The Grand Challenge of Biofuels

(Dartmouth) – A robust second-generation biofuels industry based on inedible cellulosic biomass available as wood, grass, and various wastes was widely expected to be in place by now. Anticipated benefits include climate change mitigation and rural economic development while avoiding the limitations of first-generation biofuels. Progress has been made but at a much slower pace than expected. It is important to understand why. The experience of the past decade and the need for low-cost technology in a world of low oil prices necessitates a strategic reset for biofuels as part of a “grand challenge” renewables strategy.

 

Background 

Plant biomass provides 10 percent of global primary energy today and is widely expected to provide on the order of a quarter of primary energy in prominent low-carbon scenarios for 2050. Biomass provides as much energy as oil, natural gas, and coal combined in Shell’s net-zero energy scenario, as well as opportunities for carbon removal that must be deployed at a large scale to have more than a 50-percent chance of achieving the 2°C goal.

Among various types of plant biomass, cellulosic feedstocks are thought to have the greatest potential for mitigating climate change and are widely available at a lower cost per unit energy than petroleum. Transport is both one of the largest and fastest-growing energy sectors and one of the most difficult to decarbonize. Even if the rest of the global economy were completely decarbonized, a failure to displace the fossil fuels used in aviation, ocean freight, and long-haul trucking with low-carbon alternatives would result in emissions exceeding the 2°C COP21 target. Biofuels are the leading low-carbon option for these transport modes, which represent about half of global transport energy.

Recent studies recognize the substantial number of jobs created by renewable energy technologies, including biofuels. Bioenergy is responsible directly and indirectly for almost 3 million jobs globally—about the same as photovoltaics and three times that of wind—with liquid biofuels responsible for a little over half this total and solid biomass and biogas making up the balance. Estimates for direct liquid biofuel jobs in the United States range from 100,000 to 300,000, compared to about 370,000 direct jobs in the U.S. solar industry and about 70,000 for coal mining. Sugarcane production in Brazil, about half of which is used for ethanol, is the largest agricultural employer in that country. Compared with other agricultural workers, laborers in the cane industry have the greatest representation in the formal economy and achieve higher levels of education. Towns with ethanol plants in Brazil have higher tax revenues than comparable towns that do not.

Yet biofuels in the United States and across the globe have progressed little over the past decade—in sharp contrast to other renewable energy technologies. Expansion of global production of biofuels has leveled off, policy support has weakened, and research and development (R&D) funding has decreased and/or narrowed in many countries. Cellulosic biofuel investment and expectations have decreased markedly, although the rationale for their use is widely accepted and, in some ways, stronger than a decade ago.

 

Past and Present 

Between 2000 and 2010, the first-generation ethanol industry grew by tenfold in the United States and 2.6-fold in Brazil. In the middle of that decade, the world started paying more attention to cellulosic biofuels, prompted by a sharp increase in oil prices, analyses indicating large-scale availability of low-cost, sustainable cellulosic feedstocks, and claims that the technology was ready. The Renewable Fuel Standard, created under the Energy Policy Act of 2005, provided a strong policy driver for market adoption in the United States, and President George W. Bush mentioned switchgrass-derived biofuels in his 2006 State of the Union address. The European Union’s 28 member states implemented a “biofuels directive” in 2003 and followed this with more comprehensive biofuels-related legislation in 2009 through its Renewable Energy Directive and amendments to the Fuel Quality Directive.

National governments saw in biofuels, and in particular cellulosic biofuels, a chance to contribute to rural employment and economic development and to enhance energy security. Many startup companies were formed, big companies also got in the game, and investments were made at previously unimaginable scales by both the private and public sectors. Entrepreneurs seeking to raise funds in a competitive marketplace presented their technology in the best possible light, only to be told by investors in many cases that they needed to think bigger and bolder—thereby raising the bar for the next investment pitch. Propelled by this spiral of hyperbole, expectations and reality eventually diverged.

Fast forward to the present, and six precommercial pioneer cellulosic ethanol plants have come on line, providing important opportunities for technology assessment and learning by doing. Global production of renewable diesel and jet fuel increased by approximately 30 percent last year, according to Alejandro Zamorano of Bloomberg New Energy Finance. Still, by any measure, the biofuels landscape today is a pale shadow of what was imagined a decade ago. In 2016, global production capacity for liquid biofuels from cellulosic feedstocks was 4.4 billion liters for thermochemically derived renewable diesel and jet fuel, and 0.7 billion liters for cellulosic ethanol, according to Zamorano. These figures are dwarfed by the production capacity of first-generation biofuels—98 billion liters for ethanol produced from grains, sugarcane, and sugar beets, and 30 billion liters for biodiesel produced from oil seeds. Whereas the U.S. Renewable Fuel Standard foresaw a domestic cellulosic biofuel industry producing 4.5 billion gallons (17 billion liters) in 2016, actual production was 0.16 billion gallons (0.6 billion liters), of which 98 percent was biogas rather than the liquid fuels originally envisioned. The amount of global cellulosic ethanol capacity retired last year exceeded the amount added.

Many advanced biofuel startups have failed. Those that have survived are trading well below their initial public offering price; most are focusing primarily on higher-value products other than fuels: Solazyme changed its name to Terravia and is now focused exclusively on food products; Amyris is active in flavors, fragrances, sweeteners, and rubber; and Ceres shifted its emphasis from cellulosic feedstocks to food and feed and was acquired by Land-O-Lakes. Global investment in next-generation biofuels and biochemicals is now more than 50 percent in chemicals rather than fuels, less than a quarter of its peak in 2011.

 

Diagnosis

Although widely expected circa 2008, a price on carbon did not materialize in most of the world. The nascent cellulosic biofuels industry was rocked by the global financial crisis. The collapse in oil prices in 2014 was the final knockout punch to many efforts in the cellulosic biofuels space. Yet other renewable energy sectors thrived during this period. Between 2005 and 2015, global solar investment increased by an order of magnitude, and wind investment more than tripled. During the second half of this decade, the cost of battery energy storage for electric vehicles dropped by about threefold.

PhD candidate Shuen Hon metabolically engineers microbes in Lynd’s lab. Photograph by John Sherman.

 

So what has been different about cellulosic biofuels? Overestimation of technological readiness is part of the answer. There has been a marked tendency, encouraged by both government and private sector investors, to focus on large, expensive, stand-alone facilities rather than niche applications. Particularly in the United States, funding agencies prematurely turned away from cellulosic ethanol, although it is now clear that further development is needed to achieve cost-competitive fuel production even with oil prices at $100 per barrel. Amidst frequent claims that economically viable technology was in hand and investment was needed only in scale-up and commercialization, investment in new, potentially low-cost processing paradigms was generally modest. As a result, technological advancement was slower than it might have been, and policies were designed assuming that deployment, rather than technology, was the limiting factor. The impacts of a tendency to try to vault 100-foot cliffs with 10-foot poles were compounded by the very large size of investments of $250–$500 million and relatively long duration of the design-build-operate-learn cycle in the cellulosic biofuels field. In sharp contrast, other renewable energy technologies proceeded in a stepwise fashion, recognized the need for technological advancement and invested accordingly, and benefitted from projects with lower costs and more rapid learning cycles.

There is more to it, however. Biofuels require land. As a result, their production inevitably has strong linkages to food security, rural economic development, and land-based ecological services. Biofuel advocates see these linkages as opportunities to achieve value above and beyond low-carbon energy supply, pointing to the soil fertility and water quality benefits of incorporating perennials into agricultural landscapes, the social benefits resulting from the Brazilian biofuel industry, and the potential role of biofuels in African transformation and enhanced food security. Critics see these linkages as posing risks that arise to a smaller extent with other renewables, and point out that although cellulosic biofuels avoid direct competition with food markets, they do not avoid competition for land. There is a basis for both perspectives, but the critical voices have spoken more loudly over the past decade, and this has contributed to weaker and less-consistent policy support for biofuels compared with other renewables.

 

What to do?

Three key measures should be part of any effort to revitalize cellulosic biofuels. First, pursue commercial deployment in achievable, successively enabling steps, proceeding from where the industry is today. Second, maximize social and environmental benefits based on examples and learning from experience. Third, invest in alternative processing paradigms.

Solar and wind energy were deployed first off-grid and at the most advantageous sites. Battery technologies were employed for consumer electronics before use in hybrid vehicles, with grid storage the next horizon. A similar stepwise approach in the biofuels field involves niche applications featuring low-cost feedstock, preferably with established supply chains and/or preexisting infrastructure—an approach exemplified by the Raizen plant, which converts bagasse to ethanol within a larger sugarcane processing facility in Brazil; efforts by several companies to convert corn fiber in the United States; and LanzaTech’s conversion of waste gasses in China and elsewhere.

Gracefully integrating bioenergy technologies into the agricultural, social, and environmental systems with which they interact is a challenge that can only be resolved by experience. With supportive policies, suitable safeguards, innovative business models, and on-the-ground projects aimed at benefitting people, planet, and profit, it is reasonable to expect progress as we replicate successes and learn from failures.

Just as battery development focused successively on lead-acid, nickel-cadmium, and then lithium ion chemistries and is now exploring new alternatives to meet the challenge of grid storage, cellulosic biofuels technology must actively look beyond existing processing paradigms. The key challenge to cost-effective production of cellulosic biofuels is the difficulty of converting cellulosic biomass into reactive intermediates, termed recalcitrance. The recalcitrance barrier is manifested in the cost of thermochemical pretreatment and added enzymes for biological processing. For thermochemical processing, it is manifested in the cost of gasification or pyrolysis, including clean-up before fuel synthesis. To maximize the probability of developing a robust cellulosic biofuels industry at a scale large enough to meaningfully contribute to climate and other goals, we need an aggressive effort aimed at new processing paradigms.

 

A Call to Action

With swings from irrational exuberance to dismissal behind us, it is time to see cellulosic biofuels as they are. They remain an important and likely necessary component of climate change mitigation strategies, but face substantial technological challenges to achieve financial viability. They require learning by doing to maximize favorable social and environmental outcomes and to enhance competitiveness with incumbent fossil fuels, which have benefitted from a century of investment and development. Near-term deployment opportunities need to be realized in a stepwise fashion, along with aggressive investment in R&D aimed at innovation and new processing paradigms. Cellulosic ethanol provides the most direct path to a low-cost platform for biological production of fuels from inedible biomass, and is the logical point of entry and proving ground for new technology aimed at overcoming the recalcitrance barrier for biological processing, but is not yet cost competitive and needs innovation to become so. As with many aspects of the climate change challenge, needed actions in the biofuels domain should be aligned with market realities, but will progress more quickly with policy support than in response to market forces alone.

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Lee R. Lynd is Thayer’s Paul and Joan Queneau Distinguished Professor of Engineering and an adjunct professor of biology. A cofounder of two cellulosic biofuel startups, he is focus area lead for biomass deconstruction and conversion for the U.S. Department of Energy’s Bioenergy Science Center and is executive committee chairman of the Global Sustainable Bioenergy Initiative.

This article is adapted with permission from an article of the same name published in Nature Biotechnology. Read the full article (with references).

 

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