Ten years ago, ethanol was one of the hottest commodities on the market. Americans (especially those in Congress) had fallen in love with the idea that we could make a renewable, plant-based fuel to replace oil. You mean I can power my car with corn and sugarcane? That sounds like a great way to stay away from foreign oil and be (sort of) green.
Today, that picture is quite a bit different. Ethanol is no longer broadly viewed as a pro-American or particularly green fuel. In fact, Congress introduced legislation last month that would counteract 2005’s Renewable Fuel Standard, a policy that required incremental increases in the standard percentage of biofuels blended with gasoline (today it’s about 10 percent).
Why did ethanol fall out of favor? A big part of the change is probably due to the massive natural gas boom, which has gone a long way toward making the U.S. energy independent. But ethanol has had its own problems. The overwhelming majority of ethanol in the U.S. is made from corn, but corn has plenty of other uses. And though anyone who has driven through Iowa would have trouble believing it, there actually isn’t enough corn to sustainably produce ethanol.
Corn ethanol is created from the plant’s sugars and starches (in other words, the good stuff) which means that those same corn kernels can also be used for corn oil, corn syrup, livestock feed and many other functions. These other customers create demand for the corn which ultimately makes ethanol too costly to produce on a large scale. The same is true for ethanol derived from sugarcane or other valuable crops.
But sugars and starches aren’t the only parts of a plant that can be used to create ethanol. It is also possible to use cellulose, an inedible component of almost every plant. Since the cellulose is found in the undesirable portion of a plant (i.e. corn stalks and husks rather than kernels), it makes for a widely available, cheap feedstock. That’s why many are calling cellulose the future of ethanol, and perhaps the future of biofuels in general.
There is a catch, however. Any bootlegger can turn corn kernels into alcohol, but creating ethanol from cellulose is much more difficult. Only a few companies, such as Massachusetts-based Mascoma, have figured it out. Using proprietary technology, Mascoma introduces bacteria to materials such as wood and agricultural waste to create cellulosic ethanol. The final product is identical to corn ethanol, but the method and feedstocks are much more sustainable and scalable.
How big will cellulosic ethanol’s impact on the renewable fuels industry be? The answer depends in part on Congress’s decision about the Renewable Fuel Standard, but a sea change has already begun.
Jake Navarro is a senior consultant for Greenough. Send him an email at email@example.com