, and cropping systems. Although the Office of Fuels Development is well suited to take the lead in these programs, the agency should work in coordination with other government agencies and grant programs (e.g., the U.S. Department of Agriculture and the National Science Foundation), international partners, and the forest, agricultural, and biotechnology industries. Bioethanol production costs include both feedstock development (production, collection, and handling) and conversion processes (pretreatment, fermentation, distillation, pentose conversion, and cellulase production). Because the process of obtaining a liquid fuel from biomass entails several steps, a change in one part of the system can affect other components. For example, as the limits on cellulase enzymespecific activity at the molecular level are better understood, genetic engineering may lead to the development of plant matter more amenable to enzymatic hydrolysis, thus increasing the efficiency of bioethanol manufacturing. An integrated analysis is a useful technique for determining relationships between feedstock development and conversion processes and impacts on total costs for bioethanol. Agricultural and forest residues as well as dedicated energy crops are potential sources of biomass for conversion to ethanol. Because feedstocks can contribute as much as 40 percent to total bioethanol costs, OFD should thoroughly evaluate the logistics and costs of producing, harvesting, collecting, and transporting feedstocks and impacts on processing economics. Furthermore, OFD researchers could use systems modeling to uncover opportunities for small-scale bioethanol processors and exporters of bioethanol conversion technologies.

BIOMASS-DERIVED TRANSPORTATION FUELS

To determine the best opportunities for major new technology options and cost reductions, OFD should undertake an integrated review of both the feedstock and processing components of its programs. Recommendation. The Office of Fuels Development should consider developing an integrated systems model that encompasses feedstock development, collection, storage, transport, and biomass processing. This model could reveal opportunities for reducing costs, optimizing synergies among technologies, and prioritizing projects to achieve program goals in light of changing market opportunities.

PROGRAM MANAGEMENT A strong R&D program will require careful monitoring of its performance. Peer review can be used to evaluate proposed R&D projects and measure performance of ongoing projects. In the case of OFD, peer review can increase the likelihood of the program developing cost-effective technologies for the production of bioethanol. Researchers and program managers should be held accountable for ensuring that their research is directed toward meeting specific performance goals. The committee encourages OFD to continue using outside reviews to evaluate its biofuels programs. To make significant technological progress, OFD should reach out even more than it has in the past for ideas from institutions outside of government laboratories. Recommendation. The Office of Fuels Development should establish clear criteria for evaluating project performance levels and should include reviewers from academia, industry, and other government programs in its evaluations.

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5

INTRODUCTION

1 Introduction

In 1998, the U.S. Department of Energy (DOE) Office of Fuels Development (OFD) requested that the National Research Council (NRC) evaluate the OFD’s research and development (R&D) strategy and directions for biomass-derived ethanol (bioethanol) and biodiesel transportation fuels. The NRC formed the Committee to Review DOE’s R&D Strategy for Biomass-Derived Ethanol and Biodiesel Transportation Fuels to conduct the study, and this report documents the committee’s findings and recommendations. (See Appendix A for biographical sketches of the committee members.) The OFD, which is part of the DOE’s Office of Transportation Technologies, has an annual budget of $41.8 million to oversee the federal government’s program to make ethanol from cellulosic biomass a practical and affordable alternative to gasoline. The OFD works with the DOE national laboratories, other DOE offices, the U.S. Department of Agriculture (USDA), universities, and corporations to develop technologies that would enable a bioethanol industry to become a mature market. Through its National Biomass Ethanol Program, the OFD manages R&D by government and industry-government partnerships for the development of a cellulosic ethanol industry. The mission of the National Biomass Ethanol Program is to promote the development of a robust industry by facilitating the commercialization of technologies to produce cost-competitive ethanol for use as an alternative transportation fuel. OFD’s working definition of biomass is plant matter produced by photosynthetic uptake of carbon from the atmosphere (OFD, 1998). Most biomass material consists of plant cell walls, referred to as lignocellulosics or cellulosics. Biomass as defined here does not include corn grain. OFD’s major R&D programs are the development of biomass feedstock at Oak Ridge National Laboratory (ORNL) and the development of biomass-conversion technologies at the National Renewable Energy Laboratory (NREL). The ORNL feedstock development program is cofunded by the DOE Office of Power Technologies, which contributed 55 percent of its funding in fiscal year 1999. Of the total Copyright © 2003 National Academy of Sciences. All rights reserved.

$41.8 million budget, approximately $2.8 million is allocated to ORNL, and $36 million is allocated to NREL. NREL’s budget includes a $14 million congressional mandate to support three cellulose-to-ethanol manufacturing facilities. R&D at ORNL is directed toward the development and refinement of environmentally sound agriculture and silviculture systems for the production, harvesting, and handling of a reliable supply of perennial biomass feedstocks. The feedstock base has been expanded through breeding and selection to increase feedstock productivity over a broad range of climates and soil types and to optimize conversion to ethanol. Improvements have also been made in technologies for the environmentally acceptable collection and handling of existing low-value feedstocks, such as residues from the agriculture and forest industries. The objective of the biomass-to-ethanol conversion program (centered at NREL) is to develop cost-effective conversion technologies for the production of ethanol from cellulose and hemicellulose fractions of biomass that will ultimately lead to the establishment of a major domestic biofuels industry. Initial R&D was focused on improving the efficiency of biomass-to-ethanol conversion processes for existing low-value biomass feedstock. Technology transfer projects have focused on taking the processes developed in the laboratory and, working with industrial partners, establishing commercial-scale test facilities to validate the economic viability of production processes.

PRODUCTION AND MANUFACTURE OF BIOETHANOL Biofuels, such as ethanol, methanol, and other chemicals, are derived from plant matter, or biomass. Plants grow through photosynthesis, in which sunlight acts as the energy source for combining carbon dioxide from the atmosphere, water, and nutrients from the soil into complex organic energy-containing molecules (e.g., sugars, carbohydrates, cellulose). Much of the biomass in plants goes into the fibrous cellulosic part of the plant and not into the seed. 5

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6 A number of feedstocks can be used to produce biofuels, all of which are derived from plants. The most common biofuel in recent years has been ethanol. In the United States, approximately 1.8 billion gallons (6.8 billion liters) of liquid ethanol were manufactured in 1996–1997 from the starch in corn kernels (RFA, 1999); in Brazil, approximately 14 billion liters of ethanol were produced from sugarcane in 1996–1997 (PCAST, 1999). Trees, as well as switchgrass, are being developed for cellulose-to-ethanol manufacture and as a fuel source for electric power generation. Eventually, crops might be grown for the sole purpose of producing fuels. For example, poplar or willow trees might be grown on energy plantations. In the near term, OFD appears to consider poplars as coproduct systems, in which the fiber can be used for material production and the residuals for bioenergy production. Rather than growing a dedicated energy crop for fuels manufacture, residues from various production processes could be used as biomass feedstocks. Large amounts of biomass are left in the field after conventional food crops have been harvested or after trees have been cut by the forest products industry. These residues range from sugarcane bagasse, rice straw, wood mill residues, and corn stover to forest residues from logging and other activities. Although estimates vary with region and local soil conditions, approximately 100 million metric tons of corn residue in the United States are potentially available as biomass feedstock for ethanol manufacture. This estimate is based on the assumption that 30 percent of the corn residues are left in the field to conserve soil and water (NRC, 1999c). Residues that have already been collected have the advantage of low cost. Municipal waste, which contains organic matter, such as paper, paper products, wood, and other organic materials, is another potential source of feedstock. Because some wastes come from many sources, the composition of municipal waste can be heterogeneous (NRC, 1999c). Therefore, the economic viability of using municipal waste is limited because solid wastes often contain materials that could be hazardous or that could increase processing costs. Producing a liquid fuel from biomass entails several processing steps. If a dedicated crop is used, it must be planted, fertilized, possibly irrigated, and harvested, much like a conventional food crop. Feedstock collection costs can increase exponentially with distance, sharply constraining the optimal size of a plant (Sperling, 1988). Therefore, the costs of collection will limit the distance and area over which a crop might be harvested and collected. The collected biomass constitutes a cellulosic biomass feedstock that must then be pretreated. Many pretreatments, including biological, chemical, physical, and thermal processes, have been investigated, but none has been demonstrated at a commercial scale. OFD’s current pretreatment breakdown involves milling and exposure to acids and heat to reduce the size of the plant fibers, break down sugars from a portion of the material to yield fermentable sugars, and make their component parts more

BIOMASS-DERIVED TRANSPORTATION FUELS

accessible to conversion processes. During hydrolysis, feedstock components, primarily polymers of glucose and pentoses, are hydrolyzed by acids and/or enzymes to fermentable sugar monomers to produce sugars that can be fermented into ethanol. Because cellulose polymers are more difficult to hydrolyze than pentosan polymers, in current practice cellulose is hydrolyzed after pentose. The NREL model under development includes a simultaneous saccharification and fermentation (SSF) process, in which hydrolysis and fermentation take place in the same reactor. The process of fermentation involves using yeast or other microorganisms to convert sugar into ethanol, carbon dioxide, and other minor components. The fermented mixture is then distilled to remove the ethanol from the water and then dewatered via azeotropic distillation or an adsorption process. The ethanol must then be transported to service stations for distribution by pipeline, truck, barge, or railroad. Obviously, each step, from the planting to final distribution, will entail some cost, and much of OFD’s R&D is intended to reduce the costs of the steps that contribute most to the cost of the overall process (see Figure 1-1). Another approach to producing ethanol from cellulosic biomass is gasification of the biomass to synthesis gas followed by microbial fermentation to form ethanol. Methanol can also be produced from the gasification of biomass using inorganic catalysts. The dominant cost factors in the production of methanol are associated with the production of synthesis gas. The OFD program is not currently developing gasification technologies for cellulosics-to-methanol conversion (Lynd, 1996; Wyman et al., 1992). The projected costs of producing ethanol from biological processes and methanol from gasification using current technologies are comparable. No significant cost reductions are projected for producing methanol by mature gasification technologies. After more than two decades of R&D on gasification, DOE concluded in the mid-1990s that biomass-based methanol would not be competitive with methanol manufactured from natural gas.

ROLE OF GOVERNMENT The motivation for developing bioethanol as a transportation fuel is based on concerns about energy security, environmental quality, economic competitiveness, and stabilization of the agricultural sector. Congress has addressed environmental and energy security concerns through several mandates, including the Alternative Motor Fuels Act of 1988, the Clean Air Act Amendments of 1990, and the Energy Policy Act of 1992. The Alternative Motor Fuels Act of 1988 encourages the development and widespread use of alternate fuels, including methanol, ethanol, and natural gas, as transportation fuels. It directs DOE to work with federal agencies to administer programs to encourage the development of alternative fuels and the production of alternative-fueled vehicles.

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7

INTRODUCTION

40

Percentage of total cost

Percentage of processing costs 30

Percentage of overall costs

20

10

H

ar

dw o f ee od O ds ch th er to ip ck ra w m at er ia Pr l et re at m SS en F t fe rm en ta tio n D is til la O tio th er n pr o ce Pe ss nt in os g e co nv C er el si lu on la se pr od uc tio n Po w er cy cl e

0

FIGURE 1-1

Relative costs of processing steps in the NREL bioethanol process of 1991. Source: Wyman, 1999.

The purpose of the Clean Air Act Amendments of 1990 was to improve the nation’s air quality. Title I requires certain levels of oxygen in automotive fuel, which can be met with the addition of oxygenates, such as ethanol, to gasoline in areas that exceed public health standards for ozone and carbon monoxide (so-called nonattainment areas) as set by the Environmental Protection Agency. The Energy Policy Act of 1992, Section 502(a), directs DOE to “establish a program to promote the development and use in light duty motor vehicles of domestic replacement fuels” and further states that the “program shall promote the replacement of petroleum motor fuels with replacement fuels to the maximum extent practicable.” The program “shall, to the extent practicable, ensure the availability of those replacement fuels that will have the greatest impact of reducing oil imports, improving the health of our nation’s economy and reducing greenhouse gas emissions.” Another issue related to the environmental and national security concerns addressed by Congress is the issue of externalities. Externalities include, for example, environmental damage caused by unpenalized or unregulated pollution. Environmental damage is not reflected in the cost to the polluter or the price of the product. An acknowledged role of government is to ensure that externalities are somehow incorporated into decisions about the investment and use of products and their production. For example, government regulations on the manufacture, use, and composition of fuels do incorporate some externalities into the price

structure of fuels. The committee recognizes that changes in government regulations for biomass-based fuels could substantially change the relative market values of renewable and fossil fuels but has declined to speculate on possible changes. The projected market values in this report assume that no changes will be made in government policies with respect to externalities. Another traditional role of government is supporting basic science and long-range R&D—especially in areas that are considered important to national policy but may not be of current interest to industry. The private sector has no incentive to invest in R&D on many long-range technologies although it is in society’s interest to prepare for an uncertain future by investigating promising advanced technologies. Underinvestment by the private sector may be attributable to the inability of a firm or a small group of firms to capture the return on its investments in R&D or to the incentive structure of a given sector of the economy that may inhibit investment in innovation, especially for the long term (PCAST, 1997).

STRATEGIC OBJECTIVES FOR THE OFFICE OF FUELS DEVELOPMENT The OFD is pursuing strategic objectives to encourage the development of a bioethanol industry. Ethanol production is expected to progress from the exploitation of niche feedstock opportunities, such as agricultural residues (e.g.,

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8

BIOMASS-DERIVED TRANSPORTATION FUELS

corn stover, sugarcane bagasse, rice straw, and wheat straw), forest softwood residues, softwood by-products of the pulp and paper industry, and municipal solid waste, to production based on dedicated energy crops. The following program objectives of the OFD are described in the National Biomass Ethanol Program Plan for Fiscal Years 1999–2005 (OFD, 1998): • Near-term objectives (2000–2003). Demonstrate the commercial-scale production of cellulosic ethanol by using one or more low-value waste feedstocks, such as agricultural or forest residues. • Midterm objectives (2005–2010). Demonstrate commercial-scale ethanol production for one or more ethanol plants using agricultural/forestry residues together with components of dedicated biomass supply systems, such as the energy crop switchgrass or residues from woody crops, that have been used for fiber. • Long-term objectives (2015–2020). Demonstrate that ethanol manufactured from dedicated energy crops, such as switchgrass and specific woody crops, is cost competitive with gasoline. Beyond 2010, OFD will seek cost reductions through genetic improvements in feedstocks to increase process efficiencies and enhance the value of coproducts. To achieve these objectives, the OFD believes that it will have to (1) meet the technology cost-reduction targets demanded by the marketplace, (2) leverage the corn-ethanol industry’s business and technical resources to expand the ethanol market base, and (3) engage in cost-shared demonstration projects with industrial partners to encourage the acceptance of new technology and reduce market barriers (OFD, 1998). The strategic objectives focus on early demonstration of the production of ethanol to meet congressional mandates, even though the government technology base is not adequate to ensure the widespread acceptance of an ethanol fuel at this time. In the committee’s view, a strong industrial R&D program to achieve significant advances in bioethanol production and feedstock production will require time to mature, especially to benefit from ongoing advances in genetic engineering. The OFD can enhance the effectiveness of an industrial R&D program by providing a solid scientific basis for reducing costs of bioethanol manufacturing and economic risks in the near term and support technology advancements in the long term.

Stage-and-Gate Process The OFD uses a stage-and-gate process to measure progress toward meeting its R&D objectives (OFD, 1998). The stage-and-gate process is structured to facilitate the decision making at five stages, from process conceptualization

through technology deployment. Information generated by this technical-economic model is used by OFD to measure economic progress at each stage of research and to ensure that research is focused on the most promising technologies. The stage-and-gate process requires go/no-go decisions at the following stages: concept development, qualification of opportunity, feasibility confirmation, process development, and commercial launch stages (OFD, 1998). In the concept development stage, the concept must be well enough described so that others can understand it and act upon it. Opportunities are qualified by OFD collaborators (e.g., industrial partners) who identify issues that must be resolved for the successful development and commercialization of promising technologies. Feasibility is achieved through demonstration or development of data that resolve the issues identified in the previous stage. Through development, technology processes and products are created, demonstrated at bench side, measured against performance requirements and risks identified and minimized. Commercial launch concludes the process with the design, construction, and start-up of an operational plant by industry. Passing from one stage to the next requires passing through a “gate” showing that each technical and business objective of that stage has been met. If the data do not pass a particular gate, then development of that concept is stopped. With each stage, the gate review criteria become more business oriented, and the level of management that approves the review is higher. Process economics are updated as new data are developed using ASPEN Plus process simulation software to generate material and energy balances, design criteria for vendors, and other information to estimate capital requirements. As actual process data are developed and incorporated into the simulation, the estimate becomes more accurate. The policy analysis system (POLYSYS) agricultural-sector model developed by the University of Tennessee provides some additional input to OFD on the relative profitability of bioenergy and conventional crops. The POLYSYS model simulates changes in policy, economic, resource, or environmental conditions and estimates the effects on the U.S. agricultural system. POLYSYS is a system of interdependent modules that simulate crop supply for 305 production regions; national crop demand and prices; national livestock supply; and agricultural income. POLYSYS analysis is currently under way to measure the effects of conversion of existing crops to fuel on crop production, allocation of land among crops, and returns to crops and farmers (APAC, 1999). The approach outlined above provides a disciplined, rational way to manage R&D projects. Its validity, however, depends on the quality of the data and other information provided by investigators, especially the inputs to the ASPEN Plus model. Evaluating an untried approach to process improvement is difficult, however, so the program is focused on

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9

INTRODUCTION

Appropriation (millions of dollars)

45

41.75

40 35

31.475

31.9

30

26.39

25.25 27.926

25 20 1994

1995

1996

1997

1998

1999

Fiscal Year FIGURE 1-2

Appropriations for the National Biomass Ethanol Program. Source: OFD, 1998.

improvements to known technologies as modeled by the new data, rather than on introducing new untried technologies.

BUDGET OF THE OFFICE OF FUELS DEVELOPMENT The funding appropriated for the National Biomass Ethanol Program (Figure 1-2) was relatively stable from fiscal year 1994 to fiscal year 1998. Funding was increased in fiscal year 1999, and an additional increase has been requested for fiscal year 2000. Funding by program elements is shown in Table 1-1 (see Appendix B for details on the budget and program). Early demonstration of technologies and the involvement of industry are included in the congressional mandates. The request for $53.4 million in fiscal year 2000 for the OFD biofuels program includes $37.4 million for ethanol production, $1.0 million for biodiesel production, $5.5 million for feedstock production, $3.5 million for the regional biomass program, and $6.0 million for R&D on integrated bioenergy. In 1999, the DOE launched a crosscutting Bioenergy Initiative supported by the biofuels (OFD’s program), biopower, and industrial programs. The purpose of the initiative is to focus on technological advances that will foster an integrated and competitive bioindustry through partnering with industry. Through additional funding, DOE will allocate part of its budget to the development of key technologies and the coordination of all of DOE’s bioenergy-related R&D activities. A Bioenergy 2020 Action Plan (drafted in 1998) envisions a national partnership among federal agencies and the private sector for an integrated biomass industry that will produce power for homes, fuel for cars, and industrial chemicals from crops, trees, and residues (Reicher, 1998). Bioenergy 2020 will integrate the results of R&D from OFD

with other DOE R&D programs in biomass power and the forest products and agricultural industries program to develop technologies for the production of combinations of fuels, power, chemicals, and other products from diverse feedstocks in different areas of the country.

STUDY GOALS The committee was asked to evaluate the contribution and role of biofuels, biomass-derived ethanol, and biodiesel as transportation fuels in the domestic and international economies; review OFD’s biofuels R&D strategy; and recommend, as appropriate, changes in this strategy and OFD’s portfolio for R&D. The time frame considered by the committee extends out about 20 years. In the Statement of Task, the committee was asked to meet the following objectives. 1. Examine the likely contribution that biofuels can make domestically and internationally in light of barriers (e.g., energy and economic costs, health impacts, environmental and land constraints, infrastructure, etc.) to their deployment and use, and experience that has been gained from past or current biofuels programs. 2. Examine the benefits of the deployment and use of biofuels. 3. Examine OFD’s strategic focus for biofuels and concomitant R&D portfolio in light of potential opportunities. 4. Identify strategic directions for biofuels development and deployment and make recommendations, as appropriate, for the biofuels program. The committee held three meetings and was given a

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10

BIOMASS-DERIVED TRANSPORTATION FUELS

TABLE 1-1 Funding Allocations for the Office of Fuels Development Biofuels Program

Ethanol Production Advanced fermentation organisms Advanced cellulase Pretreatment Consortium for plant biotechnology research Integrated process development Cellulose-to-ethanol production facilities Feasibility studies Subtotal Biodiesel Production Biodiesel production technologies Waste oil assessment Subtotal Feedstock Production Biomass feedstock development centers Environmental effect of energy crop deployment Energy crop seedling/planting stock selection Large-scale woody crop plantation Switchgrass variety testing and scale-up Feedstock composition and multiproduct use Mechanization Subtotal Regional Biomass Energy Program Regional biomass resources Biofuels production resources Subtotal

FY 1998 Appropriations

FY 1999 Appropriations

FY 2000 Budget Requests

$ 1,960 2,455 1,906 2,455 8,265 7,091 841

$ 2,200 4,547 2,800 1,250 11,500 13,653 0

$ 3,000 5,500 5,508 0 11,500 11,933 0

25,027

35,950

37,441

600 200

750

1,000

800

750

1,000

1,600 400 100 150 200 0 50

1,600 225 100 125 500 100 150

4,000 225 100 125 500 200 350

2,500

2,800

5,500

1,650 350

1,650 600

2,000 1,500

2,000

2,250

3,500

Integrated Bioenergy Technology Totals

6,000 30,327

41,750

53,441

Source: OFD.

number of presentations on OFD’s biofuels program and related issues (see Appendix C). The committee used the information from these sessions as input to its deliberations. This report focuses on the main components of OFD’s bioethanol and biodiesel programs, most of which are directed toward the development of bioethanol technologies

rather than biodiesel. Chapter 2 provides a brief history of the use of bioethanol as a transportation fuel and describes the market conditions for biomass-based ethanol. Chapter 3 addresses parts of the program related to feedstocks. Chapter 4 addresses biomass-to-ethanol conversion technologies. Chapter 5 addresses crosscutting program issues.

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11

CONTEXT FOR BIOMASS-DERIVED FUELS

2 Context for Biomass-Derived Fuels

of biofuels that will influence their marketability are described in the following sections.

HISTORICAL BACKGROUND AND PUBLIC POLICY International and domestic experience with the manufacture of fuels from biomass feedstocks (biofuels) is long and varied. In the days of early automotive development, ethanol was one of the candidate fuels. When fears about the stability of petroleum supplies briefly surfaced around 1920 and again after the 1973 Arab oil embargo, investments in biomass-derived ethanol (bioethanol) flourished (Sperling, 1988). Scattered investments in bioethanol were also made in many other countries around the world. Soon after 1973, oil-poor Brazil expanded its efforts to convert sugarcane to bioethanol and blend it into gasoline with roughly 22 percent ethanol and 78 percent gasoline (22:78 proportions). In 1979, Brazil began manufacturing vehicles that could run on hydrous ethanol (95 percent ethanol, 5 percent water). By the mid-1980s, almost all new cars in Brazil were designed to run exclusively on ethanol. In the past decade, however, the Brazilian government has tried to reverse the program because of the financial subsidy required. Because of the large percentage of vehicles on the road that require ethanol, however, ethanol fuel manufacture has continued, although very few new cars are designed for ethanol. Until the 1980s, the motivation for developing bioethanol and other alternative fuels in the United States and almost everywhere else was energy security and domestic economic development. Since the mid-1980s, the primary motivation has gradually shifted to meeting environmental objectives, primarily the improvement of air quality. Growing interest in the past few years in addressing climate change by reducing emissions of greenhouse gases to the atmosphere has given a new impetus to the development of biomass fuels. The primary U.S. policy sustaining investments in ethanol has been tax subsidies in the form of federal and state gasoline tax exemptions.1 In addition, ethanol and other oxygenates, such as methyl tertiary-butyl ether (MTBE), displace aromatics, especially benzene, from gasoline. The advantages and disadvantages Copyright © 2003 National Academy of Sciences. All rights reserved.

ADVANTAGES AND DISADVANTAGES OF BIOFUELS Air Quality The Clean Air Act Amendments of 1990 included the implementation of Environmental Protection Agency (EPA) regulations for reformulated gasoline to mitigate nearground ozone pollution, a principal component of smog in the United States. Requirements were established for reformulated gasoline to be used in gasoline-fueled vehicles in specified nonattainment areas (areas that fail to meet EPA air quality standards). Although the introduction and improvement of vehicle emission control devices contributed to a decline in ambient atmospheric concentrations of carbon monoxide and tropospheric ozone in virtually all urban areas, many areas continued to exceed the National Ambient Air Quality Standards (NAAQS) (NSTC, 1997). The Clean Air Act Amendments also stipulated that nonattainment areas were required to adopt programs to add an oxygenated organic compound to gasoline to shift the air-to-fuel ratio and lower emissions of carbon monoxide. The oxygenated gasoline was required to contain an oxygen level of at least 2.7 percent by weight and lower the fuel-to-air ratio. The Clean Air Act Amendments of 1990 require the use of reformulated gasoline with oxygen in areas of the United States that have substantial ozone pollution, particularly in the summer months when near-ground ozone is most

1 The ethanol tax credit is currently $0.54 per gallon and applies to ethanol and the ethanol portion of the gasoline additive ethyl tertiary-butyl ether. The Transportation Equity Act for the 21st Century (TEA 21), H.R. 2400, extends the tax credit through 2007 but specifies the following reductions in tax credits: $0.01 reduction in credit in 2001–2002; $0.02 reduction in 2003–2004; and $0.03 reduction in 2005–2007.

11

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12 prevalent. Reformulated gasolines are designed to lower the emissions of pollutants that contribute to near-ground ozone formation. Overall emissions of ozone precursors from gasoline-fueled motor vehicles have substantially decreased in recent decades, largely as a result of government mandates and industry’s development and use of new emission controls on motor vehicles. The contribution of on-road vehicles to the total inventory of ozone precursor emissions is expected to continue to decline in the future (NRC, 1999b). If it does, the impact of using oxygenates in reformulated gasoline to mitigate near-ground ozone concentrations would also decline. Thus, the magnitude of the effect of reformulated gasoline on the downward trend is uncertain. A recent NRC report addresses this subject in detail (NRC, 1999b). Vehicle emissions of carbon monoxide are major contributors to air pollution. A key factor influencing vehicle emissions is the air-to-fuel ratio.2 Additional oxygen in the combustion mixture of fuel and air in the engine decreases the amount of carbon monoxide emitted from the tailpipe. In older vehicles with open loop controls, the addition of ethanol to the fuel is necessary to increase the oxygen level in the combustion chamber and lower carbon monoxide emissions. In newer vehicles, regardless of whether there is oxygen in the fuel, new technologies have contributed to decreases in tailpipe emissions. Onboard diagnostic systems are now in place that can detect malfunctioning emission control systems. In addition, older high-emitting vehicles are disappearing with fleet turnover. Hence, as new vehicles with onboard diagnostic systems become dominant in the vehicle fleet, the benefit of oxygenates is expected to decline. Although ethanol can lower exhaust emissions somewhat, problems can occur with high evaporative emissions. The Reid vapor pressure of the mixture increases with ethanolgasoline blends, making evaporative emissions more difficult to control. This may be partially offset by the lower reactivity of the alcohol after release into the atmosphere, which creates less ozone. Nevertheless, high-level blends of ethanol (e.g., E85) have lower evaporative emissions than vehicles fueled with low-level ethanol blends (e.g., E10), making this less of an issue for dedicated ethanol vehicles. Because of the low vapor pressure, however, dedicated ethanol vehicles have a difficult cold start-up, which can result in an increase of emissions of hydrocarbon and aldehyde at start-up.

2 Controls of air-to-fuel ratio can be divided into two classifications: open-loop and closed-loop controls. Generally, with open-loop control, air-to-fuel ratios are predetermined (typically stoichiometric or richer) but changed by ambient and operating conditions. With closed-loop control, the air-to-fuel ratio is automatically adjusted to achieve a given goal, in this case maintaining the stoichiometric mixture necessary to destroy carbon monoxide, oxides of nitrogen, and volatile organic compounds (NRC, 1996).

BIOMASS-DERIVED TRANSPORTATION FUELS

In summary, the benefit in terms of air quality from reduced vehicle emissions from ethanol-gasoline blends relative to petroleum-based fuels may not be substantial enough to be a significant market driver. The use of ethanol-gasoline blends as a transportation fuel is more likely to be influenced by economic, regulatory, and political factors. Greenhouse Gases Many scientists believe that the full fuel-cycle impacts of growing, harvesting, processing, and consuming biofuels could add very little carbon dioxide (a greenhouse gas) to the atmosphere. The carbon dioxide released by the consumption of biofuels in vehicles would be offset by the uptake of carbon dioxide by the plants (e.g., grasses or trees) used as feedstock to manufacture the fuel. Because some of the plant biomass would be used for running the biofuel processing plant, some would be left over and could be converted to electricity (thus reducing carbon dioxide from other generators of electricity). The latest and most detailed estimates indicate that the net reduction in greenhouse gases, relative to a gasoline-consuming vehicle, could range from 60 to 90 percent (Brown et al., 1998; Delucchi, 1991; Wang et al., 1998). Only solar hydrogen has shown as much potential for reducing net additions of carbon dioxide to the atmosphere. There is considerable debate, however, on the magnitude of the net carbon dioxide reductions of biofuels. The entire life cycle of the fuel, including feedstock production, combustion, and transportation stages, has been considered in analyses of greenhouse gas emissions for bioethanol manufactured from corn starch, woody crops, and herbaceous crops (Wang et al., 1998). More studies are needed, however, to estimate potential greenhouse benefits, if any, from the production of bioethanol from corn residues. Ecological Effects The systemic effects on the ecosystem of a cellulosic biomass industry might be beneficial to the environment, depending on the ecological factors and the intensity and mode of biomass removal (see Tolbert and Wright, 1998). The collection of forest residues, for example, could reduce the accumulation of kindling that feeds forest fires. Crown fires remove large amounts of carbon from forest ecosystems and make them susceptible to extensive nutrient loss through soil erosion. Therefore, the removal of forest residues, in conjunction with stand-thinning, could substantially improve the health of trees by reducing competition for resources, especially in arid areas, and usually increases the pest resistance and growth of remaining trees. Thinning also reduces habitat for insect and disease populations, such as bark beetles, major forest pests that often develop epidemic populations in dense, stressed stands of trees. Harvesting agricultural crop residues could also potentially reduce the breeding habitat and create less amenable conditions for the reproduction for

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13

CONTEXT FOR BIOMASS-DERIVED FUELS

certain crop pests. For example, most fungi are less able to sporulate and spread disease in less dense, drier, better aerated crop residues. Saprotrophic root diseases are also less likely to develop in these conditions. However, the removal of residues also has some significant ecological risks. If crop residues are overharvested, exposed bare soil will be more susceptible to soil and wind erosion. The removal of residues may also reduce populations of beneficial microorganisms that retard disease. Most important, the continued removal of residues may substantially reduce the carbon and nutrient content of soils and reduce the water and nutrient retention of soils. In woody crops, these problems could be ameliorated by the selective removal of nutrient-poor wood, leaving branches, bark, and foliage on site. The ecological effects of dedicated energy crops can also have considerable ecological benefits or risks, depending on cropping intensity and the systems to which they are compared (Ranney and Mann, 1994; Tolbert and Schiller, 1996). Growing perennial crops in agricultural areas in place of traditional annual crops is expected to greatly reduce soil erosion, agrochemical usage, and soil and nutrient runoff. The extensive, long-standing, deep root systems of perennial crops is expected to present an efficient biofilter for surface water and near-surface groundwater during the growing season, reducing the movement of dissolved nutrients and agrochemicals into streams, lakes, and deep groundwater. However, converting natural habitat to the production of biomass crops may reduce habitat quality and have an adverse environmental impact, depending on the extent of specific habitats and the species that depend on it. These factors would have to be considered on a larger regional context when planning regional feedstock programs (Christian et al., 1994). However, the diversity of seral stages over a landscape by woody biomass crops at different stages of development (harvest, site preparation, planting, and the different stages of crown closure and stand development) may provide a variable array of habitats and thus support more diverse wildlife populations than any single natural or agronomic habitat. For example, many ungulate, bird, and carnivore species are known to utilize short-rotation, hybrid poplar plantations. International Market The development of a cellulosic bioconversion industry would create domestic industrial expertise in both processing and feedstock production that could be transferred to other countries and would benefit the U.S. economy. In its May 1999 report, the Panel on International Cooperation in Energy Research, Development, Demonstration and Deployment of the President’s Committee of Advisors on Science and Technology recommended that the United States promote collaborative international energy research, development, demonstration, and deployment on industrial-scale biomass energy conversion technologies, emphasizing the

technologies that would provide both electricity and one or more coproducts (e.g., heat, fluid fuels, chemicals, as well as food/feed/fiber). The panel also recommended collaborative research on the restoration of degraded lands that could be used for growing crops optimized to provide the feedstocks for multiple product strategies. The U.S. Agency for International Development and USDA would generally have the lead role for these collaborative efforts. The feedstock development and biomass processing technologies under development by DOE could meet these criteria. However, the economics and environmental effects associated with the production and use of biomass-derived transportation fuels depend strongly on site-specific characteristics and the particular national economy and will have to be evaluated on a case-by-case basis. In a presentation to the committee by an industrial firm, Arkenol, Inc., on its efforts to develop international business prospects in China, Russia, Brazil, and Europe, the limits on market opportunities for biomass-derived transportation fuels were apparent (Miller, 1999). Based on this presentation, as well as Brazil’s past experiences with ethanol as a motor vehicle fuel, the committee concluded that markets throughout the world for bioethanol are less influenced by currently available technologies than by tax incentives, availability, and the cost of petroleum fuels, as well as a significant market share of vehicles that can effectively use the alternate fuel. Many of these issues, however, go beyond the scope and concerns of DOE’s biomass-derived transportation fuels R&D program. Land Resources The introduction of biofuels could increase competition for land resources. By diverting agricultural land to energy crop production, less land may be devoted to food production. This concern could be mitigated if cellulosic feedstock were grown on marginally productive land that is less desirable for food production. Approximately 35 million acres of less-productive land has been set aside in the USDA Conservation Reserve Program as incentives to producers to take land prone to environmental degradation out of production; this land may be suitable for growing perennial grasses and trees for biomass conversion to coproducts (e.g., biobased chemicals) along with ethanol fuel. Large-scale displacement of conventional transportation fuels with cellulosic ethanol will require significant production from dedicated energy crops. In addition, advances in biotechnology may lead to genetically modified crop plants with traits that could be used for both energy and food production. The manufacture of biofuel based on agricultural residues left on the field probably would not interfere with food production. Biorefineries that produce multiple products could greatly reduce the competition for land resources. The existing prototype biorefineries (corn wet mills) produce food and feed products in addition to fuel. Some of the most likely

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14 scenarios for cellulosic biomass conversion to bioethanol could actually increase food and animal feed reserves. Here there are at least two possible scenarios. First, the herbaceous feedstocks for bioethanol manufacture, such as switchgrass, can contain 5 to 12 percent protein depending on the growth conditions and time of harvest. Protein cannot readily be converted to a fuel and, if burned, will emit nitrogen oxides. Therefore, some biomass protein is likely to become animal feed or even human food (Dale, 1983; de la Rosa et al., 1994). In the second scenario, an economical pretreatment of cellulosic biomass that makes lignocellulosic sugars available for fermentation would also make these sugars available for digestion in animal feed. Therefore, with a vigorous cellulose bioethanol industry, world supplies of digestible energy could be increased. The conflict over land use is based on concerns for protection of soil quality, preservation of natural habitats, and maintenance of biodiversity. Because land use decisions are complex, future uses of land cannot be predicted with certainty. The resolution of these issues will depend on many factors, including the pressures of human population and consequent demands for food, fiber, fuel, and human settlements, land and environmental policies, and the state of future economies. Renewable Fuels Biomass-based fuels are renewable energy sources that could contribute to a domestic source of liquid transportation fuels, and cellulosic bioethanol could help reduce U.S. dependence on foreign sources of oil. An NRC report (1999c) estimates that cellulosic bioethanol manufactured from by-products of agriculture could supply up to 10 percent of liquid transportation fuels. Reliance on oil from the Persian Gulf today has forced the United States to maintain a military presence there, leaving the country vulnerable to price shocks because petroleum reserves are in a geopolitically unstable part of the world (Lugar and Woolsey, 1999). In the long term, as petroleum and natural gas reserves dwindle, the value of renewable energy sources may increase. The contribution of cellulosic biomass-derived fuels will depend on several factors: the cost of conversion to ethanol, the depletion of competing sources (e.g., fossil fuels), the impact of environmental regulations, and the global demand for liquid transportation fuels.

BIOMASS-DERIVED TRANSPORTATION FUELS

average fuel economy ( CAFE ) standards.3 The AMFA changes the way an alcohol or natural-gas vehicle is treated in the calculation of the CAFE standard. Because only the gasoline portion of the fuel is considered in the CAFE calculation, manufacturers of vehicles operating on alcohol or natural gas can earn credits that can be used to offset shortfalls in fuel economy in previous years. As a result of this legislation, automakers began to manufacture vehicles that could operate on both nonpetroleum and petroleum-based fuels (so-called flexible-fuel vehicles). In 1993, the flexible-fuel vehicle was introduced as a bridge to the dedicated-alcohol vehicle. (In general, vehicles will be more efficient if optimized for a single fuel [e.g., gasoline or ethanol].) A flexible-fuel vehicle can run on any blend of gasoline and alcohol and is produced in both methanol and ethanol versions. The first year of manufacture, 3,000 flexible-fuel vehicles were sold. In 1998, 250,000 were sold (Lambert, 1999). Under AMFA, CAFE credits are also available for flexible-fuel vehicles, although the credits are substantially less than for dedicated-fuel vehicles. Automakers are opting for the lesser credits, however, because there are only about 50 ethanol refueling stations, mostly in the Midwest, and 50 methanol stations in California. Therefore, the opportunity for these vehicles to operate on alcohol, at least in the foreseeable future, is small. Ethanol is only one of many alternative fuels under consideration. The future energy needs of the world are not likely to be filled by any one fuel because alternative fuels will vary from region to region, depending on the availability and economics of resources. In general, however, liquid fuels are most compatible with existing distribution systems and engines (i.e., they require the least departure from the technologies in place today both for vehicles and for the refueling infrastructure). A critical issue for introducing any alternative fuel vehicle will be an adequate refueling infrastructure. If refueling stations are available, consumers will be more likely to consider purchasing vehicles with new technology. In addition, the alternative fuels must be competitive in price with the commonly available fuel (i.e., gasoline).

MARKETS FOR BIOMASS-DERIVED ETHANOL In a free market economy, new businesses and industries are generally developed based on demand in the marketplace (so-called “market pull”). OFD’s success in launching a new

ALTERNATIVE FUELS AND VEHICLE TECHNOLOGIES The Alternative Motor Fuels Act (AMFA) passed in 1988 created a federal program of financial support for R&D and demonstration of alternative motor vehicles and alternative fuels (methanol, ethanol, and natural gas). As an incentive for automakers to produce alternative-fuel vehicles, the AMFA provided fuel-economy credits for meeting corporate

3 The Energy Policy and Conservation Act of 1975 established corporate average fuel economy (CAFE) standards as a means of increasing fuel efficiency and decreasing reliance on imported oil. Compliance with these standards is based on a calculation of fuel efficiency (measured in miles per gallon) for a car manufacturer’s new model passenger cars and lightduty trucks.

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CONTEXT FOR BIOMASS-DERIVED FUELS

TABLE 2-1 Markets for Cellulosic Biomass-Derived Fuels Advantage

Disadvantage

Market sizea

Time Period

Ethanol-gasoline blend agent (subsidized)

Oxygenateb and octane enhancement; lower carbon monoxide emissions in older vehicles

Cost offset by subsidy, therefore, not a current market disadvantagec

1.8 billion gal/yrd

Present to 2007e

Gasoline-ethanol blend alternative (unsubsidized)

Octane enhancement

Lower energy content than gasoline; high blend vapor pressure and water affinity

More than 10 billion gal/yr

After 2007

Ethanol neat fuel in internal combustion engine

Lower greenhouse emissions for dedicated energy crops

Lack of infrastructure and distribution system; lower energy content than gasoline

More than 120 billion gal/yr

Long term

Ethanol for fuel cells

Lower greenhouse gas emissionsf

Lack of infrastructure More than and distribution system; 120 billion lower energy content than gal/yr gasoline

Long term

Diesel and biodiesel

Lower emissions of sulfur and aromatic compounds; no requirements to modify engineg

Cost of feedstock very high

Long term

Fraction of 33 billion gal/yrh

a

Maximum potential for each market without quantifying the realistic percentage that could be achieved. advantage to meet EPA regulations for ozone reductions will probably be discontinued. c Current fuel markets do not recognize that ethanol has 20 percent energy debit compared to hydrocarbon fuels. d Based on current cornstarch-based ethanol market. e Subsidy for ethanol may not end in 2007. f Reformer cells under development must meet emissions criteria. g Benefits proportional to the blend level of biodiesel. h Based on 4.64 quadrillion BTU per year of distillate (low-sulfur diesel) fuel. b Oxygenate

Source: RFA, 1999; EIA, 1998.

biofuels industry based on cellulose conversion will be limited by the absence of market pull and the reliance on “technology push.” Many key market factors are beyond OFD’s control, including the low price and easy availability of raw material for hydrocarbon fuel and the extent to which policies developed to implement global climate change treaties pull renewable fuels into the marketplace. For these reasons, the effectiveness of the OFD program should not be measured solely by near-term commercial success. Technological improvements and cost reductions achieved by the program may be very important in the midterm and long term.

If competitive costs can be achieved, fuel ethanol produced from cellulose could potentially compete in the following auto fuel markets (see Table 2-1): • the current subsidized market, in which bioethanol is blended with gasoline generally at about 10 percent concentration to satisfy oxygenate and octane requirements • a future unsubsidized market, in which bioethanol is blended with gasoline to satisfy octane requirements • a long-term market, in which bioethanol is used as an

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BIOMASS-DERIVED TRANSPORTATION FUELS

essentially neat fuel in concentrations of 85 to 95 percent • a market that may develop over the long term, in which bioethanol could be used to generate hydrogen for vehicles powered by fuel cells Generally, the value of cellulosic fuel ethanol in these markets will be determined by the price of competing materials, as well as differences in performance between ethanol and other fuels. In estimating the market value of bioethanol (the net wholesale price received by the manufacturer when the retail price of bioethanol is comparable to the price of competitive fuel) the committee did not consider credit for reduction in greenhouse gases because the basis for this credit has not been established. This situation could change in the future as nations establish implementation programs to support international agreements to control climate change. The price of gasoline components differs somewhat among individual refiners and blenders depending on the crude oil processed, the degree of crude oil self-sufficiency, refinery configuration, available excess refining capacity, and market niche. Typical industry practice includes the determination of company-specific values for gasoline components using sophisticated optimization models. An average value for ethanol in these markets can be estimated using historical overall-market average prices for gasoline and octane premium as related to the price of crude oil. The ethanol values determined for internal combustion engines are based on the assumption that no significant changes in market fundamentals would impact the price differential between crude oil and gasoline, the relative octane value, and the gasoline vapor pressure specifications. Actual market prices vary over time depending on supply and demand. The values estimated here are based on expected average prices over several years. Ethanol as a blend agent for gasoline has some disadvantages because of its higher affinity for water and its high blend vapor pressure. Refiners have been reluctant to transport ethanol blends by pipeline because of potential contact with water. For this reason, ethanol is often splash-blended at a storage terminal instead of as part of the normal blending procedure at the refinery. When ethanol is blended with gasoline at the terminal, the blend generally has a higher octane number than the octane number required for regular gasoline, often referred to as “octane giveaway.” Blenders located at terminals with proprietary pipelines can avoid this problem by blending ethanol with gasoline that has lower octane. Ethanol’s high blend vapor pressure can entail significant processing costs because other materials with high vapor pressures traditionally found in gasoline have to be removed and used elsewhere to make room for ethanol. Octane giveaway and other performance debits are discussed more fully in Appendix D.

Current Subsidized Market The blended ethanol market, which satisfies some oxygenate and octane requirements, is currently subsidized. In addition to the federal excise tax exemption, 16 states offer additional incentives of up to $0.40 per gallon (e.g., in North Dakota and Wyoming) (DOE, 1996, 1997; DOT, 1998). The current size of this subsidized market is about 1.8 billion gallons per year of ethanol, primarily ethanol derived from corn grain. To compete in this market, ethanol from cellulosics would have to be cost competitive with ethanol from corn grain. Ethanol is only one of several products made from corn in a wet milling operation; other products include food and industrial starches, dextrose, high-fructose corn sweetener, and milling coproducts, such as corn gluten feed, gluten meal, and corn oil. Therefore, estimates of manufacturing cornbased ethanol must allocate portions of the raw material, plant capital, and operating costs among the various products, which leaves room for differences of opinion in the processing costs of ethanol from a wet milling operation. A cost estimate was first made in 1980 (Keim, 1980) and updated using generally accepted engineering methods. This estimate compares favorably with the cost estimate of committee members and peers. The cost for both is about $1 per gallon. Fuel ethanol from a wet mill plant without major coproducts would cost about $1.50 per gallon (in 1999 dollars cost updated). The cost of ethanol from a dry mill plant would be $1.40 per gallon (Katzen et al., 1994), reflecting the lower value of coproduct credits.4 Future Markets for Gasoline-Ethanol Blends Even though the federal ethanol tax credit is currently scheduled to expire in 2007, ethanol proponents have obtained extensions of the credit several times in the past, although at reduced levels. Although it is not clear when tax incentives for blending bioethanol into gasoline will end, an unsubsidized market for fuel-ethanol blends may eventually develop. The ultimate potential for ethanol as a source of octane in this market is more than 10 billion gallons per year. By the time this market develops, however, oxygenated fuels

4 In a wet mill corn ethanol plant, the corn is steeped for 24 to 48 hours then fractionated into germ (from which oil is extracted), starch, fiber, and gluten (corn protein). The starch is then converted into dextrose and fermented to alcohol. Normally, the corn refinery makes several products, such as food and industrial starches, dextrose, fructose, corn oil, gluten meal, and corn gluten feed. In a dry mill, the corn is “mashed” (i.e., ground), slurried in water, cooked with enzymes to convert the starch to glucose, and fermented. The two products from a dry mill are ethanol and distiller’s dried grains (an animal feed).

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CONTEXT FOR BIOMASS-DERIVED FUELS

may not be significant contributors to decreases in carbon monoxide tailpipe emissions. The committee considers octane enhancement as a primary source of value for bioethanol in an unsubsidized fuelethanol blend market. The market for fuel-ethanol blends could be limited to premium grades, which have the highest octane. The average value for ethanol blended in premium gasoline in this market would depend on average prices for gasoline and incremental octane, which in turn will depend on the price of crude oil. For example, if crude oil costs $15 per barrel, the ethanol value would be about $0.64 per gallon; if crude oil costs $25 per barrel, the ethanol value would be about $0.99 per gallon.5 If ethanol is blended with a midgrade fuel, the market value of bioethanol would decrease by 20 percent; if ethanol is blended with a regular grade fuel (regular grade fuel is characterized by a lower relative value of octane), the value would decrease by 30 percent. Because of its oxygen content, a gallon of ethanol contains about 33 percent less energy than a gallon of hydrocarbon gasoline. However, ethanol blends have been shown to be more energy efficient than gasoline. Therefore, the net energy debit is only about 20 percent per gallon of ethanol in a gasoline blend (Miller et al., 1996). This amounts to a 2 percent energy debit for a typical 10 percent ethanol blend. There is no energy debit for ethanol in reformulated gasoline that has a specified oxygen content. The energy debit only occurs when the addition of ethanol increases the oxygen content of gasoline. Neat Fuel Markets Internal Combustion Engines The internal combustion engine, the primary automotive technology used in vehicles today, consumes about 120 billion gallons of fuel per year in the United States (EIA, 1998). Future scenarios that include neat ethanol (85 to 95 percent ethanol blended with gasoline) as a replacement for some of this fuel must be based on the properties of the fuel, the

5 These ethanol values are based on the following assumptions: no significant changes in market fundamentals that would impact the differential between crude oil and gasoline, average fuel octane value and gasoline vapor pressure specifications; estimated values would provide a reasonable return on investment; and industry would make the necessary investments in pipeline infrastructure to permit transporting ethanol-gasoline blends from refineries. The correlation of gasoline price to crude oil price is based on recent historical U.S. refining margins (Ting, 1999). The market value relationships between various grades of gasoline fuels is based on published data and personal communication with William Piel (1999). Changes in availability of MTBE were not reviewed for this study or considered in these calculations.

introduction of new technologies, and required fuel infrastructure changes. Although ethanol has higher octane than premium gasoline, higher octane is expected to add little additional value in the marketplace, at least in the midterm. The manufacture of high-compression engines that would derive the full benefit of ethanol octane cannot be justified as long as ethanol sales volumes are relatively low. The only practical vehicles for neat ethanol in the foreseeable future are flexible-fuel vehicles, which are designed to use either gasoline or ethanol. The compression ratio of flexible-fuel vehicles is set by the lower gasoline requirement. Neat ethanol fuel will have to compete with gasoline on an energy equivalent basis, which lowers the value for neat ethanol because ethanol has 33 percent less energy per gallon than gasoline. This lower energy content may be somewhat offset by higher efficiency. A limited evaluation by the EPA found that neat ethanol was about 5 percent more efficient than gasoline in the one flexible-fuel vehicle model tested to date (Adler, 1999). Further testing will be necessary to determine fuel efficiencies in a wide variety of vehicle models. Today there is no significant infrastructure for transporting and distributing neat ethanol to the motor fuel marketplace. The investment for a new supply infrastructure will have to be made before ethanol sales begin, which presents a major hurdle for fuel ethanol, or any new fuel. The amortized cost of the new infrastructure has been estimated to be on the order of $0.08 to $0.11 per gallon when the system is operated to capacity (Sperling, 1988; Wang et al., 1998). For the purposes of estimating the value of ethanol in this market, the committee assumed the amortized cost of the new supply infrastructure would be $0.10 per gallon. On this basis, ethanol values would be $0.34 per gallon for a crude oil price of $15 per barrel and $0.53 per gallon for crude oil at $25 per barrel when used as a premium-grade, highoctane fuel. Fuel Cells Fuel cells, which generate energy through electrochemical reaction of hydrogen and oxygen, are under development as a potential alternative to internal combustion engines. Although fuel cells have the potential to increase efficiency significantly, the initial motivation for fuel-cell development has been the reduction in emissions of criteria pollutants. A number of hydrogen-rich fuels, such as gasoline, methanol, and ethanol, could be used with fuel cells. Gasoline used for fuel cells may be a new low-cost grade that may require additional pumps and storage tanks at service stations or may simply replace an existing grade of gasoline. If ethanol or methanol is used, then a new fuel distribution system will be required.

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BIOMASS-DERIVED TRANSPORTATION FUELS

TABLE 2-2

Cost Estimates for Bioethanol Manufacturing

DOE and best of industry (1991) DOE program (1999) Near-term best of industry (2002) Iogen (unsubstantiated claim) DOE and best of industry (2005) DOE and best of industry (2010) DOE and best of industry (2015)

Cost per Gallon (in 1995 dollars) ($25 per ton of feedstock)

Cost per Gallon (in 1995 dollars) ($42 per ton of feedstock)

— 1.36 1.10 — 0.87 0.78 0.70

1.28 1.61 1.32 0.90 1.08 0.95 0.86

Sources: Schell et al., 1991; Hinman et al., 1992; Wooley et al., 1999; Foody, 1999.

The technology for fuel cells is not developed sufficiently to permit this study committee to develop an estimate for relative value of fuel ethanol in this market. Controlling factors will be the cost of delivery and the performance of hydrogen. A critical step will be processing of fuels other than hydrogen onboard the vehicle. The NRC Standing Committee to Review the Research Program of the Partnership for a New Generation of Vehicles (NRC, 1999a) noted that an integrated systems analysis to assess cost and performance issues of onboard processing has not been done and that the major efforts to date have focused on gasoline. Although the design phase of the fuel cell is in the very early stages, R&D engineers are working on multiple-fuel fuel-cell systems.

MANUFACTURING BIOMASS-DERIVED ETHANOL A primary goal of the OFD bioethanol R&D program is to reduce the cost of manufacturing ethanol from cellulosic biomass through improvements in technology. The OFD periodically assesses the technical and economic status of the biomass-to-ethanol process to establish goals and directions for future R&D strategies. Prior Estimate In June 1991, an assessment of ethanol manufacturing costs based on the best available technology was made by the Fuels and Chemicals Research and Engineering Division of the Solar Energy Research Institute (SERI, the predecessor of NREL). A plant size of 58 million gallons of ethanol per year (1,920 dry tons of feedstock per day) was used for the analysis (Schell et al., 1991; Hinman et al., 1992). Based on the equipment list generated from the process flow diagrams, the total capital cost of the plant in 1990 dollars was estimated to be $141.24 million. The annual capital charge rate was 20 percent. The feedstock used for the analysis was whole-tree wood chips delivered to the plant site for $42 per dry ton. The results of this economic assessment are summarized in Table 2-2. To determine the five-year adjustment to 1995 dollars, the committee applied the Chemical

Engineering Purchased Equipment Index to capital-cost and fixed-cost items factored from the plant cost, applied the Inorganic Chemical Index to adjust the cost of chemicals and nutrients, and applied the Labor Index to adjust the cost of labor. No adjustment was made in the cost of feedstock and the by-product electricity credit (Wooley et al., 1999). The manufacturing costs adjusted to 1995 dollars of $1.28 per gallon are shown for comparison with more recent economic analyses. Current Estimates Recently, NREL, in conjunction with Delta-T Corporation, prepared a series of economic assessments for ethanol manufacturing costs based on the most recent understanding of the technology from the NREL R&D program and NREL’s understanding of related industrial technology (Wooley et al., 1999). The plant size used was 52.2 million gallons of ethanol per year (2,204 dry tons of feedstock per day). Projections of cost reductions expected by years 2005, 2010, and 2015 were also calculated to guide the program direction and prioritization for R&D. ASPEN Plus material and energy balances were used as a basis for equipment sizing, and ICARUS cost estimation software was used to determine capital costs in conjunction with vendor quotes for most of the major equipment (Wooley et al., 1999). All costs were in 1995 dollars. Using current NREL technology, the total capital cost of the plant was estimated to be $204 million, with a total project cost of $212 million. A capital charge rate of 17.7 percent was used to estimate manufacturing cost per gallon. The feedstock was poplar hardwood chips delivered to the plant at a cost of $25 per bone-dry ton. The total manufacturing cost for NREL of $1.36 per gallon is shown in Table 2-2. The relatively low feedstock cost is assumed to correspond to the first few commercial plants where niche opportunities for low-cost residue feedstock will probably be available. OFD recognizes that other available technologies may be more cost efficient and desirable than the ones under

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CONTEXT FOR BIOMASS-DERIVED FUELS

development by NREL, especially pretreatment technologies that can produce higher conversions of hemicellulosic sugars and microorganisms that can produce enzyme more efficiently (Hettenhaus and Glassner, 1997; Wooley et al., 1999). Superior ethanologens that ferment hemicellulose sugars to ethanol are also available. When these technologies are incorporated into OFD’s design and cost models, the estimated manufacturing cost is lowered by 19 percent. The following are NREL’s estimates for best-of-industry technology for 2002 (Wooley et al., 1999): • a yield increase of 12 percent to 76 gallons of ethanol per ton of feedstock resulting in a manufacturing increase of 12 percent to 58.7 million gallons of ethanol per year • a capital-cost reduction of 18 percent to $173 million • a manufacturing cost reduction from $1.36 per gallon to $1.10 per gallon of ethanol at $25 per ton of feedstock As the industry grows, the availability of niche, low-cost feedstock is expected to decline. As a result of cost increases for feedstock of $25 per ton to $42 per ton, manufacturing costs will increase from $1.10 per gallon to $1.32 per gallon of ethanol (Nguyen, 1999). Comparisons of the current cost estimate in Table 2-2 with the estimate done in 1991, adjusted for inflation, show that there has been little if any drop in the projected cost to manufacture ethanol. The capital estimate for the manufacturing plant in 1999 is 50 percent higher than for the plant in the earlier estimate. According to OFD, the costs increased in the 1999 estimate because of a more complete assessment of technology costs reflecting a level of operation at the pilotplant scale and more accurate material and energy-balance techniques in the ASPEN Plus modeling tools. The 1991 cost estimates may have been too optimistic because they were not as detailed and complete as the recent estimate. Improvements OFD anticipates that its R&D program will yield major reductions in the costs of cellulosic ethanol over the next 15 years by concentrating R&D on cellulase enzymes and fermentation organisms. By 2005, OFD estimates that improvements in the thermostability of enzymes should yield a threefold improvement in specific activity. Wooley and colleagues (1999) estimate the following improvements will be made in ethanol manufacturing for 2005 (1995 dollars): • a yield increase of 7 percent to 81 gallons of ethanol per ton of feedstock resulting in a manufacturing increase of 7 percent to 62.2 million gallons of ethanol per year • a capital-cost reduction of 17 percent to $143 million • a manufacturing cost reduction from $1.10 to $0.87 per gallon of ethanol at $25 per ton of feedstock

• a manufacturing cost reduction from $1.32 to $1.08 per gallon at $42 per ton of feedstock By 2010, OFD projects that enhancements in the cellulose binding domain (i.e., improvement in interaction between the enzyme and the surface of biomass), improvements in enzyme activity (i.e., changes in amino acid sequence of the enzyme protein to improve enzyme catalytic activity), and reduced nonspecific binding (i.e., genetic modifications of enzyme to reduce losses through adsorption to lignin) will lead to a tenfold increase in enzyme performance. OFD plans to fund research in the enzyme area conducted by industrial researchers. The OFD projects that substantial improvements will occur through the development of microorganisms capable of producing 5 percent ethanol at temperatures higher than 50°C. Wooley et al. (1999) estimate the following improvements for 2010 (compared to 2005): • a yield increase of 16 percent to 94 gallons of ethanol per ton of feedstock resulting in a manufacturing increase of 16 percent to 72.3 million gallons of ethanol per year • a capital cost reduction of 10 percent to $129 million • a manufacturing cost reduction from $0.87 to $0.76 of ethanol at $25 per ton of feedstock • a manufacturing cost reduction from $1.08 to $0.95 per gallon of ethanol at $42 per ton of feedstock By 2015, genetic engineering will lead to higher levels of carbohydrates in crops grown for ethanol manufacture. The cellulose fraction in the feedstock is expected to increase from 42.7 percent in the base case to 51.2 percent in 2015. The following improvements are estimated for 2015 (compared to 2010) (Wooley et al., 1999): • a yield increase of 21 percent to 112 gallons of ethanol per ton of feedstock resulting in a manufacturing increase of 21 percent to 87.5 million gallons of ethanol per year • a capital-cost increase of 2 percent to $131 million • a manufacturing cost reduction from $0.76 to $0.70 per gallon of ethanol at $25 per ton of feedstock • a manufacturing cost reduction from $0.95 to $0.86 per gallon of ethanol at $42 per ton of feedstock OFD’s cost estimates are based on potentially lower cost technologies that are being developed outside of its own program. Even lower cost technologies than these may become available. For example, Iogen, a Canadian enzyme company that has been involved in cellulosic ethanol research for more than 25 years, recently claimed it had developed a process capable of manufacturing ethanol from biomass crops for about $0.90 per gallon (Foody, 1999). Iogen recently joined with Petro-Canada, one of Canada’s largest oil and gas

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¢¢¢¢ ;;;; QQQQ QQQQ ¢¢¢¢ ;;;; yyyy QQQQ ¢¢¢¢ ;;;; yyyy 1.60 1.50 1.40 1.30

Cost per gallon in 1995 dollars

1.20

Subsidized blending market

1.10 1.00 .90 .80 .70

Nonsubsidized blending market

.60 .50 .40

Neat fuel market

.30

1990

1995

2000

2005 Year

2010

2015

2020

Estimates by NREL for NREL technology Claim by Iogen

Estimates by NREL of combined NREL technology and best of industry

FIGURE 2-1 Estimated manufacturing costs and the market value of cellulosic biomass-derived ethanol. NOTE: These calculated ethanol values are based on the following assumptions: no significant changes occurred in market fundamentals that would affect the differential between crude oil and gasoline, average fuel octane value, and gasoline vapor pressure specifications; estimated values provide a reasonable return on investment; and industry makes the necessary investments in pipeline infrastructure to transport ethanol-gasoline blends from refineries. The correlation of gasoline price to crude oil price is based on recent historical U.S. refining margins (Ting, 1999). The market value relationships between various grades of gasoline fuels is based on published data and personal communications from William Piel (1999). Changes in the availability of MTBE were not reviewed for this study or considered in the calculations.

producers, to build an ethanol demonstration unit for the purposes of scaling up Iogen process technology (McCoy, 1998). OFD manufacturing cost estimates are also shown graphically in Figure 2-1 and compared to the estimated value of bioethanol in potential markets. Although OFD has made significant improvements in planning and estimating, the lack of demonstrated cost reduction in the last decade is a cause for concern (see Figure 2-1). Major cost reductions will be essential for ethanol to compete in a nonsubsidized motor-fuel market. A comparison of the manufacturing cost for cellulosic ethanol using the core technology being researched by OFD with the value of fuel ethanol in the potential markets outlined earlier in this chapter shows a wide gap between bioethanol manufacturing cost and market value.

CONCLUSIONS Conclusion. Because of the uncertainty of future government regulations and/or subsidies for biofuels, the Office of Fuels Development should not rely on subsidies as market drivers for biomass-based ethanol but should assume that biomass-based ethanol must become cost competitive with other transportation fuels when setting program goals and judging progress. Conclusion. Although cost estimates for the manufacture of bioethanol made in 1991 were not as complete or detailed as recent cost estimates, there has been apparently little if any drop in the projected cost of bioethanol based on technologies under development in the Office of Fuels Development program.

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21

CONTEXT FOR BIOMASS-DERIVED FUELS

Conclusion. The international market for biofuels will depend on economic conditions and resource availability of individual countries. Conclusion. In the near term, the primary market for ethanol fuel will be as a gasoline blend agent. Major market

penetration of ethanol transportation fuel is likely to occur only in the long term. Conclusion. The issue of an infrastructure must be addressed as part of the potential widespread use of bioethanol in the transportation sector.

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22

BIOMASS-DERIVED TRANSPORTATION FUELS

3 Feedstock Development

forest, industrial, and municipal wastes, to have high potential as a source of low-cost cellulosic feedstock. Primary agricultural residues include sugarcane bagasse, corn stover, wheat straw, and rice straw. Forest residues include waste from lumber mills, logging, fire control, and thinning operations. OFD estimates that between 100 and 200 million tons of corn stover and wheat straw are potentially available at a cost of less than $45 per ton (OFD, 1998). Studies are under way on the effects of supply, cost, storage, and harvesting corn stover on agronomic systems and soil fertility (Hettenhaus, 1999). Initial research included evaluating the potential of using a number of woody species, including poplar, sweetgum, sycamore, silver maple, black locust, and eucalyptus. However, the program is now focused primarily on poplar because of the broad geographic range over which it can be grown. Rapid acceptance and utilization of hybrid poplars for high-value fiber production by the pulp and paper industry was also a significant factor. OFD has played an important role in the development of poplar hybrids and silvicultural methods now used by forest industries in several parts of the country (Wright and Tuskan, 1997). The high-yield, intensive-culture systems used in the Pacific Northwest are the most dramatic examples. Because of the high value of fiber and wood products compared to bioenergy products, for the near term DOE considers poplars as coproduct systems (i.e., residuals not used for wood or pulp would enter a bioenergy stream). Dedicated energy crops being investigated in the OFD program include switchgrass and willow, both of which are being developed as biomass crops for cellulose-to-ethanol production and as fuel sources for generating electricity. Research on switchgrass has increased in recent years because its economic potential appears to be superior to the potential of woody crops. Switchgrass can be readily grown by farmers using current equipment, and, as a C4 crop (i.e., the initial carbon dioxide fixation products are four-carbon acids), it is suitable for growing in the large areas of warm,

PROGRAM OBJECTIVES AND OVERVIEW The objective of feedstock research by OFD is to develop low-cost lignocellulosic biomass to be used for ethanol and coproduct conversion. This objective is to be achieved by (1) developing agricultural and silvicultural systems for the efficient production, harvesting, and handling of perennial crop biomass from different regions of the United States; (2) improving the yield and quality of biomass by traditional plant breeding and biotechnology; and (3) developing environmentally acceptable methods for collecting and handling biomass, including residues from agriculture and forestry and municipal wastes (OFD, 1998). In addition to this overall objective, the program is also charged with considering sustainability and the environmental effects of biofuels on water, soil, atmosphere, and biological diversity. Feedstocks are a major cost of bioethanol production (see Figure 1-1), accounting for approximately 40 percent of total production costs (Wyman, 1999). Studies have shown that improvements in biomass yield are the most effective means of reducing dedicated feedstock costs and have, therefore, attracted major investments in research on breeding and agronomics. Other major opportunities for reducing feedstock costs include improvements in harvesting systems (Tuskan, 1999), derivation of coproducts, and improvements in feedstock quality to reduce processing costs. Initial research was focused on identifying potential species and sites for growing low-cost biomass. More than 100 woody and 35 perennial herbaceous species were screened for their potential biomass yield and their adaptability to various climates (Wright and Tuskan, 1997). Based on this research and industry’s interest in using currently available sources of biomass for demonstration projects, the program is now focused on three areas: (1) agricultural and forest residues, (2) woody biomass as a coproduct from short-rotation woody crops grown primarily for other purposes, and (3) perennial herbaceous crops. OFD considers the use of residues, including agricultural, Copyright © 2003 National Academy of Sciences. All rights reserved.

22

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23

FEEDSTOCK DEVELOPMENT

droughty lands available for bioenergy crops. However, because of the uncertainties in the economic analyses, the suitability of woody crops for integrated, coproduct-oriented systems, and the expectation of greater environmental benefits from tree plantations over herbaceous systems, OFD is also continuing to support research on woody feedstocks. Environmental issues are another important driver of bioenergy crop development. OFD has been working closely with the environmental community and has initiated several in-house studies and studies in partnership with universities to evaluate the environmental aspects of energy crop culture. These studies have focused on the effects on soil fertility, water quality, and wildlife habitats compared to the effects of alternative crops and natural vegetation. OFD has also conducted detailed modeling analyses of life-cycle impacts for carbon management of bioenergy crops compared to fossil-fuel alternatives (Wang, 1997; Wang et al., 1998). Perennial bioenergy cropping systems can provide diverse local environmental benefits (e.g., biofiltration, erosion control, and creation of wildlife habitat), as well as benefits in terms of global carbon management. By evaluating environmental and economic trade-offs at several scales, OFD has provided a foundation for the development of national policies that may help the United States reduce net additions of carbon dioxide to the atmosphere while solving some of the environmental and economic problems of rural communities.

ALLOCATION OF FUNDING The feedstock development program involves a wide range of projects both within DOE and in cooperation with universities, industry, and other government agencies (see Table 3-1). Research is divided regionally and nationally. Regional divisions are the Midwest/Plains States (switchgrass and poplar), the Southeast (switchgrass and poplar), the Northeast (willow), the Lake States (poplar), and the Pacific Northwest (poplar). Regional development centers conduct research focused on breeding and agronomics to increase crop yield and on plant physiology and biotechnology. Up to now, Congress has not supported significant increases in funds. In fiscal year 1998, the feedstock development projects accounted for 8.2 percent of the OFD R&D program; in fiscal year 1999, they accounted for 6.7 percent. The request for fiscal year 2000 is 10.3 percent of the OFD budget. OFD’s initial focus was on woody crops, for which 37 percent of its research funds were allocated in 1994–1995 (compared to 22 percent for herbaceous crops). However, since 1996, both crop types have received approximately 33 percent of research funds for crop development (see Table 3-2). Allocations for environmental sustainability also increased from 12 percent in 1996 to 20 percent in 1999. The economics of production were a major focus during 1996 and 1997, accounting for 25 percent of funds spent, but received almost no funding in 1999. Research in

TABLE 3-1 Participants in the Feedstock Development Program, 1996–1999 Crop Development Woody Crops Iowa State University Mississippi State University Washington State University State University of New York University of Washington Oregon State University U.S. Department of Agriculture, Forest Service, North Central Forest Experiment Station Herbaceous Crops Auburn University Oklahoma State University Texas A&M University University of Georgia University of Tennessee Virginia Polytechnic Institute and State University U.S. Department of Agriculture, Natural Resources Conservation Service, Plant Materials Centers U.S. Department of Agriculture, Agricultural Research Service Chariton Valley Resource Conservation and Development District Environmental Sustainability Alabama A&M University Auburn University Clark University Clemson University U.S. Department of Agriculture, Forest Service, Forestry Sciences Laboratory U.S. Department of Agriculture, Center for Forested Wetland Research National Council for Air and Stream Improvement Tennessee Valley Authority Economics Kansas State University University of Tennessee University of Minnesota-Crookston Natural Resources Research Institute U.S. Department of Agriculture, North Central Forest Experiment Station WesMin Resource Conservation and Development Council Source: ORNL, 1999a.

biotechnology, which includes tissue culture, genetic mapping, and genetic engineering, has received extremely low funding, ranging from 2 to 4 percent.

SHIFT IN STRATEGIC DIRECTION Like other elements of OFD’s R&D program, research on feedstocks has been dominated by short-term goals, most of them involving production or commercialization. Investments in new science and technology have been limited in scope and funding. OFD’s support for research in biotechnology, molecular genetics, and physiology to provide new options for production systems has been very modest. In general, OFD has focused on the management and

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24

BIOMASS-DERIVED TRANSPORTATION FUELS

TABLE 3-2 Allocation of Funds for Feedstock Development Projects Project

1996

1997

1999

Crop developmenta Woody speciesb Herbaceous speciesc

28%d 30%

32% 26%

34% 38%

Biotechnology Woody species Herbaceous species

4% 0%

3% 0%

2% 4%

Environmental sustainability

12%

13%

20%

Economics

26%

26%

2%

a Crop development includes management, breeding, and physiology research. b Includes poplar and willow. c Includes switchgrass. d Percentage based on total research funding for all projects.

Source: ORNL, 1999b.

breeding of biomass feedstocks to provide basic information on the culture of these high-intensity systems and to identify varieties adaptable to the conditions where the feedstocks would be grown. Until these basic parameters were established, it was impossible for OFD to evaluate the economics of the production systems or attract private-sector participants to share the costs of further development. As research in these areas progresses, major improvements are being made in the productivity of both woody and herbaceous crops. Considerable work remains to be done, however, to improve the basic production methods for switchgrass, prompting a recommendation by a panel of reviewers that OFD continue work on production systems and focus work in biotechnology toward defined production targets (OFD, 1998). The feedstock development program is involved in several kinds of partnerships, including interdisciplinary teams of scientists and university-industry-government collaborations in breeding, culture, biotechnology, and analysis of environmental impacts. Through these partnerships, OFD has been able to leverage its investments. Partnerships have been particularly successful with woody crops, where very modest government investments have prompted large contributions of funds or in-kind resources from forest industries, land-grant universities, and the USDA. OFD uses diverse, often informal, methods of project selection and review. Some projects have been selected after a formal call for proposals; some have been arranged by contract with particular institutions; some have been arranged as partnerships with a number of contributors. Formal project reviews have been infrequent and sporadic. Despite this variable structure, the committee believes that OFD’s research funds have been allocated effectively. The results of OFD funding have included fundamental advances in breeding,

genome analysis, and genetic engineering that have enabled expansions in commercial production and applications of new technologies to crop improvement. Nevertheless, the committee believes that a more formal process for selecting projects and monitoring progress, including regular peer reviews, would ensure quality, especially if the funding base is increased significantly. Although OFD’s support for the establishment of basic breeding and production systems for the major bioenergy crops is appropriate, the committee does not believe that OFD should support long-term regional breeding and production programs. Once breeding systems have been established and a number of productive clones or varieties identified for each region, OFD should shift its focus toward research on major technological improvements that would be too costly for regional programs to undertake but could have a national, and even international, impact. This research should include continued studies of the environmental issues raised by newly developed biotechnologies. Responsibility for incremental improvements in breeding and production systems should be relegated to private industry, regional USDA programs, or land-grant universities, as appropriate. Biotechnology presents a major opportunity for improving biomass crop yield and product quality in the midterm to long term. However, at OFD’s current level of activity, little progress can be expected. In the last few years, “genomics” has become a major scientific and commercial enterprise worldwide (Box 3-1), and private sector investments now exceed $200 million per year, dwarfing public-sector investments (NRC, 1998a). As a result of research on genomics, the agricultural seed and chemical industries have been radically restructured. Discoveries are being made daily, providing new tools for understanding and solving problems in crop production. These discoveries have no historic parallels in biology and are creating a wealth of new information for researchers. OFD should take advantage of advances in genomics in its attempts to bring down the costs of bioenergy crop production. Leveraging these advances will require significant studies in bioenergy crops. Because of the high functional conservation across species of protein-encoding gene sequences, genes identified in model organisms can be rapidly identified and studied in biomass crops, but only if gene catalogs and genetic engineering methods have been developed. Because genetic mapping, gene function studies in transgenic plants, and field trials of newly created materials will take a long time, OFD should begin work soon so that improved varieties are ready for production systems in the 2010 to 2020 time frame.

GENOMICS Major investments will be required to develop the genomics tools and genetic engineering systems to make genomics technology applicable to bioenergy crops.

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FEEDSTOCK DEVELOPMENT

BOX 3-1 What Is Genomics? Genomics is the intensive, large-scale study of the structure and function of genes. The initial focus of genomics research is on mapping and sequencing large numbers of genes. A typical plant contains about 20,000 genes. Studies can range from the development of maps of the genome to determining the complete DNA sequence of all chromosomes. The next phase of genomics research involves clarifying gene function at the cellular and organismal levels. This includes determining how they are regulated, how they interact, how variations in structure affect function, and how they can be used in genetic engineering.

Genomics technology can lead to the development of new, high-yield, pest-resistant varieties of plants and enable major modifications to the production characteristics and feedstock quality that would be very difficult to achieve via traditional breeding. Once the necessary genes are available in the gene pools of bioenergy crops, genomics could also enable the production of novel coproducts. The following key elements of advanced biotechnology will be necessary for bioenergy crops: • large sets of gene sequences from bioenergy crops that represent most of the functional genes in their genomes • maps of the genetic and physical locations of genes, including their locations with reference to the complete gene sequences of model plant species (e.g., Arabidopsis thaliana) • methods for rapid and inexpensive mapping and expression studies of the genes that affect economically important traits • efficient means of producing transgenic plants to test the function of isolated and modified genes, including genes from other species OFD should carefully assess its goals for improving feedstock via genomics biotechnology and focus on the areas that are technically feasible and most likely to lead to reductions in cost. A detailed list of the tools and research projects needed to implement genomics in a bioenergy crop, using poplar as an example, is provided in Appendix E. The two model species on which OFD has chosen to focus, poplar and switchgrass, both have major advantages that will facilitate the application of biotechnology. As a member of the monocotyledonous grass family Poaceae, switchgrass is closely related to rice, maize, sorghum, and sugarcane, organisms that are also being intensively studied. More than 76,000 genes (i.e., distinct expressed sequence tags) have already been determined from maize by private industry. The entire rice genome is being sequenced by an international public consortium. The extensive synteny (conservation of gene order) between the switchgrass genome

and these well studied genomes should facilitate the rapid gene-level analysis of switchgrass. Some obstacles must first be overcome, however, before biotechnology can be effectively applied to switchgrass. First, substantial progress will have to be made on breeding and production systems. Then, because of its polyploid nature and lack of a gene-transfer system, considerable work will be necessary on basic genetic and tissue culture protocols as a basis for the development of genetic mapping and transformation methods (ORNL, 1998). Poplars and willows, which are members of the dicotyledonous family Salicaceae, have no close relatives under genomic study. However, these species have a number of traits that would facilitate genomic studies. Most of them are diploids and have a small genome, which would simplify gene identification and mapping. Many can be readily crossed, producing hybrids that show heterosis, which would facilitate genetic mapping. Several pedigrees already exist for poplars as a result of breeding programs and ongoing genomic studies. And poplars can be readily transformed via methods of asexual gene transfer; thus they have given rise to many more transgenic plants than any other woody species. OFD funds have contributed to this capability through support of the crop development centers in the Pacific Northwest (PNW, 1999). In addition to their biological tractability, both poplars and willows are of considerable interest to other organizations that might cofund genomic research. The USDA and other multispecies grass genome programs (e.g., International Grass Genome Initiative) are logical partners for research on switchgrass, and the forest industry and the U.S. Forest Service are logical participants in studies of poplar. Although poplars are not a major economic species for the forestry industry, they are widely recognized for their value as a model species for forest biotechnology. Poplars can provide the proof of concept for biotechnology targets much faster and at much lower cost than conifers, the main commercial species for most forest industries. The DOE Agenda 2020 program, which is funded by the DOE Office of Industrial Technologies, is an example of a grant program

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26 cofunded by industry and DOE that includes research in biotechnology (AFPA, 1994). Through genetic engineering, new genes, and thus new biochemical pathways, can be transferred into plants enabling the creation of novel coproducts in bioenergy crops. The bioenergy crops of the future may be the feedstock for biorefineries for which energy is only one, perhaps the least valuable, of several products. Coproducts under commercial development via the genetic engineering of plants include vaccines and other high-value pharmaceuticals, industrial and specialty enzymes, and novel fragrances, oils, and plastics. Bioenergy crops might logically be engineered to produce high quantities of cellulytic enzymes, such as cellulase or xylanase, which could be used directly for feedstock processing and thus reduce the cost of cellulase required for production. For other feedstocks, such as corn stover and switchgrass, genes and genetic engineering methods will be available from major biotechnology companies as a result of their work on maize and rice. For poplars, the genes developed for dicot crops can often be directly tested or adapted. Modifications of feedstock biomass are a highly desirable way to facilitate processing; however, the necessary modifications will vary with the energy product and processes. For example, higher lignin quantity is likely to be desirable for combustion to produce electricity because of its high energy density compared to polymerized sugars. For fermentation to ethanol, however, lignin could be reduced or modified so that it can be removed at less expense and with less interference for processing enzymes and microorganisms. Hemicellulose structure also appears to be important for processes that use enzymatic digestion. Feedstock, therefore, will have to be engineered differently for different products, pretreatments, and processing methods. A number of genes are already known that could be tested in transgenic plants for their effects on feedstock processing into ethanol. Many more possibilities for quality engineering will become available as catalogs of genes expressed in lignocellulosic tissues are uncovered by genomics studies (Sterky et al., 1998). To understand how feedstock should be engineered for different products, pretreatments, and processing methods, the research programs of OFD’s processing and feedstock development groups should be integrated. Investigations in genetic engineering and genomics of biomass feedstocks could be integrated to avoid duplication of effort via the establishment of virtual centers that would include DOE and other government laboratories, universities, the private sector, and international partners. These virtual centers would be designed to share complementary tasks across several facilities that have the technologies in hand. Some functions that are national in scope may be more effective if they are centralized, but others will be more effective if they are regionalized to take into account study

BIOMASS-DERIVED TRANSPORTATION FUELS

materials created by local breeding programs and genetic traits expressed in specific environments. Studies should be carefully prioritized and monitored by DOE with the aid of a national review panel to ensure that project proposals do not overlap but contribute to the goals of the investigations of the virtual center. Apart from tool development, these investigations should be directed toward target traits that have been selected for their scientific, technological, and economic values, and consider environmental acceptability as well as production goals.

CONCLUSIONS Conclusion. Given the resources available to the Office of Fuels Development, the feedstock program funds have been well allocated, and research programs have clarified production and environmental issues. Conclusion. The feedstock program is appropriately involved in extramural projects with investigators from universities, industry, and other government agencies. Conclusion. Given the importance of the cost of dedicated feedstock to the economics of bioenergy production and the potential for technological advances via breeding and biotechnology, research on feedstock development may be inadequately funded to achieve substantial reductions in the cost of feedstock even in the long run.

RECOMMENDATIONS Recommendation. A more formal process for the selection and review of feedstock projects and outside participants should be established and the use of peer reviews expanded, especially if there are significant increases in program funding. Recommendation. Because of the many opportunities for genetic improvements in the midterm, the Office of Fuels Development should seriously consider expanding its applied biotechnology and genomics programs to improve feedstock yields, pest resistance, quality, and cropping systems. Although the Office of Fuels Development is well suited to take the lead in these programs, the agency should work in coordination with other government agencies (e.g., U.S. Department of Agriculture and the National Science Foundation) and grant programs, international partners, and the forest, agricultural, and biotechnology industries. Recommendation. Investigations in genetic engineering and the genomics of biomass feedstocks should be integrated to avoid duplication of effort.

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27

PROCESSING TECHNOLOGIES

4 Processing Technologies

conversion at Arkenol, Inc. (Sacramento, California), BC International (Jennings, Louisiana), and Masada Resources (Orange County, New York). All of these plants use locally available feedstocks, such as crop residues (e.g., corn stover or rice straw) or municipal solid wastes, for cellulose-toethanol conversion. These facilities all use both currently available, well demonstrated technologies and some new technologies, notably new recombinant organisms to ferment both five-carbon and six-carbon sugars to ethanol. The knowledge and experience gained from these commercialization projects should provide valuable information for future commercialization. NREL’s modeling analyses indicate that significant reductions in the cost of ethanol manufacturing were made during the 1980s. However, the committee’s analysis indicates that cost reductions have leveled off since 1991 (see Figure 2-1). The committee is concerned that some of the processing technologies currently in the NREL program have reached their inherent limitations and that, even though incremental improvements may be achievable, much less expensive and more effective alternatives should replace these technologies. In addition to OFD’s program, a broad range of innovative research is being done outside of DOE that could improve bioethanol conversion technologies. Researchers have already identified several opportunities for improving cellulosic-to-ethanol conversion and lowering manufacturing costs in the following research areas (Himmel et al., 1997; Lynd, 1996; Lynd et al., 1996; Wyman, 1999):

PROGRAM OBJECTIVES AND OVERVIEW Current R&D on processing technologies is focused on improving the conversion of low-value biomass feedstocks to ethanol. According to the Bioethanol Strategic Roadmap, NREL’s primary guide for the development of its conversion goals were set by the anticipated needs of the marketplace (NREL, 1998). Based on the assumptions that ethanol tax incentives will expire after 2007 and that petroleum prices will remain relatively flat until 2010, NREL estimates expected cost reductions of nearly 66 cents per gallon by 2010 (OFD, 1998). NREL believes that, with improvements in pretreatment and enzyme-based hydrolysis, bioethanol would be competitive in the marketplace at that price without tax incentives. NREL identified two critical breakthrough technologies necessary to reduce costs: (1) increasing the specific activity of cellulase enzymes and (2) increasing the temperature of the fermentation step. Beyond 2010, NREL will seek further cost reductions through genetic improvements in feedstocks (Wooley et al., 1999). OFD also supports R&D in the following areas to reduce the costs of producing bioethanol: • the development of a countercurrent reactor for the pretreatment of biomass • methods for processing lignin residues for new higher value products • the integration of all unit operations • the evaluation and optimization of process configurations

• advanced pretreatments to increase sugar yields and reduce sugar degradation • improved cellulase and hemicellulase enzymes • consolidated bioprocessing of hydrolysis and fermentation • product diversification including coproduction of nonfuel products (e.g., organic chemicals and biobased materials) with bioethanol

BACK TO FUNDAMENTALS A primary aspect of OFD’s conversion-technology development plan is supporting the near-term development of a bioethanol industry. In accordance with congressional mandates, OFD provides some funding support for bioethanol

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BIOMASS-DERIVED TRANSPORTATION FUELS

Size reduction

Dilute acid pretreatment

Hydrolysate with hemicellulose sugars

Residual solids processing

Enzyme production

Simultaneous saccharification and fermentation

Ethanol recovery

FIGURE 4-1 Schematic diagram of the conversion of biomass feedstock to ethanol fuel. Source: NREL, 1998.

A better fundamental understanding of underlying phenomena in all of these technology areas will be crucial to the development of innovative approaches to reducing costs. An understanding of the fundamental mechanisms underlying pretreatment, cellulose and hemicellulose hydrolysis, and consolidated processing can lead to insights on the areas that have the greatest potential for improvement through R&D. As the knowledge base grows, researchers will be able to develop meaningful comparisons among technologies and investigate the effects of changes in key performance parameters on process economics. Approaches to innovation that rely largely on trial and error are inefficient, risky, and less likely to support scale-up and commercialization by industry. Investment in basic R&D will be key to identifying technical opportunities to lower the costs of manufacturing cellulosic bioethanol.

IMPROVING CONVERSION The ethanol manufacturing process that has been most thoroughly investigated by NREL is shown in Figure 4-1. Biomass is ground to an appropriate size and treated with dilute sulfuric acid to convert most of the hemicellulose to soluble pentose sugars, which are then separated from the feedstock material. The remaining plant material (mostly cellulose and lignin) is then hydrolyzed with enzymes. The resulting sugar solutions (glucose, xylose, arabinose, galactose, and mannose) are combined and fermented to produce ethanol, which is then distilled. Residual solids in the distillation mixture are burned to provide process steam and excess electricity, which is sold into the electric grid. In the current NREL process, cellulase hydrolysis and fermentation take place simultaneously in the same vessel, a procedure referred to as SSF (simultaneous saccharification and fermentation). A portion of the biomass is also diverted to a separate fermentation step in which the enyzmes for cellulose hydrolysis are produced. Although a wide variety

of types of cellulosic biomass are referred to in the literature, most laboratory and pilot-plant work to date has been focused on hardwoods (primarily poplar species). Apparently little experimental work has been done on grasses, such as switchgrass, or crop residues, such as corn stover. The current conversion process makes use of technologies that have largely been developed in house at NREL. One technology, notably the acid hydrolyis/pretreatment, has remained essentially unchanged for almost 20 years (Lynd, 1996; NREL, 1998). Because processing downstream of the pretreatment step is greatly affected by the characteristics of the pretreated material and the hydrolyzed sugar solutions, innovation in downstream processing has also been limited. Research on pretreatment has been underfunded relative to the high cost of this processing step and its significant effects on the costs of subsequent hydrolysis and fermentation steps (Lynd, 1996). Although large increases for research on pretreatment for fiscal year 2000 have been requested, the committee believes OFD should consider using pretreatment technologies under development elsewhere to improve bioethanol manufacturing processes. Diverse pretreatment processes under evaluation may have the potential to unlock vast reserves of cellulosic biomass (NRC, 1999c). The most thoroughly researched pretreatment processes are dilute acid hydrolysis, steam explosion, ammonia fiber explosion, and treatment with organic solvents (Lynd, 1996). Less is known about liquid hot water pretreatment (van Walsum et al., 1996), and none of these pretreatments is currently a commercial success (NRC, 1999c). Lynd (1996) has established some criteria for determining the ideal pretreatment: produces reactive fiber; yields pentoses in nondegraded form; does not significantly inhibit fermentation; requires little or no size reduction; can work in reactors of reasonable size and moderate cost; produces no solid residues; has a high degree of simplicity; and is effective at low moisture contents. This committee agrees with Lynd’s assessment that the dilute acid hydrolysis process

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used by NREL does not meet these criteria, nor does steam explosion. Lynd suggests that other processes, such as liquid hot water and ammonia fiber explosion, merit further evaluation. Because improvement in performance of pretreatment technology is intimately associated with fermentation and enzyme production steps, leap-forward advances in pretreatment will require that NREL focus on the best available technologies, keeping in mind basic process design. OFD recognizes that investing in research on enzymatic processes will be critical to improving the efficiency of the bioethanol process in the long term. The strategic plan for the next five years emphasizes two key activities: (1) developing more active cellulase enzymes that can operate at higher temperatures and (2) developing microbes capable of fermenting a broad range of sugars at relatively high temperatures (OFD, 1998). The ideal microorganism or system of organisms for producing ethanol from cellulosic biomass in a process featuring enzymatically mediated hydrolysis would simultaneously exhibit the following properties: (1) synthesis of an active cellulase enzyme system at high levels; (2) fermentation and growth on sugars from both cellulose and hemicellulose; and (3) production of ethanol. Many organisms under evaluation have either an inability to use a range of carbohydrates (e.g., cellulose, xylan) and simultaneously produce ethanol at high yields, or differing requirements for oxygen for various functions essential to the process (Lynd, 1996). Although the committee agrees that cellulase enzymes are a key component of bioethanol research, hemicellulase enzymes have the potential to unlock additional sources of sugars for fermentation. NREL currently has little R&D on hemicellulase enzymes, which can hydrolyze the hemicellulose fraction of biomass. Another outside panel of experts from industry and academia has recommended that NREL consider this area of research, which could lead to additional sources of sugars for further processing (Glassner, 1998). It should be noted that Iogen and other private-sector companies have made substantial investments in R&D on enzymatic hydrolytic processing and that these cellulase technologies are potentially lower in cost than those under development at NREL (Foody, 1999). Given that cellulase enzymes can be inhibited by the sugars they produce, private-sector research has focused on increasing the consumption of these sugars by fermentative organisms as the sugars are produced, and significant progress has been made in this area. The logical extension of this work is called “consolidated bioprocessing” and refers to the production of enzymes by the fermentation organism (or by another organism in the vessel with the fermentation organism) (Hogsett et al., 1992; Lynd, 1996). Consolidated bioprocessing reduces biological inhibition and increases reaction rates. The committee recognizes that various approaches to processing are possible and that improvements in pretreatment

and enzymatic hydrolysis can significantly reduce the overall costs of manufacturing bioethanol (see Figure 1-1). The impact of specific technologies currently under development on overall performance and cost cannot be determined, however, because the relationships among these processing steps are not completely understood. Thus, improvements in the basic process design, as well as improvements in pretreatment, enzymatic technologies, and fermentation organisms, will be essential to reducing the costs of bioethanol.

OPPORTUNITIES FOR COPRODUCTS Early in this century, the petroleum refining industry focused on producing kerosene and took in little revenue from other products. At that time, gasoline was essentially a waste product. Over time, however, much more complex oil refineries evolved with a very large product slate, including products with a much greater profit margin. OFD’s analysis of the costs of petroleum refining and the profitability of gasoline indicates the advantages of a process that can produce coproducts along with ethanol fuel. A plant that manufactures valuable coproducts will probably be more profitable than one that manufactures only ethanol. Although the sources of biomass are diverse, most plant-derived biomass contains the following components: cellulose, hemicellulose, lignin, oil, starch, and protein. In addition, some biomass components, such as protein, do not lend themselves to fuel but could be an important and valuable source of income for a bioethanol plant. Biorefineries that can produce high-value as well as lowvalue products will be more competitive with oil refineries. Biorefineries that can produce a variety of products will not only benefit from increased profitability from the higher margin products but will also benefit from their ability to change their product mix in response to changing demands. In fact, corn wet mills, a prototype biorefinery, already produce many products, and the number of products they produce is growing. NREL, however, has focused only on the fermentation of ethanol and coproducing electricity by burning residual solids. The Bioenergy Initiative will focus on increasing the potential for the coproduction of ethanol fuels, organic chemicals, and electricity from biomass. The initiative will be a collaboration among the DOE offices engaged in biomass-related activities.1 The committee encourages DOE to extend these partnerships to other agencies, such as USDA, to promote research on coproducts of bioethanol manufacturing. The OFD believes that the abundance of corn stover and grass feedstocks and the ease of converting these sources of 1 For example, the OFD may collaborate with the Office of Power Technologies, which supports R&D on the conversion of biomass to electricity, and the Office of Industrial Technologies, which works with the agricultural and forest products industries.

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biomass to ethanol (compared to converting woody biomass) should facilitate the commercial introduction of this technology (Hettenhaus and Glassner, 1997). Accurate material balances on corn stover and candidate grasses will be crucial to ensuring that all components of these materials, including nonfuel components, are used effectively. Corn stover is an underutilized resource, and if its collection and distribution can be expedited and some conservation issues addressed, the conversion of corn stover (and other agricultural residues) in countries with large agricultural sectors could become feasible. The role of OFD in these international projects will have to be evaluated in terms of U.S. domestic objectives, but this could be a fruitful area for research.

CONCLUSIONS

BIODIESEL

Conclusion. The new bioethanol industry would benefit from a more thorough fundamental understanding of key processes and feedstock technologies.

Interest in biodiesel in the United States has been focused on soybean oil as the primary feedstock because of its abundance and relatively low cost among vegetable oils. Most European biodiesel is made from rapeseed oil, a cousin of canola oil (Tyson, 1998). Biodiesel can also be prepared from spent cooking oil and other waste fats, which are less expensive than soybean oil but of variable composition and limited availability. Biodiesel is prepared by transesterifying the oil to the fatty ester and glycerol (a by-product). Transesterification is necessary to convert the triglyceride, which has undesirable flow and combustion properties, into an acceptable motor fuel. In Europe, the European Union subsidizes farmers growing oilseed crops. Without this subsidy, rapeseed-based biodiesel would not be competitive in the marketplace. Researchers have attempted to extract biodiesel directly from oilseed crops to eliminate the expensive transesterification process. However, biodiesel in this form has poor performance characteristics when used in current diesel engines (NRC, 1999c). In an efficient crushing operation, a bushel of soybeans can produce 47.5 pounds of meal and 11.1 pounds of oil. Meal, oil, and bean prices are all related and are all influenced by the global demand for food oil and protein. At the time of this writing, soybean oil prices were at a historic low of $0.215 per pound. One gallon of biodiesel requires approximately seven pounds of soybean oil. Thus, even at this time, the cost of raw material alone for biodiesel would be more than $1.50 per gallon. Therefore, even if processing costs were minimal, the potential for reducing costs enough to make an economically viable fuel are also minimal. Congress has enacted some legislation to meet environmental concerns by establishing niche markets for biodiesel, but no further infusion of OFD funds is needed to support this project. If an oil-producing species emerges with a potential for widespread agricultural production at substantially lower cost than soybean oil, OFD could reconsider its involvement in the development of biodiesel fuels.

Conclusion. Technologies will have to be greatly improved for the emerging bioethanol industry to survive without subsidies. A broad range of innovative research is being done outside of the U.S. Department of Energy that could improve bioethanol conversion technologies. Conclusion. The committee is concerned that some of the processing technologies currently in the Office of Fuels Development program have reached their inherent limitations and that, even though incremental improvements may be achievable, much less expensive and more effective alternatives should replace these technologies.

Conclusion. Reducing the cost of biodiesel will be extremely difficult because of high feedstock costs.

RECOMMENDATIONS Recommendation. To reduce the cost and increase the competitiveness of bioethanol with other energy sources in the near term (2000–2010) and midterm (2010–2020), the Office of Fuels Development should redirect the focus of its research and development programs away from demonstrations of specific technologies to fundamental research that supports new technologies in both feedstock development and ethanol conversion. Continued technical support should be provided to the demonstration plants now in place to test and evaluate the results of this fundamental research and development. As industrial firms commercialize lower cost technologies, the role of the Office of Fuels Development in biofuels research should be refocused on fundamental and exploratory research directed toward overcoming the remaining technical barriers. Recommendation. The Office of Fuels Development should focus on fundamental research in the following areas for reducing the costs of manufacturing bioethanol: (1) advanced pretreatments; (2) consolidated bioprocessing; (3) digestive enzyme activity; (4) the development of diversified products and coproducts during biomass processing or via plant metabolism; (5) reductions in the cost of raw materials via improved yields or the development of pest-resistant or stress-resistant plants; and (6) changes in feedstocks to make processing and conversion more efficient by modifying plant biochemistry. In the long term, the new bioethanol industry will benefit most from a comprehensive understanding of fundamental biological and engineering principles that could be provided

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by a refocused federal research program. For example, rather than trying to expand the limits of native organisms, the Office of Fuels Development research program could investigate the underlying mechanisms of these limits in nature through genomics and other fundamental studies. Armed with a fundamental understanding of natural limitations, companies would be in a better position to undertake their own applied development programs. Recommendation. The Office of Fuels Development should return to its traditional role of providing a technical basis for future commercial ventures. Advancing the technology base will help new processing plants improve their competitive

position and pave the way for the next generation of processing plants. Recommendation. The Office of Fuels Development should support and encourage, perhaps by interagency cooperation with the U.S. Department of Agriculture and other federal agencies, work on coproducts of bioethanol manufacturing. Recommendation. Because of a lack of any foreseeable opportunity for reducing the production costs of biodiesel, the Office of Fuels Development should consider eliminating its biodiesel program and redirecting those funds into the bioethanol program.

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5 Crosscutting Opportunities

collection costs could sharply constrain the optimal size of an ethanol manufacturing plant. Therefore, R&D systems analyses should also evaluate the potential for small-scale processing facilities to decrease the distance between the collection points and the processing plants. OFD could also consider systems analyses that could be developed further by the private sector for international markets. For example, studies could be performed on processing alternatives that could lower the capital intensity and raise the labor intensity of production processes. Flexibility in this regard would enhance a company’s potential for exporting bioethanol conversion technology to regions that have lower labor costs and less available capital than the United States. An integrated review of both the feedstock and processing components of OFD’s programs could determine the best opportunities for major new technology options and for reducing costs with minimal environmental impact. Process engineers and plant scientists from NREL and ORNL could then collaborate on the development of advanced models that would optimize bioethanol costs across the entire system from feedstock production through manufacturing. A systems approach would enable researchers to identify and target crosscutting opportunities to overcome technological barriers.

In the previous chapters, the committee approached OFD’s R&D on biomass-related ethanol and biodiesel transportation fuels in terms of feedstock development and conversion technologies. This approach was based on the current organization of the OFD program, with R&D on feedstock development centered at ORNL and R&D on conversion technologies centered at NREL. Some common themes that emerged in the process of reviewing the R&D program are described in this chapter.

SYSTEMS ANALYSIS Advances in R&D have the potential to reduce the costs of bioethanol to a competitive level with petroleum-based fuels. Production costs for bioethanol include feedstock development (production, collection, and handling) and conversion processes (pretreatment, fermentation, distillation, pentose conversion, and cellulase production) (Wyman, 1999). The process of producing a liquid fuel from biomass entails several steps, and a change in any component of the system can affect the other components. For example, improved pretreatment would improve the efficiency of downstream fermentation and enzyme processes. Little is known, however, about the impact of changes in feedstock genetics on the efficiency of pretreatment. An integrated analysis could determine the relationship between feedstock development and conversion processes on the total costs of bioethanol. Agricultural and forest residues, as well as dedicated energy crops, are potential sources of biomass for conversion to ethanol. Because feedstocks can contribute as much as 40 percent to total bioethanol costs, OFD should make a complete evaluation of the logistics and costs of producing, harvesting, collecting, and transporting feedstocks and their effects on processing economics. Because feedstock residues, such as corn stover, tend to be dispersed, the collection costs of cellulosic biomass usually increase exponentially with distance from the processing plant, and the feedstock Copyright © 2003 National Academy of Sciences. All rights reserved.

Recommendation. The Office of Fuels Development should consider developing an integrated systems model that encompasses feedstock development, collection, storage, transport, and biomass processing. This model could reveal research and development directions for reducing costs, optimizing synergies among technologies, and prioritizing projects to achieve program goals in light of changing market opportunities.

TECHNOLOGY INTEGRATION R&D should be integrated to address the overall manufacturing system. For example, research on pretreatment should be coordinated with enzyme development and 32

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CROSSCUTTING OPPORTUNITIES

fermentation because pretreatment will reduce the need for enzymes, affect the types of enzymes needed, and also affect the fermentation step. Furthermore, R&D in plant genetics could lead to the development of feedstocks that are amenable to particular pretreatments. Other R&D on bioethanol processing may also be amenable to integration. R&D conducted at several technology-based research centers would improve coordination across research areas and contribute to a knowledge base that would support the development of future technologies. Technology-based research centers should attract the very best, most knowledgeable people available and should be adequately funded. Technology-based research centers might be established, for instance, to focus on pretreatment (as mentioned above), enzyme development, genetic engineering genomics, and coproduct production. These centers should be designed and managed to promote collaboration and communication among researchers. Because many experts are working in academia and because of the several distinct technologies essential to bioethanol research, coordinated research centers could facilitate interdisciplinary and crosscutting research. At the same time, the participation of experienced process design engineers from industry could keep research focused on reducing costs. A broad community of professionals would stimulate innovative research in the key technologies for the future biofuels industry. Recommendation. In keeping with its management role in the development of biofuels for the nation, the Office of Fuels Development should reinforce its program in crosscutting research. The establishment of several technologybased research centers would facilitate the integration of research results and foster collaboration among experts from government, industry, and academia.

INCREASING LINKS Cellulosic biomass could potentially be used as raw material to produce a variety of products, including liquid fuels, organic chemicals, and electric power. For example, a biorefinery could integrate the production of ethanol liquid fuel with high-value organic chemicals (e.g., specialty enzymes) to increase the profitability of processing plants. The committee commends DOE for establishing a Bioenergy Initiative to develop national partnerships with other federal agencies and the private sector. Integrated R&D on bioenergy will encompass existing R&D by DOE on transportation fuels, biomass power, and forest products and agricultural industry programs to encourage the development of a variety of fuels, power sources, chemicals, and other products based on the diversity of cellulosic biomass feedstocks across the country (DOE, 1999). By extending its

relationships with other federal agencies, university, and industrial partners, OFD could take advantage of fundamental knowledge and technologies that could reduce the costs of biomass production and processing. Recommendation. The Office of Fuels Development should strengthen its links and take advantage of synergies between its research and development program and other programs of the U.S. Department of Energy, government agencies, universities, and industry to leverage public-sector funds and take advantage of scientific and engineering advances in the integrated processing of diverse feedstocks and options for a variety of products.

IMPROVED PEER REVIEW A strong R&D program in biofuels will require careful monitoring of its performance. The OFD has shown that it is sensitive to the allocation of public funds for achieving its R&D goals by developing quantitative milestones to measure program performance. A recent report of the President’s Committee of Advisors on Science and Technology recommended that industry, national laboratory, and university oversight committees work with DOE to provide overall direction to energy R&D programs. In addition, the report recommended that all DOE energy programs be subjected to outside technical peer reviews every one or two years (PCAST, 1997). The committee also encourages OFD to continue using outside reviews to evaluate its biofuels program. Outside reviews can provide a basis for regular input on proposed R&D projects and measurements of the performance of ongoing projects. Effective outside reviews can increase the probability of success of a program. In the case of OFD, improvements could increase the likelihood of the development of cost-effective technologies for the production and manufacture of bioethanol. To reinforce these reviews, OFD should seek input from researchers involved in biofuels activities outside of the R&D program under review, as well as disinterested scientists and engineers from the academic and industrial communities. This will increase the technical quality and objectivity of the review process. Researchers and program managers should be held accountable for research directed toward specific performance goals and established milestones. If the planned objectives are not achieved, OFD should determine the reasons for the shortfalls. Recommendation. The Office of Fuels Development should establish clear criteria for evaluating project performance levels and should include reviewers from academia, industry, and other government programs in its evaluation.

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References

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REFERENCES Miller, R. 1999. Outlook for Bioethanol Development. Presentation to the Committee to Review the R&D Strategy for Biomass-Derived Ethanol and Biodiesel Transportation Fuels, Beckman Center, Irvine, California, February 11, 1999. Miller, R., B. Heine, C. Jewitt, C. Reeder, and W.R. Schwanst. 1996. Changes in Gasoline III: The Auto Technician’s Gasoline Quality Guide. Brenin, Ind.: Downstream Alternatives, Inc. Nguyen, T. 1999. Personal communication from T. Nugyen, program manager, Office of Fuels Development, U.S. Department of Energy, to John Sheehan, Office of Fuels Development, U.S. Department of Energy, April 12, 1999. NRC (National Research Council). 1996. Toxicological and Performance Aspects of Oxygenated Motor Vehicle Fuels. Washington, D.C.: National Academy Press. NRC. 1998a. Designing an Agricultural Genome Program. Washington, D.C.: National Academy Press. NRC. 1998b. Peer Review in Environmental Technology Development Programs. Washington, D.C.: National Academy Press. NRC. 1999a. Review of the Research Program of the Partnership for a New Generation of Vehicles, Fifth Report. Washington, D.C.: National Academy Press. NRC. 1999b. Ozone-Forming Potential of Reformulated Gasoline. Washington, D.C.: National Academy Press. NRC. 1999c. Biobased Industrial Products: Priorities for Research and Commercialization. Washington, D.C.: National Academy Press. NREL (National Renewable Energy Laboratory). 1998. Bioethanol Strategic Roadmap: A Planning Framework for Development of Biomass-toEthanol Technology. Preliminary draft (December 22). Prepared by the National Renewable Energy Laboratory for the Office of Fuels Development, U.S. Department of Energy. Golden, Colo.: National Renewable Energy Laboratory. NSTC (National Science and Technology Council). 1997. Interagency Assessment of Oxygenated Fuels. Washington, D.C.: Executive Office of the President. OFD (Office of Fuels Development). 1998. Draft National Biomass Ethanol Program Plan, Fiscal Years 1999–2005, Draft. EE-31. Washington, D.C.: U. S. Department of Energy, Office of Fuels Development. ORNL (Oak Ridge National Laboratory). 1998. Review of the Switchgrass Component of the Biofuels Feedstock Development Program (April 15). Letter report from Dwayne R. Buxton, Agricultural Research Service, and chair of Review Team for the Switchgrass Component of the Bioenergy Feedstock Development Program. Oak Ridge, Tenn.: Oak Ridge National Laboratory. ORNL. 1999a. List of cooperators available on line: www.esd.ornl.gov/ bfdp/papers/misc/cooperators.html ORNL. 1999b. Draft Bioenergy Feedstock Development Program Fiscal Year 1999 Project Summaries, Draft. Oak Ridge, Tenn.: Oak Ridge National Laboratory. Also available on line: www.esd.ornl.gov/bfdp/ bfdpmain.html PCAST (President’s Committee of Advisors on Science and Technology). 1997. Federal Energy Research and Development for the Twenty-First Century (November 5). Washington, D.C.: Executive Office of the President. PCAST. 1999. Powerful Partnerships: The Federal Role in International Cooperation on Energy Innovation (June). Washington, D.C.: Executive Office of the President. Piel, W. 1999. Personal communication from William Piel, business director, Tier Associates, to Robert Hall, member of the Committee to Review the R&D Strategy for Biomass-Derived Ethanol and Biodiesel Transportation Fuel, May 18, 1999. PNW (Pacific Northwest). 1999. Information on crop development centers in the Pacific Northwest available on line: http://www.fsl.orst.edu/tgerc/ index.html or http://poplar2.efr.washington.edu/fm Ranney, J.W., and L.K. Mann. 1994. Environmental considerations in energy crop production. Biomass and Bioenergy 6: 211–228.

Reicher, D. 1998. Growing an Industry: Overview of DOE’s Bioenergy Activities and Proposed Plan of Activities. Washington, D.C.: U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy. Also available on line: http:/www.eren.doe.gov/ bioenergy_iniative/sub2.html RFA (Renewable Fuels Association). 1999. Ethanol: Brief Report on its Use in Gasoline. Available on line: http://www.ethanolrfa.org/ techreports.html Schell, D., C. Riley, P. Bergeron, P. Walter. 1991. Technical and Economic Analysis of an Enzymatic Hydrolysis-Based Ethanol Plant. SERI/TP232-4295. Golden, Colo.: Solar Energy Research Institute. Sperling, D. 1988. New Transportation Fuels: A Strategic Approach to Technological Change. Berkeley and Los Angeles, Calif.: University of California Press. Sterky, F., S. Regan, J. Karisson, M. Hertzberg, A. Rohde, A. Holmberg, B. Amini, R. Bhalerao, M. Larsson, R. Villarroel, M. Van Montagu, G. Sandberg, O. Olsson, T. Teeri, W. Boerjan, P. Gustafsson, M. Uhlen, B. Sundberg, and J. Lundeberg. 1998. Gene discovery in the wood forming tissues of poplar: analysis of 5,692 expressed sequence tags. Proceedings of the National Academy of Sciences 95: 13330–13335. Ting, P. 1999. Personal communication from Paul Ting, Salomon Smith Barney, to Robert Hall, member of the Committee to Review the R&D Strategy for Biomass-Derived Ethanol and Biodiesel Transportation Fuels, April 30, 1999. Tolbert, V.R., and A. Schiller. 1996. Environmental enhancement using short-rotation woody crops and perennial grasses as alternatives to traditional agricultural crops. Pp. 209–216 in Environmental Enhancement through Agriculture, W. Lockeretz, ed. Boston, Mass.: Center for Agriculture, Food and Environment, Tufts University. Tolbert, V.R., and L.L. Wright. 1998. Environmental enhancement of U.S. biomass crop technologies: research results to date. Biomass and Bioenergy 15(1): 93–100. Tuskan, G.A. 1999. The Development of Bioenergy Crops: An Integration of Improved Cultural Practices, Pest Control, Genetics and Biotechnology. Presentation to the Committee to Review the R&D Strategy for Biomass-Derived Ethanol and Biodiesel Transportation Fuels, Beckman Center, Irvine, California, February 11, 1999. Tyson, K.S. 1998. Biodiesel Strategic Plan: Opportunities for a New Century. Draft Version 2. Internal Review Document (October 26). Golden, Colo.: National Renewable Energy Laboratory. van Walsum, P., S.G. Allen, M.S. Laser, M.J. Spencer, M.J. Antel, and L.R. Lynd. 1996. Applied Biochemistry and Biotechnology 57/58: 157–170. Wang, M.Q. 1997. GREET 1.0—Transportation Fuel Cycles Model: Methodology and Use. ANL/ESD-33. Argonne, Ill.: Argonne National Laboratory. Wang, M., C. Saricks, and D. Santini. 1998. Fuel-cycle energy and greenhouse gas emissions effects of fuel ethanol. Argonne, Ill.: Argonne National Laboratory. Wooley, R., M. Ruth, J. Sheehan, H. Majdeski, and A. Galvez. 1999. Lignocellulosic biomass to ethanol process design and economics utilizing co-current dilute acid prehydrolysis and enzymatic hydrolysis: current and futuristic scenarios. Draft. NREL TP-580-2615. Golden, Colo.: National Renewable Energy Laboratory. Wright, L., and G.A. Tuskan. 1997. Strategy, results and directions for woody crop research funded by the U.S. Department of Energy. Pp. 791–799 in Proceedings of the 1997 Pulping Conference. Atlanta, Ga.: Tappi Press. Wyman, C. 1999. Opportunities and Technological Challenges of Bioethanol. Presentation to the Committee to Review the R&D Strategy for Biomass-Derived Ethanol and Biodiesel Transportation Fuels, Beckman Center, Irvine, California, February 11, 1999. Wyman, C.E., N.D. Hinman, R.L. Bain, and D.J. Stevens. 1992. Ethanol and methanol from cellulosic biomass. Pp. 865–924 in Fuels and Electricity from Renewable Resources, R.H. Williams, T.B. Johansson, H. Kelly, and A.K.N. Reddy, eds. Washington, D.C.: Island Press.

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37

APPENDIX A

APPENDICES

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39

APPENDIX A

APPENDIX

A Biographical Sketches of Committee Members

was professor, Chemical Engineering and Agricultural Engineering; director, Food Protein Research and Development Center; and director, Engineering Biosciences Research Center, Texas A&M University; associate and assistant professor of chemical engineering, Colorado State University; and a visiting scientist, National Bureau of Standards (Boulder). He has served as co-chair of the NRC Committee on Biobased Industrial Products: National Research and Commercialization Priorities. He is a National Merit Scholar and has received a number of awards. He has a Ph.D. in chemical engineering from Purdue University.

David L. Morrison (chair) is an adjunct professor at North Carolina State University. He recently retired from the U.S. Nuclear Regulatory Commission where he was the director of the Office of Nuclear Regulatory Research. His previous positions include technical director of the Energy, Resource and Environmental Systems Division, MITRE Corporation; president of the Illinois Institute of Technology Research Institute; and director of program development and management, Battelle Memorial Institute. He has been a member of the National Research Council (NRC) Energy Engineering Board and the National Materials Advisory Board, chair of the NRC Committee on Alternative Energy R&D Strategies, chair of the NRC Committee on Industrial Energy Conservation, and a member of the Committee on Fuel Economy of Automobiles and Light Trucks and the Committee to Review the United States Advanced Battery Consortium’s Electric Vehicle R&D Project Selection Process. His areas of expertise include research management, energy and environmental research, materials science, nuclear chemistry, physical chemistry, and the assessment of energy technologies. Dr. Morrison has a Ph.D. in chemistry from the Carnegie Institute of Technology.

Anthony J. Finizza is the former chief economist at ARCO, where his responsibilities included monitoring alternative fuel vehicle developments and energy/economic studies. From 1970 to 1975, he was regional vice president of Data Resources, Inc., and from 1968 to 1970, he was vice president and economist of Northern Trust Company. Dr. Finizza has contributed his expertise to various professional organizations, including the International Association for Energy Economics, of which he was president in 1996. He received his Ph.D. in economics from the University of Chicago.

Gary Coleman is assistant professor, Natural Resource Sciences and Landscape Architecture, Molecular and Cell Biology Program, at the University of Maryland. He has been a postdoctoral research assistant, Oregon State University; a research biologist for Uniscope Inc.; and a forester in the U.S. Forest Service (Rio Grande). His research interests include genetic engineering, molecular biology, and the physiological aspects of trees, including poplars. He is presidentelect, Washington Section, American Society of Plant Physiologists and serves on a number of review panels for the U.S. Department of Agriculture. He has a Ph.D. in horticulture-forestry from the University of Nebraska.

Robert Hall was with the Amoco Oil Company where he held a number of positions, including general manager, Alternative Fuels Development; manager, Management Systems and Planning; director, Research and Development (R&D) Department; and supervisor, Amoco Chemical Company Process Design and Economic Division. He has extensive experience in R&D on alternative fuels, strategic planning, management, and technology innovation. He has served on the NRC Committee on Production Technologies for Liquid Transportation Fuels and the Committee on Strategic Assessment of the Department of Energy’s Coal Program and is past chair of the International Council on Alternate Fuels. He has a B.S. in chemical engineering from the University of Illinois.

Bruce E. Dale is professor and chair, Department of Chemical Engineering, Michigan State University. Previously, he Copyright © 2003 National Academy of Sciences. All rights reserved.

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40 Donald L. Johnson (NAE) is vice president, Product and Process Technology, Grain Processing Corporation. He has also been senior development engineer and manager, Product Development Groups; and director, Chemicals Research and Development Departments at A.E. Staley Manufacturing Company. He is a member of the Advisory Council, College of Applied Science, Miami University, and member of the Departmental Visiting Committee, Botany Department, University of Texas at Austin. His primary interests and expertise are in the utilization and processing of renewable resources for food ingredients and industrial chemicals. He has an Sc.D. in chemical engineering from Washington University and a B.S. in chemical engineering from the University of Illinois. Roberta Nichols (NAE) was with the Ford Motor Company from 1979 to 1995 in several positions: manager, Electric Vehicle (EV) External Strategy and Planning Department, North American Automotive Operations; manager, EV External Affairs, EV Planning & Program Office; manager, Alternative Fuels Department, Environment and Safety Engineering Staff; and principal research engineer, Alternative Fuels Department, Scientific Research Laboratory. She was also a member of the Technical Staff at Aerospace Corporation from 1960 to 1979. She is a fellow, Society of Automotive Engineers, a recipient of the National Achievement Award from the Society of Women Engineers, and a recipient of the Clean Air Award for Advancing Air Pollution Technology from the South Coast Air Quality Management District. Dr. Nichols has served on a number of advisory groups on alcohol-based transportation fuels. Her expertise includes alternative fuel vehicles, electric vehicles, internal combustion engines, and strategic planning. She has a Ph.D. in engineering from the University of Southern California. Daniel Sperling is professor of civil engineering and environmental science and policy and founding director of the Institute of Transportation Studies at the University of

BIOMASS-DERIVED TRANSPORTATION FUELS

California, Davis (ITS-Davis), where he oversees large research programs on mobility (including the use of small EVs and smart car sharing), fuel-cell vehicles, and environmental assessments of ITS technologies. Dr. Sperling specializes in advanced transportation technologies, energy and environmental impacts, and travel behavior and is a recognized international expert on transportation technology policy. He has conducted extensive studies on advanced automotive technologies for low emissions, including approaches to technology development and realization, has expertise in transportation engineering, and has conducted extensive investigations on alternative fueled vehicles and sustainable transportation. Dr. Sperling is a recent member of the NRC Committee on Liquid Fuel Options, the Committee on Transportation Options for Megacities, and the Committee on Transportation and a Sustainable Environment. He was founding chair of the NRC Alternative Transportation Fuels Committee from 1989 to 1996 of the Transportation Research Board. He received a Ph.D. in transportation engineering from the University of California, Berkeley. Steven H. Strauss is professor, Department of Forest Science, Molecular and Cellular Biology and Genetics, Oregon State University and director, Tree Genetic Engineering Research Cooperative, College of Forestry, Oregon State University. His past positions include visiting scientist, INRA, Versailles and Orleans, France; visiting professor, College of Forestry, Australian National University; and visiting scientist, CSIRO Division of Plant Industry, Australia. He has been a National Science Foundation (NSF) Presidential Young Investigator and has served on a number of NSF, U.S. Department of Agriculture, and NRC panels. He is chairman, International Union of Forestry Research Organizations Working Party on Molecular Genetics of Forest Trees. His research interests include genetic engineering, genome mapping, and population genetics of forest trees. He has a Ph.D. in forest genetics from the University of California, Berkeley.

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41

APPENDIX B

APPENDIX

B Office of Fuels Development Fiscal Year 1999 Budget EXCERPT FROM U.S. DOE BUDGET INFORMATION

Total Biofuels Conversion Funding

$35,950,000

Renewable Energy Laboratory process development unit in FY 1998. In FY 1999, focus is on installation of the reactor system. In addition, bench scale testing of cost-effective technology for softwood feedstocks and potential chemical co-product, will improve process economics of producing ethanol from thinnings from forests.

Advanced Fermentation Organisms R&D Research and development of advanced fermentation organisms to improve process efficiency, including the development of Zymomonas mobilis with enhanced capabilities (FY 1998) and the development of organisms with increased stability and robustness, and ability to ferment mixed sugars from waste feedstocks and the model energy crop switchgrass (FY 1999) will improve process efficiency and lower the cost of ethanol production from biomass. Testing of these strains at pilot scale and small scale commercial facilities will be completed to demonstrate reliable performance of these first generation organisms. Research and development of advanced organisms (second generation), such as Lactobacillus, with greater efficiencies that can ferment additional biomass feedstocks provide further costs reductions and the potential for expanding biomass ethanol applications. Subtotal

Subtotal Consortium for Plant Biotechnology Research

The 50:50 cost-shared, long term R&D projects with The Consortium for Plant Biotechnology Research, Inc., (CPBR) for peer-reviewed university research will not be continued in order to focus on more applied research activities that support program goals and objectives. Subtotal

In FY 1998 integrated bench-scale studies were conducted to evaluate and optimize unit operations, with emphasis on detoxification studies, to improve the overall process. The performance of a genetically improved fermentation organism capable of fermenting available sugars was validated at the bench scale. In FY 1999, integrated bench-scale studies will evaluate the overall process and performance of softwood thinning from private and public forests, including National Forests, in cooperation with industrial partners. Technologies for the coproduction of ethanol and high value products will be researched and developed by the Michigan Biotechnology Institute (MBI). DOE will provide $3.0 million to MBI, in accordance with Congressional guidance.

Analyses indicate that the production of ethanol, using enzymes for the breakdown of biomass materials to sugars for fermentation is limited to a great degree by the high cost of enzymes. Research and development partnerships with enzyme producers will provide highly productive, low cost cellulase systems. Collaborations with enzyme and biomass ethanol producers will accelerate the use of commercially available cellulase systems. $4,547,000

Pretreatment R&D

Subtotal

Physical and/or chemical pretreatment of biomass facilitates enzyme and fermentation reactions, thereby improving process efficiency and lowering costs. An advanced pretreatment reactor, the countercurrent pretreatment reactor, was designed, fabricated and delivered to the National

Copyright © 2003 National Academy of Sciences. All rights reserved.

$1,250,000

Integrated Process Development

$2,200,000

Advanced Cellulase R&D

Subtotal

$2,800,000

$11,500,000

Cellulose-to-Ethanol Production Facilities Laying the groundwork for a broad-based cellulosic biomass-to-ethanol industry, cost-shared partnerships to design

41

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42

BIOMASS-DERIVED TRANSPORTATION FUELS

and construct ethanol production facilities are being developed. In FY 1998, an additional commitment to design and construct biomass waste-to-ethanol facilities was obtained. DOE’s commitment for the BC International project (BCI) that was initiated in FY 1997 was $4,00,000, with BCI costshare of $27,600,000, or 87 percent. An additional $750,000 was included under Biomass Power for the Gridley Project. A minimum 50 percent cost share was required from any partner entering into an agreement. In FY 1999 DOE’s commitment with BCI for the Jennings, Louisiana plant will be completed, in accordance with Congressional language. An additional commitment with an industrial partner was established that will lead to the design and construction of an ethanol facility in Rio Linda, California. DOE share for the Rio Linda facility was $4,000,000, in accordance with Congressional language. An additional commitment with industry partners will be established that will lead to the design and construction of commercial demonstration facilities in targeted areas: California and Alaska.

switchgrass handling and storage specifically as a means of improving the ethanol production costs will be explored. Handling and storage systems for the use of agricultural residues to produce ethanol will improve costs and process efficiencies.

Subtotal

Using the regional program infrastructure, support will be provided for cost-shared site studies for biofuels production facilities, including resource assessments and analyses of local, State, and regional nontechnical issues. The potential of biodiesel will be improved by testing new biodiesel fuel formulations to enhance fuel performance of high efficiency engines in collaboration with the Office of Heavy Vehicle Technologies, USDA, and the National Biodiesel Board.

$13,653,000

Switchgrass Variety Testing and Scale-up Research Switchgrass variety field tests are being conducted in the five major growing regions of the U.S. Field trials established at five USDA National Plant Materials Testing Centers will evaluate newly developed switchgrass liners. Costshared 100-300 acre scale-up plantings of switchgrass will be evaluated to provide yield, operational issues, and cost data. In FY 2000, field tests and scale up data will be collected and evaluated and field trial near waste-to-ethanol facilities/sites will be established. Subtotal

$625,000

Feedstock Composition and Multiproduct Use Altering plant composition to improve conversion efficiencies will provide potential benefits and costs reductions in the production of fuels, chemicals and electricity. The tailoring of plants so that all components of the plant can effectively be used to produce multiple products will provide potential costs reductions and broader opportunities for adaptation of feedstock production systems. Subtotal

$100,000

Subtotal Total Regional Biomass Energy Program (jointly funded with Biopower)

$150,000 $3,500,000

Regional Biomass Resource Activities Regionally-focused activities with State and local governments and industry will develop the capability to produce and use biomass resources for multiple products. Subtotal

$2,000,000

Biofuels Production Activities

Subtotal Total Biodiesel Funding

$1,500,000 $750,000

Biodiesel Production Technologies Based on a completed assessment, research and development will improve biodiesel process technology, using waste grease streams to lower production costs. In addition, improved oilseed production has the potential of lowering biodiesel production costs. Working with industry, activities to facilitate market penetration will lead to increased biodiesel production and use. Subtotal Total Feedstock Production Funding (jointly funded with Biopower)

$750,000 $5,100,000

Mechanization Research Mechanization systems for energy crops to lower harvesting/handling cost, will address a major obstacle to the widespread use of energy crops. Cost-shared opportunities for

Biomass Feedstock Development Centers Research will be conducted to develop economically viable model energy crops at integrated biomass feedstock

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43

APPENDIX B

development centers in the Pacific Northwest (poplars), Southeast (switchgrass), and Midwest/Plains States (switchgrass and poplars), where breeding to select for higher yields and other desirable traits is linked closely with studies on management, physiology, growth-limiting factors, and advanced biotechnology. Fields studies to evaluate nutrient effects on carbon sequestration and storage will provide additional vital information on energy crops. Subtotal

$3,600,000

Energy Crop Seedling/Planting Stock Selection Research Advanced biotechnology and other methods will develop techniques that can be used to select energy crop seedlings or other planting stocks that are less susceptible to disease and/or pest, reducing the risk of mortality and increasing technical/economic viability. Desirable genotypes of switchgrass will be selected, propagated, and transferred to greenhouse/field tests to verify the selection process. Subtotal

$100,000

Environmental Effects of Energy Crop Deployment

Large Scale Woody Crop Plantation Research

Research to evaluate the effects of large scale deployment of energy crops on the environment, such as water and soil quality, chemical fates, and biodiversity will provide credible data that could be used to guide deployment in a manner that ensures energy and environmental benefits.

Research will be conducted to develop and evaluate management techniques to overcome the water use efficiency constraints in the Southeast. Technical assistance and cost sharing will be provided for existing large scale plantings in the Midwest/North Central region to obtain performance and cost data.

Subtotal

Subtotal

$400,000

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$125,000

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44

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APPENDIX

C Committee Meetings and Other Activities

1. Committee Meeting, December 17–18, 1998, Washington, D.C.

2. Second Committee Meeting, February 11–13, 1999, Irvine, California

Program Overview John Ferrell, Director, U.S. Department of Energy Office of Fuels Development

Opportunities and Technological Challenges of Bioethanol Charles Wyman, BCI, Inc., and Dartmouth University

Ethanol Production Technology R&D David Glassner, National Renewable Energy Laboratory

Cellulase Technologies James Hettenhaus, Chief Executive Assistance, Inc. Outlook for Bioethanol Development Rus Miller, Arkenol, Inc.

Biodiesel Overview K. Shaine Tyson, National Renewable Energy Laboratory

California Perspective Dean Simeroth, California Air Resources Board

Feedstock Development Janet Cushman, Oak Ridge National Laboratory

Biomass Chemicals and Co-Production William Hitz, Dupont Company

Fuel Cycle Analysis and Greenhouse Gas Benefits Michael Q. Wang, Argonne National Laboratory

Feedstock Development Projects Gerald Tuskan, Oak Ridge National Laboratory

Ethanol Market Issues, Analytical Approach and Results Barry McNutt, U.S. Department of Energy Office of Policy and International Affairs Roger LeGassie, TMS, Inc.

Impact of Genetics/Genomics for Biomass Energy Crops Toby Bradshaw, Washington State University 3. Third Committee Meeting, April 8–10, 1999, Washington, D.C.

U.S. Department of Agriculture Biofuels Activities Jim Craig, U.S. Department of Agriculture

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Ethanol Development Patrick Foody, Sr., and Brian Foody, Iogen Corporation

44

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45

APPENDIX E

APPENDIX

D Barriers to Using Ethanol1

but the periodic use of ethanol blends can result in a recurring problem. Initial ethanol use in a geographic region has been reported to cause batches of off-specification gasoline and plugged automobile fuel filters, as well as occasional damage to fuel injectors. To avoid potential problems with water, most refiners do not transport ethanol-gasoline blends by pipeline. Thus, considerable “splash blending” of ethanol takes place at distribution and storage terminals instead of at the refinery where gasoline is normally blended to final specifications. Ethanol blends are then shipped by truck from terminals to retail service stations. Common carrier pipelines transport only fungible products (i.e., products that meet standard product specifications and are, therefore, interchangeable with products from other sources). Thus, when ethanol is blended at a terminal, the blend stock is specification-grade gasoline. The addition of 10 percent ethanol to regular gasoline produces a blend with an octane number about two units above the number required for regular gasoline. This causes an octane giveaway when the ethanol blend is sold as regular gasoline. If terminals are supplied by proprietary pipelines or trucks from a refinery, octane giveaway can be avoided by blending with a gasoline blend stock with lower than specification octane. The nonoxygenated blend stock used in reformulated gasoline is fungible and can be shipped by common carrier pipeline to terminals for blending without octane giveaway. When 10 percent ethanol is added to regular gasoline, octane giveaway can be essentially eliminated if the resulting blend is sold as midgrade gasoline; when ethanol is blended with midgrade gasoline it can be sold as premium gasoline. Octane giveaway in the U.S. market is estimated to range from 25 percent to 50 percent of the product sold. Transportation systems could also be cleaned up to permit the shipment of ethanol-gasoline blends from a refinery by pipeline, but most companies are reluctant to invest the funds for this system upgrade, possibly because the future availability of ethanol is considered to be uncertain. Ethanol from corn is only economical because of government

Manufacturers interested in entering the bioethanol market will rely on economic analyses to facilitate company decision making. Although a market may exist for bioethanol as a blending agent with gasoline, manufacturers must take into account the dissimilar nature of alcohol and the hydrocarbons in which it is blended. The disadvantages of using ethanol as a gasoline blend agent are ethanol’s higher affinity for water and its high Reid vapor pressure. Because of manufacturers’ reluctance to transport ethanol blends by pipeline to avoid potential contact with water, ethanol must be blended with specification-grade gasoline at the terminal. This results in an ethanol-gasoline blend that exceeds octane requirements and leads to some excess product octane (octane giveaway).

AFFINITY FOR WATER The transportation and storage systems used for ethanolgasoline blends must be essentially water free. Even moderate quantities of water can cause ethanol-gasoline blends to separate into two phases, which can reduce engine performance. Ethanol can also act as a cosolvent that facilitates the incorporation of small quantities of water into the ethanolgasoline blend. Water can collect in low spots of hydrocarbon-handling systems, such as pipelines, storage systems, and vehicle fuel systems. The water typically contains rust and other particulates but normally does not cause a problem because the water remains in place when contacted by hydrocarbons and can be periodically drained. The “scouring” action of ethanol-gasoline blends can incorporate this dirty water into the gasoline. Once the dirty water has been eliminated, the system remains clean as long as ethanol is present,

1 The information in this appendix is based on a presentation, Gasoline Volatility: Environmental Interactions with Blending and Processing, by George H. Unzelman, president, Hyox, at the National Petroleum Refiners Association Annual Meeting, March 17–19, 1996, San Antonio, Texas.

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46 subsidies, and the federal subsidy is scheduled to be eliminated by 2007. In addition, the price of grain is unrelated to the price of crude oil, and a price squeeze on grain could force some ethanol manufacturers to shut down their manufacturing plants.

VAPOR PRESSURE Even though ethanol alone has a relatively low vapor pressure, when used as a gasoline blend agent its effective vapor pressure is quite high. The Reid vapor pressure for ethanol-gasoline blends is about 18 psi for 10 percent ethanol content. This high vapor pressure is a disadvantage for ethanol-gasoline blends. When ethanol is added to a properly formulated gasoline blend stock, as it is with refinery blending, low boiling hydrocarbon components, such as butanes and even pentanes, must be reduced to meet gasoline vapor pressure specifications. The removal of these low boiling hydrocarbons is expensive because gasoline is their highest value use. Blending of ethanol at the terminal can result in a blend that exceeds vapor pressure specification, especially during the summer, when a 1-psi waiver is

BIOMASS-DERIVED TRANSPORTATION FUELS

currently granted for ethanol blends (except in reformulated gasoline). Lower gasoline vapor pressure reduces evaporative emissions during tank filling and fuel storage. Because of this environmental benefit, the summer vapor pressure specification for gasoline has been, and is expected to continue to be, lowered over time. For a vapor pressure specification of less than about 7.6 psi, there is no room for butane in a 10 percent ethanol-gasoline blend. To meet specifications, therefore, pentane must be removed. This so-called “pentane backout” causes a step increase in the cost of gasoline because the amount of pentane required to offset the addition of ethanol is about five times the amount of butane, and the alternative value of pentane is much lower than for butane. In general, companies consider it to be impractical to meet summer vapor pressure specifications below about 7.6 psi with 10 percent ethanol blends. The vapor pressure of ethanol blends can be reduced by using special coblending agents, such as higher alcohols, or by blending to higher ethanol concentrations. However, either of these approaches to reducing vapor pressure also reduces the value of ethanol as a gasoline blend agent.

Copyright © 2003 National Academy of Sciences. All rights reserved. Unless otherwise indicated, all materials in this PDF File provided by the National Academies Press (www.nap.edu) for research purposes are copyrighted by the National Academy of Sciences. Distribution, posting, or copying is strictly prohibited without written permission of the NAP. Generated for [email protected] on Fri Aug 8 08:07:55 2003

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47

APPENDIX E

APPENDIX

E Major Components of a Poplar Genomics Initiative

If the U.S. Department of Energy decides to focus more of its resources on the biotechnology of feedstock crops, genomics would be a logical subject for research. In the following discussion, the tools, type of experiments, and target traits for a major genomics project in a bioenergy crop are outlined using poplars as an example. These structural genomics studies would provide the tools for mapping and isolating a large number of genes. With this foundation, many different kinds of traits could be studied, and experiments could be performed to determine their roles and use them in breeding or genetic engineering. All of the options outlined below do not have to be undertaken to make progress in this area; however, a significant program to study a single feedstock species is likely to entail a recurring annual cost of at least $2 million for a number of years. A comprehensive genomics project should have the following components: structural genomics, materials for studying trait variation and expression, and functional genomics.

intensive studies of gene expression via microarray panels, synteny comparisons to model organisms, and high-throughput transformation.

STRUCTURAL GENOMICS The following components could be included in the area of structural genomics: • • • •

dense microsatellite-based genetic marker maps dense expressed sequence tag sequence banks physical mapping via bacterial artificial chromosomes expression chips (microarrays) of the majority of genes in the genome • physical map synteny relationships with Arabidopsis • high-throughput transformation methods • high-throughput single-nucleotide polymorphism map arrays

MATERIALS FOR STUDY OF TRAIT VARIATIONS AND EXPRESSIONS

• Structural Genomics. The establishment of tools for studying and mapping genes, such as large sequence databanks, genome maps, and high-efficiency transformation methods. • Materials for Studies of Trait Variation and Expression. The development of large, carefully designed pedigrees and field experiments and other experimental materials based on trait expression, in which genes for key traits can be either mapped or directly identified via differential expression. • Functional Genomics. Experiments for mapping and isolating genes for valuable traits via fine-mapping, Copyright © 2003 National Academy of Sciences. All rights reserved.

Research on materials for the study of trait variations and expressions could include the following subjects: • traits on segregating pedigrees and field trials in hybrid and intraspecific pedigrees • ribonucleic acids from tissues with contrasting trait expression (e.g., distinct tissues and ages) • phenotypic targets of economic importance and distinct expression in woody plants — heterosis and yield 47

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48

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— wood chemistry and structure —disease resistance —shoot phenology and stress tolerance —maturation, flowering onset and sterility, and rootability

FUNCTIONAL GENOMICS Research on functional genomics could include studies in the following areas:

• high-precision quantitative trait loci analysis and synteny-based candidate gene selection • transformation tests of candidate genes selected from expressed sequence tag banks • complementation, suppression, and overexpression tests of identified genes via transformation • large population of activation-tagged transgenic trees to directly identify genes for diverse traits • additional bacterial artificial chromosome libraries for trait-specific experiments

Copyright © 2003 National Academy of Sciences. All rights reserved. Unless otherwise indicated, all materials in this PDF File provided by the National Academies Press (www.nap.edu) for research purposes are copyrighted by the National Academy of Sciences. Distribution, posting, or copying is strictly prohibited without written permission of the NAP. Generated for [email protected] on Fri Aug 8 08:07:55 2003

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