Biofuels may be the answer


MAKE something people want to buy at a price they can afford. Hardly a revolutionary business strategy but one that the biofuels industry has to date aschewed.

Now a new wave of companies think that they have the technology to change the game and make unsubsidised profits. If they can do so reliably and on a large scale, biofuels may have a lot more success in freeing the world from fuels than they have had until now.

The original 1970s appeal of biofuels was the world’s opportunity to make faces (depending on the local bodily idom) at the oil sheikhs.

Over time, the opportunity to fight global warming added to the original energy security appeal. Make petrol out of plants in a sufficiently clever way and you can drive around with no net emissions of carbon dioxide as well as no net payments to the mad, the bad and the greedy. Great idea all around then.

Sadly, it did not work out like that. First the fuel was not petrol, instead it was ethanol which stores less energy per litre, tends to absorb water and is corrosive.

People will use it only if it is cheap or if you force them through mandatory blending.

In Brazil which turned to biofuel after the 1970s oil shocks, the price of ethanol eventually became low enough for the fuel to find a market thanks to highly productive sugar plantations and distillers powered by the pulp left when that sugar was extracted from its cane.

As a result Brazil is now a biofuels super-power. In most countries ethanol is mostly made from maize which is less efficient and often produced in distilleries pioneered by coal. It is thus neither cheap nor as environmentally benign.

Another problem with using maize is that it limits the size of the industry and pits it against the interests of people who want food.

Boosters claimed that cellulose from which the stalks leaves and wood of plants are made could if suitably treated become a substitute for the starch in maize.

Both starch and cellulose consists of sugar molecules linked together in different ways, and sugar is what fermentation feeds on. However, cellulose biofuel has so far failed on an epic scale to deliver. At the moment only a handful or factories around the world produce biofuel from cellulose and that fuel is still ethanol.

This is what companies working on a new generation of fuels, want to change instead of ethanol they plan to make hydrocarbons, molecules chemically much more similar to those that already power planes, trains and automobiles.

These will say be “drop in” fuels any quantity of which can be put into the appropriate fuel and pipelines with no fuss whatsoever. For that reason alone they are worth more than ethanol.

Appropriately designed drop-in fuels can substitute for diesel and aviation fuel which ethanol cannot. That increases the size of the potential market they also have advantages on the production side.

Due to the fact that crude oils from different places have different chemical compositions, containing some molecules engines will not like. Oil refineries today need to do a lot of careful tweaking. The same applies to the production of biodiesel from plant oils.

Genetically engineered bugs making hydrocarbons more or less from scratch could guarantee consistent quality without the hassle, thus perhaps commanding a premium with no extra effort. Meanwhile, the feedstock could be nice and cheap.

If this approach works, it will not only be beneficial in its own right modestly reducing greenhouse gas emissions while making money for its investors it will also provide a lasting market incentive to scientist to devise better ways of turning cellulose into sugar.

This gives the prospects for this generation of biofuels a plausibility that was missing from its predecessors.

The drop in firms are starting to come out of the laboratory, float themselves on the stock market, team up with oil companies and build their first factories.

The dice in other words are rolling. In 2010 Codexis became the first start up involved in drop-in fuels to float itself on a stock market which in this case was NASDAQ America’s main market for high-tech stocks.

The success of biofuels obviously depends on the price of sugar. Historically the cost of making ethanol has been about 26 cents a litre so there is room for profit. Nevertheless, if drop in fuels are to become a truly big business. They need a wider range of feedstock.

Until recently, the assumption has been that cellulose would take over from sugar and starch as the feedstock for making biofuels. Making cellulose into sugar is technically possible and many firms are working on that possibility. However, making fuel out of cellulose turns out to be hard and costly.

Today’s cellulose ethanol is competitive with the petrol it is supposed to displace only when the price of crude oil rises. Should cellulose work out the question remains, where will it come from? The answer will be in sugar cane, maize and wheat.

A simple way of garnering cellulose is to gather up the leftovers when these crops have been processed, Bagasse from sugar cane, stover from maize and straw from wheat.

That is a start, but it will not be enough, wood is a possibility, particularly if it is dealt with chemically rather than biologically (much of the carbon in wood is the form of lignin, a molecule that is even tougher than cellulose).

It would make sense to invest in the agriculture of these crops and if the price is right they might take any country a fair bit of the way to the energy independence that early proselytisers for biofuel clowed about.