The past two years have been turbulent for the US ethanol industry.
The first generation of the fuel—produced from corn grown primarily in the Midwest—was once trumpeted as the country’s solution for energy independence and a job-generator for the rural heartland.
But then corn-based ethanol production became caught up in a debate over whether farmland should be used for fuel rather than food. It was blamed for soaring crop prices, demonized by environmentalists for its questionable green credentials and widely cited as an example of wasteful government subsidies. Ultimately it was market forces that caused the ethanol industry to collapse in 2008, with a production glut that destroyed profits.
It made a tentative recovery last year as the US economy stabilized. Another boost may come later this year when the Environmental Protection Agency is due to rule on whether to allow as much as 15% of ethanol to be blended into US petrol.
However, President Barack Obama’s administration is still holding out hope for a big breakthrough in second generation cellulosic ethanol, fuel made from non-food crops such as switch-grass and other plant fibers, which sidesteps the food versus fuel debate and is more efficient and less damaging in terms of carbon emissions. Switch-grass for example produces about five times the energy that it takes to grow.
The Obama administration is also promoting research into other second-generation fuels, such as those produced from by-products or industrial waste. Last year it set aside $564m from the economic stimulus program for projects to produce bio-fuel from raw materials such as non-corn kernel starch and algae. The promotion of bio-fuels such as cellulosic ethanol has long formed a key part of the government’s energy policy.
No US company producing bio-fuel from non-food crops, by-products or industrial waste is yet making significant commercial sales. The economy downturn is partly to blame. It also reflects the technical complexity of next-generation bio-fuel production. The US’s failure to pass cap-and-trade legislation, which would put a price on carbon emissions, has not helped.
The big question is when this activity will make next-generation bio-fuel commercially viable. It is likely to be at least a decade before the Exxon-Synthetic Genomics collaboration is ready to take products to market. The lack of distribution infrastructure is another problem.