Qi BioEnergy

Global Insight, Inc., the world’s leading company for economic and financial analysis and forecasting, says in its study, “The Biofuels Boom: Implications for Automotive, Agriculture & Energy,” that more than 100 billion gallons of bioethanol and biodiesel will be produced globally per year by 2030, an amount equal to more than 15% of the world’s motoring fuel needs. Among several major conclusions about current and future technologies, the study reports that

• Projected technological improvements could result in biofuels representing 15% of the global motor fuel demand and as much as 35% of demand in the United States and Brazil
• Corn- and sugarcane-based feedstocks will remain the lowest-cost sources of bioethanol in the world
• Automotive manufacturers do not require technological breakthroughs to adapt to reasonable levels of biofuels and that they can and will respond to clear direction in the area of biofuels

Non-food crops, such as jatropha (a succulent perennial that produces oil seed) grown on marginal lands, and pond-grown algae, will become important sources of biodiesel fuel, reducing dependency on edible oils, such as soybeans, canola and palm, the study reported. The study also found that biodiesel levels of 5% are possible in virtually all vehicles and that new vehicles can be developed to accept blends up to 30%.

The comprehensive study was conducted by Global Insight’s Agriculture, Automotive and Energy Groups who worked with some 20 companies and organizations representing different perspectives of the biofuels industry. The Global Insight team included Dr. Gil Rodgers, senior director of the Energy Group; Philip Gott, director of the Automotive Consulting Group, and Stewart Ramsey, director of Agriculture Services. The international study was released recently at a conference in Monaco sponsored by the Fondation Prince Albert II de Monaco.

Additional information on the results of “The Biofuels Boom: Implications for Automotive, Agriculture & Energy” are available by going to www.globalinsight.com/biofuels.

The world’s biggest maker of ethanol from sugarcane juice, may begin commercial production of the fuel from the tropical plant’s cellulose as soon as 2012, an executive at Dedini SA said.Dedini, the world’s largest builder of mills to process sugarcane, is already producing the biofuel in small amounts from the fibrous waste that is left over when the cane juice is extracted, said Operations Vice President Jose Luiz Oliverio. Dedini is making the cellulose ethanol at the same cost as biofuel from sugarcane juice, he said.

Dedini aims to start building commercial cellulose mills in five years, allowing producers to take advantage of cellulose- rich waste, known as bagasse, to boost output of the biofuel. The breakthrough would let Brazil increase ethanol yields from its sugarcane crop, already the world’s cheapest and most- productive source of the biofuel per acre.

“I’m optimistic,” Oliverio said yesterday in an interview in Sao Paulo. “We are close to getting there.”

In its first experimental project, Dedini produces 100 liters (26 gallons) of ethanol from bagasse a day for about 25 cents per liter, the same as ethanol made from cane juice, Oliverio said.

The larger commercial mills that the company plans to start building in five years could produce 50,000 liters of cellulose ethanol daily, he said.

The reason is simple: Feedstock costs alone account for a full 75% to 80% of the cost of ethanol produced from residual biomass, whether it comes from sugarcane, wood chips, switchgrass or corn husks, said Isaias de Carvalho Macedo, a researcher at the country’s Interdisciplinary Center for Energy Planning, or NIPE, at the University of Campinas.

At the same time, Brazil already has much of the logistical infrastructure in place to collect the excess sugarcane mass, or bagasse, which will also cut down on initial costs, said Helena Chum, a senior adviser at the U.S. National Renewable Energy Lab.

“In the U.S the harvesting of corn stover and all that infrastructure still needs to be put in place,” she said. “Here in Brazil, it already exists.”

Together, Brazil and the U.S. jointly produce more than 70% of the world’s ethanol. However, Brazil is the world’s lowest-cost ethanol producer and the leading ethanol exporter.

If new ethanol technologies take off, Brazil could almost double its ethanol output - set to hit over 20 billion liters in the ongoing 2007-08 season - to 36 billion liters per harvest, without expanding planted area beyond its current 6 million hectares, said Nilson Zaramella Boeta, the head director of Brazil’s leading private cane research center, the Center for Cane Technology, or CTC.

Just a handful of years back, it cost $6 per gallon to produce ethanol from residual biomass in the U.S., Chum said.

“Now it’s fallen to about $3 per gallon in 2007, while the cost of producing enzymes has fallen 20-fold in the past four years,” she said.

“Enzymes have to cost about 5 U.S. cents per liter here in Brazil, just for us to begin thinking of its economic viability,” said Elba P.S. Bon, the scientific coordinator of Brazil’s Bioethanol Project. “Right now, 12.4 U.S. cents per liter,” she added.

By 2012, if the cost-cutting trend continues, the cost of producing ethanol via cellulosic technologies could slip to a cost-effective $1 per gallon, said Chum.

Corn-based ethanol may not be long for this world, but farmers should feel good about what the future holds for renewable energy, a Nobel laureate in physics said Wednesday.

“Corn is not the right crop for biofuels,” said Steven Chu, director of the Lawrence Berkeley National Laboratory in California. Chu won the Nobel Prize in physics in 1997 and is co-chairman of a study on sustainable energy by an international scientific council.

Chu and his California team of researchers are trying to develop new fuels that will be dramatically more efficient to make than either corn-based ethanol or soybean-based biodiesel.

The new fuels would use other feedstocks — such as grass — that would become alternative crops for farmers.

“It’s not as if corn prices will crash,” Chu said.

Currently, corn is the least costly feedstock for making ethanol. The ethanol demand has more than doubled corn prices in the last two years, raising concerns about its effects on food prices.

But within five to 10 years, Chu said, scientific discoveries and refining processes could improve enough to move grasses, woody substances and waste to the head of the line for making fuels. Some grasses could provide five times the amount of fuel from an acre as corn.

Unlike corn, many of the feedstocks can be grown on marginal land not normally used for food crops.

“We should look at corn as a transitional crop,” Chu said.

The Chu research team, competing against four other universities in England and the United States, won a $500 million, 10-year grant to pursue energy innovation from the global energy firm BP, formerly known as British Petroleum. It is believed to be the largest grant ever offered by a private business.

Chu commented about the research prospects in an interview before speaking Wednesday to the 25x’25 energy alliance’s annual summit at the Embassy Suites Hotel in Omaha.

The alliance of more than 650 organizations and individuals wants 25 percent of the nation’s energy — at least 10 times more than today — to come from renewable sources by the year 2025.

Corn has benefited from decades of intense research to improve productivity and crop yields, while grasses have been largely neglected in research, Chu said.

Researchers can insert dozens of genes into grass plants to make them easier to break down for refining, Chu said. Within a decade, cellulosic ethanol production should become efficient and replace corn-based ethanol.

The result should be good for agriculture, Chu said, allowing corn prices to moderate and giving farmers options about what to grow. Livestock producers will benefit, he said, from less volatile prices for the corn they buy for feed.

Scientific research also could come up with new ways to convert feedstocks into energy, creating fuels with properties different from ethanol or biodiesel.

Chu said he does not know whether existing ethanol plants could be remodeled to produce the fuels of the future, although refining processes would have similar concepts.

Ideally, he said, the countryside would be dotted with fuel-producing plants that would be connected by pipelines that transport the fuel to market. Currently, all ethanol is trucked to markets sometimes thousands of miles away.

“There will be a market for biofuels both here and abroad,” Chu said. “What we are doing (in research) should be very, very good for agriculture.”

Cellulosic ethanol will miss 2007 energy act renewable fuels targets in 2015 and 2022, unless commercial breakthroughs come faster. That is according to US Energy Information Administration chief Guy Caruso. Caruso told the Senate energy committee, ethanol from non-edible plant material, versus corn, will fall short of targets mandated in the 2007 energy act, triggering EPA adjustments in the renewable fuel standard in 2016 and 2022. �Instead of 36 billion gallons in 2030, we are, in this outlook, assuming or projecting, 32-point-5�and the main reason for that shortfall is the assumptions on the ability of the cellulosic portion of that ESA requirement to be met.
But Caruso admits if breakthroughs in commercialization of cellulosic ethanol come faster, within a year or two, EIA�s forecast could change. Extending biofuels tax credits this year would also help. Still, Caruso says renewables is now the �fastest growing� part of the energy mix in his annual forecasts.
Caruso credits the renewable fuels and higher mileage standards, and appliance energy efficiencies in the energy act with reducing not just greenhouse gasses, but for the first time, EIA�s oil import forecast. �The net import share of total liquid supplied, including crude oil and refined products, is significantly impacted by ESA 2007, dropping from 60-percent in 2006 to 51-percent in 2022.� Or down by 2-point-4 million gallons per day, but EIA predicts oil prices not adjusted for inflation could still average 113 dollars a barrel in 2016, 185-dollars by 2030.