03-25-09 by dugan
There’s no doubt that the ethanol industry is in trouble. Credit crunch, ugly recession, and roller-coaster energy prices that spook investors. The Des Moines Register has a good rundown today on cellulosic ethanol startups that can’t get private investors to finance commercial-scale plants. One puzzling thing–a chief problem cited in the story is that cellulosic ethanol is just too expensive. And the main source for that conclusion is… the American Petroleum Institute:
Al Mannato, a fuels issues manager at the American Petroleum Institute, expects only just 1 million to 5 million gallons of cellulosic ethanol to be on the market in 2010. The Environmental Protection Agency will be forced to reduce the 100-million-gallon requirement next year, and the mandates for the next two or three years will be difficult to reach, too, he said. "We know how to make cellulosic ethanol. We don’t know yet how to make it economically," Mannato said.
Just who is this "we," Kemosabe? (To quote Tonto). Cellulosic ethanol that isn’t produced in fully commercial quantities, over time, will never be economical, and it can’t get to that scale and duration without investment in both research and production. It’s like the $4-per-tomato plant in a backyard pot. "Economical" is also a matter of comparison with fossil fuel prices, which soared last year and then crashed. The API’s judgment also obviously excludes the dollar worth of carbon reduction.
The members of the American Petroleum Institute, the oil industry’s loud voice in Washington, have deep reserves left over from the oil profit orgy of the last couple of years–unlike the biofuels industry, which doesn’t generally produce its own raw material. Members of API also have a strong interest in suppressing or at least slowing biofuels, no matter what their greenwashed advertising tells us. The industry’s spending on the clean fuel they profess to love is a couple of cents at most on every dollar of their production budgets—and even there, the industry definition of alternative fuels includes petroleum products as well as renewables.
So, yes, the cellulosic fuel industry is stalled. But we can’t let the petroleum industry write its obituary, or we’ll all be even more over the barrel as the price roller coaster spikes upward again.