On Wednesday, BP anounced a joint venture with Verenium to build the world’s largest cellulosic ethanol facility.  BP’s total investment—now $112.5 million—will be the largest by an oil company in advanced, non-food-based biofuels.

The Florida-based plant would be 25 times larger than Verenium’s existing (and operational) cellulosic ethanol facility in Louisiana, which began operation earlier this month and is expected to produce 60+ million gallons of cellulosic ethanol per year when at full capacity. This new, larger facility is schedule to break ground in 2010 and commece operations in 2012.

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What’s the catch? For this fuel to be economically viable, oil will have to stay above $90 per barrel (oil is currently hovering around $42 / barrel).

Key points from the study include:

• Researchers picked middle range assumptions for their estimates. ”We didn’t pick the most optimistic assumptions or the most pessimistic.”
• The $90 per barrel figure is based on a few important assumptions: 91 gallons of ethanol can be produced from a dry ton of biomass, building a cellulosic ethanol plant would cost $3.60 per gallon of capacity, and plants would pay an average of $40 per dry ton of feedstock.
• 90 million gallons would surpass the federal mandate of 36 billion gallons of renewable fuel be produced by 2022

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As most of the first generation corn ethanol world has started to exit stage left in a loud and raucous way, the pioneers of second generation cellulosic ethanol — what I like to call “celluline” — have been quietly conducting dress rehearsals for their grand entrance.

And now the world of cellulosic ethanol has an honest-to-goodness demonstration plant to prove that it works. The plant will produce 1.4 million gallons of ethanol a year. Although it’s not at the commercial scale yet (60+ MGY), this represents a huge leap forward for second generation ethanol, which to this point has been full of promises but lacking on deliverables.

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We’re not counting the Olympic Station that sells B20 to mostly fleet vehicles and trucks or the op-op that used to operate in SoMa. Here, we have an honest to goodness B100 (or rather B99.99999) biodiesel station for autos. All the Mercedes and converted vehicle owners can rejoice at not having to drive to the East Bay or San Mateo to fill up their tanks. Even better, we can all rejoice at the fact that the station owners get their fuel not from GMO corn or switchgrass or any food but rather from San Francisco’s own waste grease program, so we can all be proud when consuming those greasy fries.

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The Des Moines Register reported the other day that Iowa’s ethanol plants contribute 15 Percent — 7.6 million metric tons out of a total of 52 million metric tons — of greenhouse-gas emissions found in the state’s new inventory of major manufacturers, businesses and power plants.

Iowa’s Department of Natural Resources found that the largest portion of the state’s overall emissions came from fermenting grain at the plants and not from burning natural gas or coal. In addition, burning biomass such as switchgrass at various industrial plants added another 0.13 million metric tons.

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Who Is Joe the Plumber?

If you watched last night’s debate, you heard the question: What will you do in your first term to reduce our dependence on foreign oil?

Did either candidate actually answer the question? Not really. But here’s why McCain’s answer of offshore-drilling-nuclear-power-wind-solar-geothermal-natural-gas is completely bogus:

1. Offshore drilling won’t do anything for 10 years. And then it still won’t do anything.

Even the Department of Energy says oil from those areas won’t arrive anytime soon. It projected last year that with the ban in place until 2012, new drilling would produce only 7% more oil in 2030, and the impact on oil prices would be “insignificant.”

Despite McCain’s adamant endorsement of offshore drilling as a solution, no new oil would be produced from new wells anytime soon. Even if we started drilling tomorrow, it would have zero effect on gas prices for the next 10 years, and then after that still probably wouldn’t affect them.

The proposal that offshore drilling is somehow a solution to foreign oil dependence is such crap, I’m almost convinced we should start drilling everywhere so we can prove definitively how little difference it’s going to make. Hell, let’s drill in ANWR too while we’re at it and maybe we can drop the price of a barrel of oil a few cents by 2025.

At least then we can prove how stupid even the Department of Energy thinks this entire proposition is:

Drilling in ANWR makes perfect sense, since it would supply 876,000 barrels of oil per day to a country that consumes 20,687,000 barrels of oil per day. To put that in perspective, 876,000 barrels is about 1 hour worth of oil, or over the course of a year amounts to about 15 days of US oil consumption.

Win/Lose?: LOSE

2. Nuclear power will not do anything to solve our dependence on foreign oil.

The first new nuclear power plant would not be finished until well after John McCain’s (God forbid) second term as president. Even if we started building new nukes tomorrow, the only way they could replace the 12,036,000 barrels/day of petroleum we import (NET) would be to turn it into electricity or hydrogen. Even if you think this is a good idea, you’d have to believe in black magic to think this in some way is going to power the millions upon millions of gasoline and diesel-powered trucks already on the road.

Win/Lose?: LOSE

3. Wind, Solar, and Geothermal Power will not do anything in the short term to solve our dependence on foreign oil. Natural Gas won’t either.

I don’t think electricity sources like wind/solar/geothermal not replacing liquid fuels needs no more explanation. I’ve written about natural gas and natural gas vehicles before:

Taking a look at data from the Energy Information Administration, the US uses about 21.6 trillion cubic feet of natural gas per year, most of which is produced domestically (18.5 trillion cubic feet) with the difference being imported (4.2 trillion cubic feet). Proved natural gas reserves in the US amount to about 211 trillion cubic feet. If my math is correct, without taking into account any increase in demand, the US only has about 11.5 years of natural gas left. After that, we’re back to square one: importing natural gas from Russia, Qatar, Iran, and Saudi Arabia*

* If you have government/university data that contradicts it, please comment.

Even if natural gas vehicles are a good idea, they still aren’t going to replace all the cars and trucks already on the road.

Win/Lose?: LOSE

To sum this up: McCain’s plan as he stated it in the debates would do absolutely nothing to reduce our dependence on foreign oil or reduce gas prices at the pump. Sorry Joe.

The alternative: How do we really cut petroleum usage?

The only actual mention of options that have the near-term potential to reduce our dependence on any oil source came from Obama. The two things he mentioned beyond pandering to the drill-baby-drill crowd were a) biodiesel and b) rebuilding our auto industry to start building fuel efficient cars.

Let’s look at each of these:

1. Biodiesel

I’ve written extensively about biodiesel before. Optimistically, biodiesel can in fact replace a small percentage of our total petroleum usage. Unfortunately, how it’s grown and produced is key to how beneficial it is. What really needs to be incented are the advanced feedstock technologies that increase productivity and aren’t made from food crops, like biodiesel made from algae and other alternative feedstocks.

Win/Lose: Depends on how it’s implemented.

2. Fuel efficient cars

Boosting production of fuel efficient cars in a way that would create millions of new jobs and pump money into the US economy is a great idea. While this may not be something that has an immediate effect, it could be accomplished faster than any kind of transition to other fuels.  Obama wants to provide $7,000 tax credits for advanced fuel and efficient vehicles and put 1 Million Plug-In Hybrid Cars on the Road by 2015.

Win/Lose: WIN

What Both Candidates Missed Completely

If you want to pump money into the short term solutions for reducing our consumption of petroleum, there are only a few ways to do it:

Ultimately, We only have 3 options for reducing our dependence on foreign oil:

1. Reduce consumption.
2. Provide a direct replacement.
3. Develop technology that doesn’t need oil.

If we work hard, we might be able to cut 1/3 of our consumption with each.

Obama has already pledged to work towards these, but I don’t understand why he didn’t take the opportunity to seal the deal in these debates: tell the American people that we have already developed the technology to produce a $2 per gallon gasoline-replacement, we can grow it from sources that don’t affect food prices, and the money created goes back into the American economy.

It’s called cellulosic ethanol - WAIT! - the type not made from corn! The type that has about 15 potential technologies to produce it that are almost ready for primetime. The type that has the potential to replace 30% of our total petroleum usage! The type that could actually sequester carbon, and reduces greenhouse gas emissions by up to 95%! The type that Obama has already pledged to support:

Obama will invest federal resources, including tax incentives, cash prizes and government contracts into developing the most promising technologies with the goal of getting the first two billion gallons of cellulosic ethanol into the system by 2013.

2 billion gallons isn’t going to solve our oil addiction, but it’s a hell of a good start, and it’s really the only option for a directly replacing oil that we’ve got. Combined with drastically cutting consumption and rapidly implementing new technologies like plug-in hybrids, it’s our best bet to actually change the game now.

Win/Lose: WIN

>> More on Obama’s Energy Plan: Obama Campaign Seeks to Make Oil Prices Irrelevant

But don’t take it from us:

• Obama’s Energy Policies
• McCain’s Energy Policies

Australia’s Commonwealth Science and Research Organization (CSIRO) reports that lignocellulose, a component of plants and wood, could potentially be used as a cheap fuel—as inexpensive as $40-60 a barrel.

Even better, lignocellulose biofuels are compatible with current facilities. All they need for conversion is an extra unit in front of any existing sugar biofuel facility.

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Dutch firm Green Fuel Systems, along with several other companies, has developed flex-fuel conversion kits for the Toyota Prius that cost less than $1,000. Converting our existing fleet to second-generation ethanol could be the best near-term play to directly replace fossil fuels.

Although the concept of a hybrid/biofuel combo has been around for a while, it has (at least in our minds) mostly been in the form of diesel hybrids running on biodiesel (which isn’t going to happen). But what if we could take America’s most fuel efficient car and convert it to run on another domestically-produced renewable fuel: cellulosic ethanol?

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Sheesh. It seems that everybody and their brothers are ethanol experts these days. But what drives me nuts is that when people are talking about ethanol, they don’t seem to know what type of ethanol they’re talking about.

It’s sad because the widespread misinformation and misunderstanding is killing popular opinion for biofuels in general right now and, in particular, mercilessly destroying the good name of the second generation of ethanol — cellulosic ethanol.

The truth of the matter is that cellulosic ethanol will be made from non-food sources (miscanthus, switchgrass, wood waste, and even garbage) that can be grown on marginal land or is already a waste byproduct of society.

The production of cellulosic ethanol could have huge benefits beyond energy independence:

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The money will be distributed to Verenium over the next 18 months, with a likelihood of further investment and cooperation beyond that point. Under the agreement, BP will have broad access to Verenium’s research, production facilities, and technology.

Although relatively late to the fray, BP thinks this investment gives them the “most advanced technology for transforming [cellulosic material] to biofuels,” as Sue Ellerbusch, president of BP Biofuels North America said.

Verenium claims to have the edge in cellulosic ethanol production through genetic engineering of the microbes required to turn the cellulosic material (switchgrass, wood chips, sugarcane bagasse, miscanthus) into ethanol.

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Much attention has been given to producing ethanol from non-food crops like grasses, but the ability to produce something indistinguishable to diesel from grass could be a game-changer. It would require almost no infrastructure change and could fuel all of the existing long-haul trucks on the road without modification.

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Ceres, Inc. supports the prediction that we could grow more than 30% of US transportation fuel with dedicated energy crops. This is no pipe dream: planting starts next spring.

Ceres, Inc., the self-described “energy crop company,” is engineering plants that could play a big role in the future of sustainable biofuels. In stark contrast to food crops, what Ceres is in the business of creating are “dedicated energy crops”—like switchgrass, sorghum, and miscanthus—that are ideally suited for fuel production.

While the global “food vs. fuel” debate rages on, a few companies like Ceres are quietly moving forward with next generation technology that challenges many of the current assumptions about growing fuel. In their view, it’s time to move the conversation on from corn-based controversy to second-generation, non-food based sources of ethanol.

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Tomorrow, General Motors is hosting a backgrounder on cellulosic ethanol feedstocks at the Thousand Oak (CA) based laboratories of Ceres, Inc.

Coverage of non-food based ethanol tends to focus on fuel production technologies, but Ceres works one step further up the supply chain: they’re using genetic technology to engineer plants optimally suited for conversion into something you’d want to put in your gas tank.

I’ve already had the chance to speak with Richard Hamilton, President and CFO of Ceres, about the potential to produce super-strains of perennial grasses like sweet sorghum and switchgrass, and I’m looking forward to hearing more details tomorrow.

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Ethanol is an alternative biofuel that can be made from corn, sugar cane, or switchgrass. In fact, Henry Ford’s first mass-produced automobile was designed to run off of 100% ethanol, so the fuel has a long history in the car industry. When added to gasoline, ethanol reduces ozone formation by lowering volatile organic compounds and hydrocarbon emissions.  This all sounds good, but there is controversy surrounding corn-based ethanol. Michael Grunwald of Time reports that one person could be fed for a year “on the corn needed to fill an ethanol-fueled SUV”. Some research demonstrates that the production of corn ethanol consumes more energy than it yields, and there is concern that corn-based ethanol is raising the price of food, although the USDA denies the increase is significant.

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No, I’m not talking about the demon-possessed hot rods (I think we all saw that coming). I’m talking about America’s zombie-like loyalty to a certain cash crop — one that has turned our entire nation into the children of the corn.

Lately, of course, you can’t watch, read, or listen to the news without someone touting the benefits of corn ethanol and how it’s the key to leading us on a path of energy independence.

There might be a *cough* kernel of truth to that argument, but… (sorry, I suffer from a cousin of Tourette’s that requires me to uncontrollably shout out useless puns)…

Seriously, corn is not the answer. It’s not even a major part of the answer. In fact, it’s a major part of the problem.

What do I mean? Well, lend me your *cough* ear (jeez, the medication is wearing off quicker)…

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USDA geneticist Ken Vogel commented that the study demonstrates switchgrass’s potential to be a major renewable biofuel that reduces GHGs and could “potentially displace 30 percent of current U.S. petroleum consumption.”

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"It’s a proven technology, but in an unproven environment," said Mr. Butcher, 27. "The idea of growing energy crops is not necessarily a new one; the idea of growing them on distributed sites on vacant land, in an urban context, is kind of a new idea."

Kind of. It’s happening elsewhere, in dribs and drabs. Monroeville’s Cardinal Resources plants poplar trees, which suck up toxic waste, at manufacturing sites around the country, but doesn’t convert those plants into fuels. In Los Angeles, a design team funded by the Annenberg Foundation has turned a 32-acre rail yard into a massive cornfield and garden. But that project, dubbed "Not a Cornfield," is more urban artwork than laboratory. The closest parallel can be found in Michigan, where Michigan State University researchers are turning a 2-acre dump site into land for biodiesel and ethanol crops.

Using plants, enzymes, fungi, or microorganisms to depollute contaminated areas isn’t an entirely novel concept. Phytoremediation - using plants to clean up the soil - has been practiced for centuries. Due to general increases in industrial pollution and the sheer potential of the idea, using naturally and (more recently) genetically-engineered organisms to ameliorate pollution has gained special emphasis in the last 20 years.

The CMU group is taking the next logical step in bioremediation by attempting to create a usable byproduct, in this case fuel:

GTECH [Growth Through Energy and Community Health], a nonprofit that sprang out of a master’s thesis, is hoping to bring all of the divergent threads together, stitching a strategy that will cleanse contaminated industrial land, occupy vacant urban plots and produce renewable fuels, the last of which happens to be one of the hot political topics du jour.

Test crops already have been planted. At the former LTV Steel site in Hazelwood, the GTECH crew has taken over six barren acres of fill and planted hybrid poplar trees, switchgrass and sunflowers. The first two can be reduced into cellulosic ethanol — that is, ethanol that isn’t corn- or grain-based — while sunflowers become conventional biodiesel.

Testing several types of crops is important, since each plant removes different contaminants. For example, ragweed and poplar trees sequester lead. Barley and sugar beets excel at removing salt and have commonly been used to desalinate agricultural land. Naturally occurring bacteria can be harnessed to assist in cleaning up oil spills. And sunflowers are apparently well-suited to remove arsenic and uranium from soils - just in case you had a chemical explosion or a nuclear meltdown.

It’s also important to find crops with properties conducive to making biofuels. Growing ethanol- or biodiesel-producing crops on contaminated land bypasses the food vs. fuel issue and could make more land available for cultivation.

But it isn’t clear that any of these crops will actually work for the intended purpose, especially on really polluted sites. Will it take a succession of several different crops or polyculture to fully remediate the soil? Will the plants even grow under such poor conditions? And more importantly for the project, will the biofuels meet ASTM fuel standards, considering the contaminant load they could contain?

"We’re not growing on even farmland, which is hard enough to grow on," said Ms. Koch, 33. "We’re growing on vacant properties, which are usually demolished houses that have brick and glass and cement and rebar and all kinds of terrible things. [Crop] quality is going to be a concern," especially in the first years. It’s a concern at Michigan State, too. Will the end product meet industry standards — and, should they come to pass, federal standards — for what makes usable biofuel?

Time will tell.  In any case, it’s a great idea, and the group deserves a nod:

"You’re going to see a lot more land, whether it’s a brownfield or otherwise, get utilized for crops like that. I wouldn’t be surprised to someday see all the highway grass be switchgrass instead," he said. Rather than paying PennDOT workers to mow grass along the sides of highways, farmers or biofuel companies might bid for the rights to harvest the switchgrass, which sprouts perennially and grows well in poor soil and cooler climates.

CMU grads want to use blighted industrial, residential sites to produce bio-fuel crops. July 10, 2007. Post-Gazette.
Wikipedia: Phytoremediation
Wikipedia: Bioremediation

Photo Credit: Post-Gazette

Outside of the juicy profits awaiting corporations like ADM thanks to the combination of U.S. farm subsidies and $60-plus-per-barrel sweet light crude, the ethanol frenzy offers more questions than answers. First, there is the questionable energy payback: some studies say ethanol yields more energy than it requires to produce ("The Energy Balance of Corn Ethanol: An Update"), while others say it's a net negative energy source ("Ethanol Fuel from Corn Faulted as 'Unsustainable Subsidized Food Burning'").

There are other concerns as well: more fuel-crop fields mean fewer forests, grasslands and natural ecosystems, higher agricultural water demands, higher food-and feed-crop prices, and more intensive monocropping on already severely depleted soils. Too many questions, too few answers.

A more responsible approach would be to immediately start jacking up fuel-efficiency standards ("Fuel Economy: The Single Most Effective Step for Cutting Oil Dependence") while investing in serious R & D for all alternative fuels and energy sources. Of course, that approach isn't a gravy train for corporate share-holders, so I won't be holding my breath.