Scaling Up Is Hard to Do

Transportation has a voracious appetite for energy. In 2008, the world consumed 1.3 trillion gallons of oil, most of it converted into gasoline and diesel and used to power vehicles. If biofuels or batteries are to satisfy a significant fraction of that appetite, production of these alternative power sources must be boosted significantly.

Cellulosic ethanol offers potential economic and environmental advantages over the corn- and sugar-derived ethanol that makes up the bulk of today’s biofuel, and it should be a more scalable technology, because a wide variety of biomass can be used for feedstock (see “Petroleum’s Long Good-bye”). But to date, it remains expensive, in that huge capital investments are required. The largest project under way to produce advanced biofuels is Range Fuels’ wood-to-ethanol plant in Soperton, GA, which is scheduled to begin operating early in 2010. The plant is being built with the assistance of $76 million in grants from the U.S. Department of Energy and an $80 million loan guarantee from the U.S. Department of Agriculture. It will initially produce just 10 million gallons of ethanol per year–a drop in the bucket compared with the 138 billion gallons of gasoline consumed annually by vehicles in the United States.

Producing advanced biofuels on the scale of tens of billions of gallons per year will mean financing several hundred commercial-­scale biorefineries at a net cost of roughly $250 billion. For investors in cellulosic ethanol to get a fair return on their money, the cost of oil would have to rise to $90 (and possibly as much as $120) per barrel, according to a joint study by Sandia National Laboratory and General Motors. Short of that, government support will be required to promote investment, in the form of tax breaks and mandates of the sort included in the Energy Independence and Security Act of 2007, which calls for 36 billion gallons of renewable fuel to be incorporated into the annual U.S. fuel supply by 2022 (see “Washington Backs Plug-ins”).