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Moving 'advanced biofuels' from labs to marketplace

This article first appeared in the St. Louis Beacon, April 19, 2011 -WASHINGTON - It's made from a strange brew of ingredients that include recycled cooking oils, animal fats and soybean feedstocks.

The recipe may not sound either appetizing or cutting-edge, but biodiesel -- a fuel represented by a Missouri-based trade group -- was the first officially declared "advanced biofuel" to reach commercial-scale production in this country, despite problems when its tax credit lapsed.

While corn ethanol is still the 800-lb. gorilla of biofuels, the federal government is trying to move beyond that product -- which has environmental drawbacks -- into a new realm of advanced biofuels that burn cleaner and are easier on the landscape. Biodiesel, first produced in the 1880s as the original fuel for the diesel engine, is not the cleanest biofuel -- but its history gave it a head start over fuels now being made in smaller quantities from other organic material. 

And as lawmakers on Capitol Hill debate whether to renew the tax credits for corn ethanol this year, they also are discussing possible ways to provide more incentives for advanced biofuels -- whether made from switchgrass, algae or even garbage -- that are not yet commercially viable.

"Our goal is to have a renewable fuel industry that operates in all parts of the country," Agriculture Secretary Tom Vilsack recently told a Senate panel. "We have programs in the Northwest looking at biomass; programs in the Southwest looking at algae; programs in the Southeast looking at grasses and landfill waste."

But Michael J. McAdams, president of the Advanced Biofuels Association, told the Senate panel that the current biofuels tax policy is unfair and inconsistent, rewarding corn ethanol but not promising areas such as algae-derived biofuels.

The tax system "penalizes many producers such as algae and other second-generation biofuels," McAdams told the Senate Environment and Public Works Committee.

U.S. Rep. Russ Carnahan, D-St. Louis, agrees that "there should be parity for all the biofuels" in terms of federal subsidies. He told the Beacon that he has sponsored legislation "to get [tax-credit] parity for algae-based biofuels. St. Louis has become a national center for this technology."

Advanced Biofuel Research

Indeed, a research coalition -- the National Alliance for Advanced Biofuels and Bioproducts -- led by the Donald Danforth Plant Center in St. Louis was awarded $44 million last year to develop a systems approach for sustainable commercialization of biofuels (such as renewable gasoline, diesel and jet fuel) and other products derived from renewable biomass resources.

The alliance is using resources from companies, universities and national laboratories to try to break down barriers to the commercialization of algae-based and other advanced biofuels such as green aviation fuels, diesel and gasoline that can be transported and sold using today's existing fueling infrastructure.

That is one of many projects sponsored by the U.S. Energy and Agriculture departments to try to jump start advanced biofuels to help meet what may be overly ambitious renewable fuel standard targets for such fuels.

In St. Joseph, Mo., a new $31 million "cellulosic fiber" pilot plant -- which will use stalks of switchgrass to make ethanol -- is expected to open this year with the goal of producing about 250,000 gallons of the biofuel anually. The facility, operated by Kansas-based ICM Inc., is one of several projects to find the best chemical process, technology and feedstock to produce cellulosic ethanol.

And on Friday, the Energy Department's Biomass Program and USDA's National Institute of Food and Agriculture announced that they will offer $30 million over the next few years to "support research and development in advanced biofuels, bioenergy and high-value biobased products."

"Advanced biofuels produced from these projects are expected to reduce greenhouse gas emissions by a minimum of 50 percent compared to fossil fuels and will play an important role in diversifying America's energy portfolio," the Energy Department said in the announcement.

Federal Incentives Are Needed, Industry Says

While there is a lot of excitement about the potential of advanced biofuels, the experience of biodiesel during a lapse in its tax credit offers an example of what can happen when an industry loses its incentives.

A couple of years ago, the $1 a gallon tax credit for biodiesel temporarily expired. Even though it was eventually reinstated -- applying to all biodiesel produced last year and through the end of this year -- that lapse caused lots of problems in the industry.

U.S. Sen. Roy Blunt, R-Mo., said that negative impact in Missouri of the uncertainty about the biodiesel tax credit is a cautionary tale about the importance of incentives. "We have lots of Missouri families that lost lots of money and jobs" as a result of that biodiesel lapse, the senator said in a conference call last week.

A biodiesel industry official told the Beacon that the lapsed tax credit caused uncertainty in the industry, with some plants suspending operations or closing in the interim, and an estimated 12,000 jobs lost because of the tax uncertainty and the economic recession.

The National Biodiesel Board (NBB), the fuel's trade association based in Jefferson City, is now trying to advance the fuel and maintain its tax breaks. According to the group's website, Missouri has five active biodiesel plants, with three more under construction; Illinois has five plants, including one in the Metro East area, in South Roxana.

"Things look much better for 2011 and beyond, with the tax credit back in place," an NBB spokesman said. The organization's vice president for federal affairs, Manning Feraci, said in written testimony to the Senate panel that "we have production capacity, an ample supply of raw materials and a fuel that is widely accepted in the marketplace."

But even though the biodiesel industry is recovering -- producing several hundred million gallons of biodiesel last year -- environmental groups say it is not the ideal advanced biofuel because it does not burn particularly cleanly and producing its raw materials uses up land and other resources.

"There's relatively limited potential for biodiesel from seed crops like soybeans. It's not a very efficient way to use land," said Roland Hwang, who directs the transportation programs of the Natural Resources Defense Council. He told the Beacon that the NRDC would prefer "renewable diesels, where you would take a waste material and convert it to gas or ferment it to make a diesel-like molecule," which would burn cleaner.

According to the biodiesel trade group's "sustainability worksheet," biodiesel reduces the emissions of life-cycle carbon dioxide (a greenhouse gas) by about 78 percent over standard diesel. Also, the exhaust emissions of particulate matter (a human health hazard) from biodiesel are about 47 percent lower.

Making 'Cleaner' Ethanol a Priority

While corn ethanol is by far the most important biofuel, hundreds of scientists and companies are working on ways to improve the fuel.

"There are ways to improve ethanol to make it cleaner and more sustainable," said Hwang. "Corn ethanol can be made cleaner but there's no incentive to do so."

One idea would be to convert the current tax credit for corn ethanol -- which is under fire in Congress as being too expensive and perhaps not needed -- and convert it into a "performance-based" ethanol subsidy. "The incentive levels should be set in a manner that reflects the benefits it provides," suggests Hwang.

While corn ethanol is made from parts of the kernel, the corn industry also could provide the raw materials for an advanced ethanol -- such as the cob, the stock and other parts of the kernel -- that might be used to make a "cleaner" ethanol.

"We need to move beyond corn ethanol to more sustainable feedstocks to produce ethanol," said Hwang. "The problem now is that these projects are not yet at commercial levels; they are pilot projects."

The St. Louis-based National Corn Growers Association backs research into advanced ethanol but contends that -- for the time being -- corn ethanol "is the only viable solution we have today to help with our country's energy security and independence."

Last fall, the Corn Growers joined several other crop and ethanol associations -- including the Renewable Fuels Association -- in urging Congress to expand incentives for advanced biofuels while retaining the ethanol tax credits.

"We believe that as we look to extend incentives for ethanol and incentives to support infrastructure, we must continue to support efforts that help the next generation of ethanol overcome commercialization hurdles. To this end, we call on Congress to pass legislation expanding the [cellulose-derived] biofuels producer tax credit, which includes a broader range of eligible advanced biofuels including algae, and the ability to allow developers to elect a refundable 30 percent investment tax credit."

Some lawmakers, including Sen. Barbara Boxer, D-Cal., chairman of the Environment and Public Works panel, say they would prefer to shift the emphasis of federal incentives to promote and speed the development of advanced biofuels.

In fact, the renewable fuel standard -- currently met mostly by corn ethanol (which accounted for 12 billion of the 12.95 billion gallons of biofuels required last year) demands an increasing percentage of advanced biofuels. By 2022, only 15 billion gallons could come from conventional corn ethanol; the other 21 billion gallons would have to come from advanced biofuels.

That's why the USDA and Energy Departments have been awarding grants to a slew of advanced biofuel projects across the country. But no one is sure how long it will take for some of those pilot project to become commercially viable, especially if the government incentives are uncertain.

Given the right incentives, McAdams of the Advanced Biofuels Association asserted, "advanced biofuels can make an immediate contribution to the nation's energy diversity and security."

Rob Koenig is an award-winning journalist and author. He worked at the STL Beacon until 2013.