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James Stafford

James Stafford

James Stafford is the Editor of Oilprice.com

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Which Biofuels Hold the Most Promise for the Future - Interview with Jim Lane

Following record droughts across the United States the benefits of the ethanol subsidy were once again hotly debated and biofuels in general found themselves generating quite a few unflattering headlines. But as always the mainstream media overreacted and we wanted to help put the record straight as to whether biofuels are an expensive folly or if they really do offer an affordable source of liquid fuel that can help us lower our reliance upon gasoline.

To help us look at these issues and much more Oilprice.com spoke with Jim Lane, the Editor & Publisher of Biofuels Digest. 

In the interview, Jim discusses:

•    Why there will be a massive drop in gasoline demand.
•    Which biofuels hold the most promise for the future.
•    Investors should be looking at marine biofuels.
•    The truth behind the Air Force paying $59 per gallon for jet fuel.
•    Which biofuel companies investors should be keeping an eye on.
•    Why electrofuels are such an exciting opportunity.
•    Why peak phosphorus is a major concern.

Interview by. James Stafford of Oilprice.com

Oilprice.com: The drought across the U.S. has led to many pundits predicting a second ethanol crash due to the under supply of feedstock like corn. Some estimates say that the US will likely lose nearly 40% of its corn crop, and possibly more, which means that the price of corn will continue to rise. How do you see the situation developing in the U.S. for ethanol producers?

Jim lane: The global corn crop this year was the 2nd biggest ever, and the US crop the 8th biggest. Whatever disruptions that will occur are already priced in - we'll continue to see lower production levels from US producers, but that will likely bring down ending stocks rather than cut into sales.

Oilprice.com: Where do you stand on the debate over the RFS?

Jim lane: The industry favors maintaining RFS2 in its current structure.  Here in Digestville we see the new 54.5 mpg CAFE standards creating a massive drop in gasoline demand. That's going to put intolerable pressure on RFS2 in our view. We'd rather see either state or federal public utilities for fuel - keeping a free market in supply and demand but having the utility in place to provide long-term supply contracts for renewables. Offtake contracts offer better source of financeable stability for advanced biofuels, in our view.

Oilprice.com: What is your favourite source of biofuel? There have been numerous articles and reports released about potential super biofuels such as Agave, Jatropha, Sorghum, switchgrass, etc… Which do you think hold the most promise for the future?

Jim lane: It comes down to what is best for that locale - most cost effective and sustainable. It will vary. Having said that, marine biofuels looks interesting (e.g. seaweed) and direct conversion of brackish water, sequestered CO2 and water into biofuels are very exciting to contemplate.

Oilprice.com: Are there any new technologies/developments taking place that people may not be aware of, which stand a real chance of transforming the biofuels sector?

Jim lane: The aforementioned direct conversion technologies. Plus, electrofuels - which are similar but use electricity as an energy source rather than sunlight.

Oilprice.com: World rock phosphate production is set to peak by 2030. Since the material provides fertilizer for agriculture, the consequences are likely to be severe, and worsened by the increased production of biofuels. Do you see phosphate shortages as a threat to the biofuel industry?

Jim lane: Phosphorus is a material necessary to make the backbone for DNA, so it's a real concern if not addressed - and even if fertilizers are sourced elsewhere. Recovering and aggregating other sources of phosphorus is a must.

Oilprice.com: Biofuels are well known for using a great deal of energy in their production – could you talk a little about the energy returns from the different types of biofuels?

Jim lane: I think you are referring to first-gen biofuels. Cellulosic biofuels offer 8-1 and 9-1 net energy returns. Passive algae farming offers even more.

Oilprice.com: Which biofuel companies should investors keep an eye on in the future?

Jim lane: The cellulosic biofuels companies like INEOS Bio and Mascoma are just now commercially deploying - right after that is a generation of thermochemical technologies like KiOR. After that, post-biomass companies like Joule are going to be heading for scale.

Oilprice.com: In a recent article we covered sweet sorghum as a biofuel investors should keep an eye on as the Environmental Protection Agency (EPA) prepares for its final approval of the grain for ethanol production. Unlike corn, it does not compete with food crops, while environmentally, its footprint is rather small. What are your thoughts on sweet sorghum?

Jim lane: It's an excellent rotation crop with sugarcane, highly suitable for Brazil for example - it can grow during the off-season for cane.

Oilprice.com: What is the environment like for biofuel investments? What biofuels are receiving the most investment and which countries are the biggest investors.

Jim lane: All sectors have been doing pretty well of late, though companies that make intermediates have market flexibility and have been doing especially well. Ditto for those who can make chemicals as easily as fuel. US by far is the biggest investor, though China is coming along.

Oilprice.com: An innovative study by Zah et al. which was commissioned by the Swiss government found that most (21 out of 26) biofuels reduce greenhouse-gas emissions by more than 30% relative to gasoline. But nearly half (12 out of 26) of the biofuels—including the economically most important ones, namely U.S. corn ethanol, Brazilian sugarcane ethanol and soy diesel, and Malaysian palm-oil diesel—have greater aggregate environmental costs than fossil fuels. How do you respond to this?

Jim lane: We need more data and less assumption-based modeling. It all comes down to how you count indirect land-use change. The models are hugely sensitive to untested assumptions. What is needed is a credible data-set of land use, and a model that can predict real outcomes.

Oilprice.com: What is your opinion on electrofuels? Do you believe that they are the future of biofuels?

Jim lane: They are a fascinating opportunity to get around the limitations and inefficiencies in photosynthesis. Right now we are going through a promising round of investments from ARPA-E - we'll have to wait and see if the data looks good.

Oilprice.com: Do you believe that the new process developed by researchers at the Michigan State University, which claims to increase the energy recovered from corn in the production of ethanol by 2000%, could prove a hero of the biofuel industry and see its rise to become a major source of transportation fuel?

Jim lane:  I doubt there will be much more corn ethanol capacity building.

Oilprice.com: A lot of people are talking about algae biofuels and how researchers should be focusing their attention here. A recent study put out by the respected energy research firm SBI predicts a compound annual growth rate of 43.1% and a $1.6 billion market in 2015 for algae biofuels. That is double digit growth for the emerging industry. What are your thoughts on algae biofuels? Should more research be focused on algae than crops like corn, sorghum, switchgrass, etc..?

Jim lane: The DOE has a funding opportunity next year focused on algae yields, and that's welcome, and for now that is what is needed. With respect to other feedstocks - they all deserve research on stress tolerance, pest resistance, and yield improvement .
Oilprice.com: Some start-up companies are abandoning biofuels and are instead using the same processes to make higher-margin chemicals for products such as plastics or cosmetics. Do you see this as a growing trend amongst biofuel producers?

Jim lane: The poorly-financed ones will have to go this route - and why not? It's all the same barrel of oil they are replacing, whether it is the top of the barrel, economically, or the bottom.

Oilprice.com: The US Navy recently paid $26 a gallon for the biofuel it used in the RIMPAC exercises, and the Air Force paid $59 a gallon. What are your thoughts on such extravagant spending?

Jim lane: They need to test and certify the fuels, and the quantities are small. Remember, they need marine military spec fuel, this isn't stuff you can draw off the same pump used for land transport.  If you ordered the same quantity of fossil fuels, it would cost the same as they are paying for advanced biofuels. When it goes to commercial volume, the costs will be the same as fossil fuels.

Oilprice.com: Do you believe the shale revolution and improvements in oilfield extraction technologies will affect investments in biofuels?

Jim lane: Two things we are already seeing. There's a tremendous uptick in interest in GTL/biofuels and CTL/biofuels mixes - where you get the price attributes from the one and environmental attributes from the other. We're also likely to see more effective distribution of CO2 for enhanced oil recovery, and that's a feedstocks delivery system for biofuels as well.

Oilprice.com: Jim, thank you for taking the time to speak with us.

For those of you who wish to learn more about biofuels please take a moment to visit Jim’s superb website at: www.BiofuelsDigest.com

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  • Cliff Claven on October 03 2012 said:
    Jim Lane offers quite a collection of opinions completely unsupported by facts. "Cellulosic biofuels offer 8-1 and 9-1 net energy returns. Passive algae farming offers even more." If this were true, not only would cellulosic and algal fuels already be surging in the marketplace instead of still being created in boutique quantities at a loss, but people would be using algal biodiesel and cellulosic ethanol to fuel their biofuels production instead of using petroleum. The truth is that the EROIs of both cellulosic and algal fuels are far below 1:1, and they drive even lower when the extra processing step of hydrotreatment is applied to make the true hydrocarbon "drop-in" fuels that the airlines and military must have. Corn ethanol only achieves a 1.25:1 EROI, and that is by parasiting off of the 8:1 or better EROI of natural gas for fertilizer and petroleum for herbicides, pesticides, farm machinery fuel, and milling and distillation plant process energy. Corn's starches are much richer in energy content than cellulose, and that is why a human can live on a corn diet, but will starve on grass without the four stomachs of a cow and the dedication of all waking hours to grazing and chewing cud. Cellulosic EROI is at least a factor of 3 below corn. UT-Austin has found that just the energy needed to circulate water in an Algae raceway consumes 7 times the energy in the final biodiesel product. Here are some references of many out there published by universities and government labs. Be very wary of investment brochure science and promises of entrepreneurs looking for investors. (Some sources: 1. Hill,et al. “Environmental, Economic, and Energetic Costs and Benefits of Biodiesel and Ethanol Biofuels.” Proceedings of the National Academy of Sciences 103, no. 30 (2006): 11206; 2. Patzek, T. “A Probabilistic Analysis of the Switchgrass Ethanol Cycle.” Sustainability 2, no. 10 (September 30, 2010): 3158–3194. http://www.mdpi.com/2071-1050/2/10/3158/; 3. Clarens, Andres F., Eleazer P. Resurreccion, Mark A. White, and Lisa M. Colosi. “Environmental Life Cycle Comparison of Algae to Other Bioenergy Feedstocks.” Environmental Science & Technology 44, no. 5 (March 2010): 1813–1819. http://pubs.acs.org/doi/abs/10.1021/es902838n; and 4. Murphy, et al. “Energy-Water Nexus for Mass Cultivation of Algae.” Environmental Science & Technology 45, no. 13 (July 2011): 5861–5868. http://pubs.acs.org/doi/abs/10.1021/es200109z.)
  • Jim Lane on October 04 2012 said:
    Thanks, "Cliff", for the comments, although it is regrettable when people hide behind pseudonyms, and I have to wonder who peed in your corn flakes this morning.

    An article in Sustainability, http://www.mdpi.com/2071-1050/3/12/2413/pdf is a good place to start for EROI on cellulosic biofuels.

    The ranges seen in that peer-reviewed article (which discusses the differences between EROI calculation systems) gives a range of 0.78:1 to 17.8:1 for cellulosic ethanol. The 8 or 9 figure I generally use is roughly in the middle there.

    Different authorities differ strongly on the exact numbers, however they all generally agree that there is a much stronger EROI for cellulosic biofuels. If "8 or 9" isn't your flavor, that's understood - but why be such a sourpuss about it?

    And I really suggest that, if you are going to point to an article from Sustainability, you look at the Dale/Patzek article rather than just the Patzek data, which is an outlier on the low side. The former really goes through the assumption systems in an illuminating way - and credit to both Ted Patzek and Bruce Dale for undertaking the effort.

    Having said that, I have no idea why anyone would take the view that simply looking at energy returns is a predictor of which systems should and will be scaled - biofuels or otherwise.

    If EROI were the only consideration, I expect we would live in a world of 100% nuclear. Social factors, cost of capital, state of technical readiness, risk, distribution of resources and demand - all of these are important factors too. Consider the case, for instance of the much-maligned Solyndra - killed by market factors, rather than problems in the technology.

    With respect to algae-based biofuels, I referred to passive algae farming - which does not include circulating water in a raceway.

    I certainly wish to express that the format of this Q&A is not conducive to long recitations of data from peer-reviewed literature. If it comes off as "a collection of opinions completely unsupported by facts," I regret that, but that's the nature of the Q&A format which OilPrice.com uses here. I find myself a little dumbfounded by the hostile and belittling nature of the comment and its author.

    Observations such as the size of the corn crop, the timing of biofuels capacity deployment, the rise in interest in GTL/biomass hybrid fuels, the rotation attributes of feedstocks such as sweet sorghum - these are generally agreed data. There's no reason to get so hostile.

    For those who want a more in-depth examination of the issues and the data,
    they are discussed in far more depth each day in Biofuels Digest. And many thanks to oil price.com and James Stafford for posing a good series of questions that looked at a wide range of challenges and opportunities for this class of fuels.

  • Dennis Miller on October 04 2012 said:
    Interesting Q&A. I suggest that both Jim Lane and Jim Stafford look at Solena Fuels website, where they will learn that Solena Fuels has orders for its highly efficient and cost effective biofuels plants from most major airlines in the world and a major ocean freighter company for our sustainable FT Diesel fuel. The first biofuels plant using a plasma gasification system and process will be commissioned in London for British Airways. This plant uses a waste biomass or RDF feedstock, no food crops, and produces 70 million gallons per year of biofuels roughly a 50-50 biojet fuel and sustainable FT Diesel fuel, as well as bionaphtha, and sufficient renewable power, so the plant is energy self-sustainable with some for export to the grid. The biofuel when oxidized in either a jet or diesel engine produces no SOx or particulate matter, very low GHG emissions, of which the CO2 is carbon neutral, and no ash. The biofuels are sold at the spot market price for JP8 or JETA 2 and the diesl at the spot market price for ultralow sulfur diesel.
  • Randy White on October 04 2012 said:
    We experimented with using human manure to propel red wiggler populations, offsetting toilet flushing water for sorghum fuel crops powered by worm castings. It's a triple win for the environment that helps farmers flip from conventional to organic methods while giving them a three-year profit crop (sorghum) and after can go back to food crops when the organic farm is experiencing high yields without petroleum inputs.

    More about it is here: http://tedxsoma.com/UAjK/tedxsoma-randy-white-the-sharing-economy-plan-b-for-moving-america-forward/

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