Biofuels or Biofolly?

The Department of Energy today announced grants of up to $78 million to support advanced research and development of biofuels and fueling infrastructure to replace petroleum products. “By harnessing the power of science and technology, we can bring new biofuels to the market and develop a cleaner and more sustainable transportation sector,” said Energy Secretary Steven Chu.

But only a few days ago, researchers at Rice University blasted U.S. biofuels policy, noting that despite generous subsidies–amounting to $4 billion in 2008–biofuels have replaced a mere two percent of gasoline production. The cost to consumers for biofuel was almost $2 a gallon on top of the retail price for gasoline.

Further, the report claimed, “it is uncertain whether existing biofuels production provides any beneficial improvement over traditional gasoline” in terms of greenhouse gas emissions. And the biofuels create potential hazards to human health by impeding the natural breakdown of other toxic chemicals, such as benzene, in the groundwater.

So is U.S. biofuels policy nothing more than a biofolly? Yes and no if you believe the Rice University report (which was funded by Chevron, but is consistent with many other studies). The problem isn’t with biofuels in principle, but with corn-based ethanol, which accounts for nearly all current U.S. biofuel production. Growing corn to make ethanol is of debateable value because it requires extensive energy and produces greenhouse gases from soil clearing and tillage.

But if we can transition to a next generation of biofuels, based on hardy weeds, crop residues, waste wood products (such as beetle-killed trees) or even algae, the environmental benefits begin to look far brighter. Unfortunately, the economics so far look a lot dimmer–which is where the DOE’s research grants may come to the rescue.

Intriguingly, one Bay Area company–Cobalt Biofuels–yesterday announced with great fanfare the launch of a facility in Mountain View to begin producing biobutenol, a versatile fuel that can be blended with gasoline or diesel and converted into jet fuel or even plastics. The company claims cost breakthroughs that will allow it to produce the fuel for only $1.40 a gallon by 2012. Biobutenol delivers more energy than ethanol and is less polluting. And, most important from an environmental standpoint, Cobalt’s feedstock isn’t food crops but forest waste and mill residues.

Cobalt’s claims, like so many before from the biofuels industry, may prove more than a tad optimistic. But DOE and Cobalt are on the right track by moving beyond traditional corn-based ethanol to greener biofuels.

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