The future of advanced biofuels lies in supporting ethanol and biodiesel today, according to several industry representatives testifying on Washington's Capitol Hill last week.
Last Wednesday, in a United States House hearing of the Small Business Committee's subcommittee on rural and urban entrepreneurship, representatives tackled what role small businesses will play in expanding biofuel production.
Most of the nation's ethanol production currently is derived from corn, but cellulosic ethanol can come from inedible materials such as corn stalks, wood chips and switchgrass.
Biodiesel production has also seen a transformation where energy can now be harnessed from cooking grease and non-virgin oils.
While these production methods hold considerable promise, obstacles persist to small businesses engaging in large-scale production of these second-generation biofuels.
Witnesses called for a range of small business-friendly federal policies to spur development of technologies and the removal of barriers to producing this clean energy.
The US farm bill included a $1.01 blender's credit for cellulosic ethanol, more than twice the current 45 cents/gal blender's credit for corn-based ethanol.
Jeffrey Trucksess, executive vice president of Green Earth Fuels, urged a long-term extension of the credit that provides $1/gal of biodiesel produced from virgin oils and 50c/gal of biodiesel produced from recycled oils.
The House recently passed the Energy & Tax Extenders Act of 2008, which prolongs the biodiesel tax incentive for 12 months. The Senate is currently working on a tax extension package.
Future of cellulose
Tom West, vice president of business and community support at Pioneer Hi-Bred, said second- and third-generation technologies are much closer to commercial reality than people believe.
"We all feel strongly that the current energy bill and the new RFS (renewable fuel standard) is a necessary flywheel for the current corn ethanol transition to keep investors interested in second- or third-generation biofuels," he said.
Some skeptics believe cellulosic ethanol is another 10 years away, but that timeline may be dramatically accelerated, said Kelly Lindenboom, vice president of communications for Verenium, a company that focuses on finding the right feedstock to convert into ethanol.
One of the biggest obstacles facing future success is bringing down the cost of cellulosic production.
"Financing for new starch ethanol plants is difficult to obtain and almost impossible for new, unproven technology like cellulosic ethanol," said Robert Wooley, director of process engineering for Abengoa Bioenergy.
Abengoa is designing a hybrid facility to be built in Hugoton, Kansas, that will produce 88 million gallons a year of starch-based ethanol and 12 million gallons a year of cellulosic-based ethanol.
"The launching of the second-generation cellulosic industry will only be possible through first-generation (starch-based) cash flows, know-how and infrastructure," he said.
Based on published US Department of Agriculture data, a recent Biotechnology Industry Organisation report concluded that farmers could supply more than 200 million dry tons of corn stover annually.
This is enough feedstock to double ethanol production from America's corn acres.
Much of this biomass will be processed at existing ethanol facilities retrofitted to handle cellulosic feedstocks in addition to grain.
"That's why the infrastructure being developed for today's ethanol industry is so vital to the next generation as well," Jack Huttner, Genencor vice president for biorefinery business development, explained.
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