Program to get fuel from plants just failed. Here’s how

Source: John Fialka, E&E News reporter • Posted: Monday, July 16, 2018

The nation’s most ambitious program to reduce greenhouse gas emissions from gasoline has failed despite a bipartisan, 11-year effort that has cost taxpayers and companies billions.

While the effort to produce cellulosic ethanol from wood and plant wastes was intended to reduce U.S. reliance on ethanol made from corn and other food sources, it has actually increased it.

Those were the findings that EPA quietly delivered to Congress earlier this month amid the turmoil of former Administrator Scott Pruitt’s departure.

Some industry experts complain that flawed EPA regulatory decisions under Pruitt played a key role in the failure, but cellulosic ethanol’s problems took shape during two previous administrations as companies grappled with the scientific challenges and changing economics that made the fuel too expensive to produce in volume.

It started as a goal in the George W. Bush administration to produce as much as 16 billion gallons of cellulosic ethanol by 2017. It was supposed to cut greenhouse gases by as much as 90 percent, measured against “reformulated” gasoline, which usually contains 10 percent ethanol. What came out of pipelines last year, according to a statement by Derrick Morgan, senior vice president of American Fuel & Petrochemical Manufacturers, was a mere trickle: 10 million gallons.

“For perspective, that was enough fuel to satisfy approximately 40 minutes of U.S. fuel consumption last year,” Morgan noted, asserting that “cellulosic biofuel mandates” set by EPA under a 2007 law “are unachievable.” He blamed an “array of market, technology, cost and logistics challenges.” The United States uses almost 200 billion gallons of transportation fuels each year.

“Corn grain and soybeans remain by far the dominant feedstocks for biofuel production,” the EPA report to Congress concluded, noting that those crops have “adverse environmental and source conservation impacts.”

The EPA report, which was mandated by Congress, described problems that the 2007 law, called the Energy Independence and Security Act, was passed to avoid. But in the decade after the law was passed, acreage planted with soybeans and corn went up, partly driven by requirements set under the law to produce more ethanol, according to EPA.

Back in 2006, cellulosic ethanol had become a buzzword among U.S. environmental groups. They worried about greenhouse gas emissions from conventional ethanol facilities and the mounting pressure on land to grow food products for fuel. In April of that year, a possible solution found its way into President Bush’s State of the Union message: “We’re working on research — strong research to figure out cellulosic ethanol that can be made from wood chips or [corn]stalks or switch grass.”

“It makes sense for this government to spend money on development to find alternative sources of energy,” Bush asserted.

The result was a law, administered by EPA, with increasing annual mandates for cellulosic ethanol. But it contained a welter of confusing definitions, waivers and other possible actions. Two trade association executives say regulators under Pruitt used them to slow down the program.

“Pruitt’s the worst thing that’s happened to me in the 12 years I’ve been running this association,” said Michael McAdams, president of Advanced Biofuels Association. “At one point, I represented 65 of the coolest companies in the world who made advanced biofuels, and most of them are now out of business. I’m down to five of them.”

Three of the survivors are building plants to produce cellulosic ethanol in the United States. Two others chose to build plants in China and Sweden to avoid what they saw as disincentives in the United States. Still others are struggling to survive by selling non-fuel byproducts discovered during their research, such as soil additives or cosmetics.

Many of the companies went through painful bankruptcies. Part of their problem was a U.S. boom in oil production due to hydraulic fracturing technology that dropped the price of conventional oil. The oil boom was “a tremendous story for the U.S., but what that story doesn’t address is climate change,” McAdams said in an interview.

The idea behind the federal energy law was to provide credits called Renewable Identification Numbers (RINs) to companies that produced cellulosic ethanol under the mandates. Companies that didn’t produce the new product would have to buy RINs. But under Pruitt, EPA tripled the number of “hardship” waivers exempting refiners from the law, in a secretive process that was “arbitrary and capricious,” according to a lawsuit filed by McAdams’ group against EPA.

EPA staff had identified ethanol made from cornstalks as a promising cellulosic biofuel, and a report from Sandia National Laboratories estimated the United States could produce 75 billion gallons of cellulosic biofuels a year — enough to satisfy more than half of the nation’s gasoline demand.

But applications for RINs were being “held back by red tape” in EPA, complained Brooke Coleman, executive director of another trade association, the Advanced Biofuels Business Council. He testified before a House Energy and Commerce subcommittee last month.

The result, he said, was a “self-fulfilling prophecy” that stymied cellulosic ethanol’s entry into the gasoline market at a time when demand for gasoline is nearing record levels. Asked about Coleman’s testimony and McAdams’ lawsuit, an EPA spokesman declined to comment.

Cellulosic ethanol is made from lignin, part of the tough cellular structure that gives plants and trees their rigidity. There are promising ways to use organisms that produce enzymes to break down that cellular structure and extract the sugar to make low-carbon fuels. Under EPA rules, only organisms derived from algae and not bacteria could get RIN credits, according to McAdams.

He said EPA rules are also fussy about providing credits for processes that use wood wastes. The rules require producers to track and identify where the waste wood came from and deny support for wastes derived from wood pulping. That dissuaded one of McAdams’ members from building a plant in Maine, he said.

Instead, it went to Sweden, where there was more support and there were fewer restrictions. McAdams, who has replenished his organization with members that make other biofuels, such as renewable diesel oil, has given Congress a list of 21 proposed changes to the U.S. law to make cellulosic ethanol easier to make.

Two Democrats, Sen. Tom Udall of New Mexico and Rep. Peter Welch of Vermont, announced after the EPA report to Congress emerged that the present law should be clarified because it has resulted in a “host of adverse environmental impacts.”

To keep the mandates for cellulosic ethanol from expiring in 2022, “members of Congress and stakeholders from all sides of this issue should come together to ensure domestic fuels have a strong future in the U.S. economy,” they said.

Without congressional action, the future for cellulosic ethanol may depend on finding cheaper and faster ways to make it. Recently, scientists at the Department of Energy’s National Renewable Energy Laboratory (NREL) in Golden, Colo., announced two breakthroughs.

One of them uses genetic manipulation of bacteria to produce variant strains whose enzymes can break down lignin cells more quickly. Another is the discovery a new family of enzymes that holds promise for extracting the raw materials from various types of lignin to make valuable products such as nylon, plastics, various types of fuels and carbon fibers — materials that are currently derived from petroleum.

Lignin is abundant and cheap and has the potential of making products that emit relatively small amounts of greenhouse gases. According to one Department of Energy study, some types of ethanol made from corn or soybeans can reduce greenhouse gas emissions by as much as 40 percent, but cellulosic-based fuels can push the reduction above 90 percent.

The biggest chemical challenge is the varied structure of lignin among different plants, even in the same species. Gregg Beckham, who’s on a team of scientists working on that problem at NREL, explained in an interview that microbes and enzymes made by Mother Nature break down lignin, but the process takes months or years. Scientists are trying to speed up the process by using so-called bioreactors that use pressure and high temperatures. The team is also researching organisms that can break lignin down.

At the moment, the raw material for each product must be unlocked differently. The United States is not alone in confronting this puzzle, which Beckham calls “massive heterogeneity.”

Laboratories in Europe and Asia are also focused on it. “We have this massive set of mutually diverse lignin out there that we don’t fully understand, but there’s gold in them hills,” Beckham predicted.