Scientists question whether subsidies will wean America off fossil fuels
By MITCH LIES
Outwardly, little distinguished two Alaska Airlines flights that departed Seattle Nov. 9. The flights, however, marked what may be the beginning of a new era in aviation.
The flights -- one to Washington, D.C., and the other to Portland -- were the airline's first powered by biofuels. Alaska plans to use a 20 percent blend of biofuel in a total of 75 Boeing 737 flights.
Though the fuel costs about five times as much as fossil fuels -- regular jet fuel costs an average of $4.92 a gallon -- company officials said the flights were an attempt to show farmers and biofuel processors that demand exists for the alternative jet fuel.
Use of the alternative fuels -- the jet fuel was made from used cooking oil -- will reduce greenhouse gas emissions and reduce the industry's exposure to volatile aviation fuel prices, airline officials said.
Michael Hurd, director of environmental strategy for Boeing Commercial Airplanes, said the technology behind aviation biofuels has advanced dramatically in recent years, giving rise to the hope it may someday be economically feasible to power jets with alternative fuels.
Just six years ago "the idea of powering airplanes with biofuels seemed like a fantasy," he said. "It's going to be a long journey, but we're off to a great start."
The enthusiasm comes at a time when a public debate swirls around biofuels. Once seen as a way to wean the nation off fossil fuels -- including crude oil imported from the Middle East and other politically unstable regions -- concern over rising food prices has taken the center stage. Field corn, a staple used for sweeteners, food ingredients and animal feed, is also the main feedstock for ethanol. And two recently released scientific studies have called into question the subsidies and policies that support renewable energy, especially ethanol.
The flights occurred a little more than a month after the National Research Council concluded that meeting the renewable fuel standards authorized by Congress in 2007 will drain federal funds and have mixed economic and environmental effects.
"Only in an economic environment characterized by high oil prices, technological breakthroughs and a high implicit or actual carbon price would biofuels be cost-competitive with petroleum-based fuels," the council stated.
The council stated that biofuels produce both positive and negative effects on water quality, soil and biodiversity.
"However, air-quality modeling suggests that production and use of ethanol to displace gasoline is likely to increase air pollutants, such as particulate matter, ozone and sulfur oxides," the council's summation stated.
Biofuel backers say the study, sponsored by the USDA, the Environmental Protection Agency and the Department of Energy, missed its mark.
"It is discouraging to see the National Research Council miss an opportunity to cast the renewable fuels standard in the proper light," said Brooke Coleman, executive director of the Advanced Ethanol Council. "The most glaring problem is the council analyzed the ongoing development of the biofuels industry in a vacuum, as if these fuels are not displacing the marginal barrel of oil, which comes at great economic and environmental cost to the consumer."
Coleman downplayed the report's conclusion that absent technological innovation, the industry was going to have a hard time hitting the cellulosic ethanol target of 16 billion gallons a year by 2022.
"We've been saying that for years," he said. Cellulosic ethanol -- alcohol made from wood and other inedible plants -- is not yet commercially available.
The question, according to critics, is how long, and even if, mandates for using the fuel and tax credits for producing it should remain in place.
"From my perspective, the renewable fuel standard is a positive in that it is encouraging production of motor fuel in the United States," said Tomas Endicott of Willamette Biomass Processors, an oil seed crusher in Rickreall, Ore.
"Those are jobs," Endicott said. "That is economic development. That is money that is staying in the United States."
The biofuel industry is mandated to produce 36 billion gallons a year by the 2022 target date. In addition to the cellulosic mandate, production capacity of corn ethanol must increase from the current 13 billion gallons a year to 15 billion gallons. Biomass-based biodiesel production must reach 1 billion gallons, and 5 billion gallons of noncellulosic "advanced" biofuels capacity must be in place.
Expansion of ethanol production capacity comes at a steep price, according to a report released last week by Oregon State University.
"A typical 100 million-gallon ethanol plant provides an estimated 45 jobs," wrote Bill Jaeger, the lead author of the report. At the current 45-cent-a-gallon subsidy, that is "the equivalent of $1 million per job per year."
Jaeger is a professor in the agricultural and resource economics department at OSU.
States also provide subsidies to ethanol plants. On top of the federal ethanol subsidy, state programs, subsidies for startups and investments, total $1.05 to $1.38 per gallon, according to the OSU report.
Jaeger and co-author Thorsten Egelkraut question the cost-effectiveness of biofuels, adding that the fuels would only slightly decrease fossil fuel use and likely increase greenhouse gas emissions.
John Talbott, director of the Western Regional Sun Grant Center in Corvallis, Ore., said subsidizing new technologies is often necessary to get them off the ground.
"All new technologies initially require some public investment," Talbott said.
Talbott believes the industry has used the incentives wisely to date and is on the verge of becoming cost-competitive with fossil fuels.
"We're just on the cusp of that final technological development that says, 'Hey guys, this is a no-brainer if we get this figured out,'" Talbott said.
Brent Searle, an official with the Oregon Department of Agriculture who has tracked the biofuel industry for years, said the technology is advancing but not as rapidly as anticipated.
"People have been saying the technology is getting better for quite a while," Searle said.
"In fact it is," he said. "But not as fast as it was hyped."
In the meantime, criticism aimed at the industry for raising food prices is largely misplaced, he said.
"People make the false assumption that we have a set pie (of corn) and we're carving off a portion of it for ethanol," Searle said.
The fact is, Searle said, corn acreage has increased since ethanol came on the scene, and the distillers' grains left after ethanol production still are going to animal feed.
Also, he said, increases in corn exports to China have displaced some of the corn that formerly was available for livestock feed.
The reality is, Searle said, ethanol has had only a minimal impact on the price of food.
That said, Searle believes the use of corn for fuel has nearly peaked.
"I don't think it will drop off," he said. "But I think it is close to its peak."
Searle, like Talbott, believes that in coming years the biofuels industry will turn to nonfood crops, such as switchgrass and woody biomass, to produce biofuels.
Technological advancements in the production of cellulosic ethanol and biomass, Searle said, are being spurred in part by the U.S. military's emerging interest in biofuels.
"It's like the space program," Searle said. "That drove a lot of technological advancements."
Agriculture Secretary Tom Vilsack recently said USDA is partnering with the Department of Energy and the U.S. Navy to work toward using biofuels in military planes and ships.
Last spring, President Barack Obama directed the Navy, Air Force and other federal agencies to focus their efforts on securing advanced fuels that can power jets and commercial planes.
Obama's directive means farmers and foresters will need to produce either biomass or nonfood crops like switchgrass or oilseed crops like canola and camelina for use as fuel.
In recent years, farmers have been reluctant to grow camelina, canola and other crops for use as fuels, primarily because of strong prices for other crops.
"The competition has been the price of wheat," said Clark Gilman, a project manager for Harvesting Clean Energy. "With wheat prices up, folks have been reluctant to swap it out."
Also, Gilman said, swapping out wheat for an unknown, like camelina, isn't something growers can do overnight.
"Some growers expect to spend up to five years figuring out how to put a new crop like this into their rotation," Gilman said. "That's not turning on a dime."
Gilman believes the science of converting crops and trees to biofuels is not the limiting factor in advancing the industry.
"It is less about the technology and more about how do you scale up a change like this," he said.
Kent Madison, an Eastern Oregon farmer, has been growing canola since the early 1990s as a rotation crop on his irrigated farm. He installed a canola crusher in 2006.
Madison said he sells canola for food oil except when the price falls below 16 cents a pound. At that price, he can make more by crushing it, selling the oil to Sequential Biofuels in Salem and utilizing the state's 5-cents-a-pound tax credit.
"Below 16 cents, it becomes cost-effective to turn on the plant," he said.
"This year we didn't do that," he said. "We sold it straight to the Canadians for the cooking oil market."