Harnessing the transformative potential of the cellulosic ethanol industry
In the ongoing debate about biofuels, it sometimes seems that confusion is the only certainty. There is a widespread lack of public understanding about everything from terminology to technology, and this can negatively impact public opinion, which is crucial to the future of this industry.
For those of us working in the industry, the lack of clarity in the public debate can be frustrating, as the potential of cellulosic ethanol as a source of sustainable energy is enormous. According to the EPA, 95% of the world’s transportation energy comes from petroleum-based fuels, and the IEA reports that transport accounted for 23% of the world’s CO2 emissions from fuel combustion in 2012. Looking ahead, the IEA estimates that the global car fleet will more than double by 2050, and – according to most projections – ICEs (internal combustion engines) will continue to play a substantial role in powering this future fleet. So that makes two things very clear: first, reducing emissions in the transport sector can have a material impact on reducing overall CO2 emissions now and in the future and second, doing so requires liquid fuels with considerably lower CO2 emissions than the emissions associated with fuels derived from petroleum.
Its potential role in reducing current and future emissions is part of what makes cellulosic ethanol such a transformative technology: multiple studies demonstrate that cellulosic ethanol can reduce CO2 emissions substantially compared to conventional gasoline. Estimates range from around 80% in a well-to-wheels analysis by the JEC consortium up to as much as 130% in a 2010 figure from the EPA.
And this potential for reducing CO2 emissions is matched by the production potential of cellulosic ethanol. According to a report just published under the aegis of the Scientific Committee on Problems of the Environment (SCOPE), “lignocellulosic biomass in the form of energy crops, agricultural wastes and forest residues represents the most abundant source of renewable biomass” The same report states that lignocellulosic biomass could produce over 400 billion liters of cellulosic ethanol per year, and points to “growing evidence that bioenergy production in poor rural areas can help improve economic growth, job security, market development, food quality and security.”
Reaching the “Plateau of productivity”
With a number of commercial plants now in operation, the cellulosic ethanol industry has made major breakthroughs, but – given all the potential described above – some people are asking why it’s not maturing much faster. An answer was put forward by Sebastian Søderberg – our VP for Biomass Conversion here at Novozymes – in a recent interview. Using the route to maturity of solar and other clean-tech industries as examples, Sebastian showed how Gartner consultants’ “Hype Cycle” applies to many such emerging technologies, including cellulosic. The cycle identifies five key phases in a technology’s life, and – according to Sebastian – our industry is currently in the “Trough of disillusionment”, a phase that naturally follows the “Peak of inflated expectations” that comes with the arrival of any new technology. The final phase of the cycle – the “Plateau of productivity” – is the goal that everyone in this industry wants to reach as soon as possible. To get there, we need to identify and overcome the key hurdles that are slowing down the growth of our industry.
Playing catch up on the cost curve
Emerging technologies are generally at an economic disadvantage compared to incumbent technologies, largely due to the fact that incumbent technologies have had years or even decades to optimize processes and lower the overall industry cost curve. This is especially true in commodities and cellulosic ethanol is no exception. Although a number of plants are now operating at commercial scale, the industry is still awaiting proof that these technologies are meeting capacity and OPEX targets, hence the sense of disillusionment. But it’s crucial that we in the industry remember that the disillusionment is just a phase in the cycle, and that we continue to work together to put the conditions in place that will take us into the next phase: “The slope of enlightenment”.
So what are those conditions? Taking a number of other industries as examples, including solar, wind power, and even shale gas, it’s clear that new technologies – especially those with significant potential benefits – CO2 reduction, for example – need some form of regulatory support, such as mandates and/or tax credits, to “level the playing field” against incumbent technologies.
Levelling the playing field
Attempts to level the playing field – while generally welcome – need to take a realistic view of how long it takes to build an industry. Regulators and policy makers need to understand that it’s a marathon rather than a sprint, and a shifting regulatory landscape creates uncertainty. That’s why stronger, long-term regulatory frameworks are crucial to attract the kind of larger institutional investors we need to take our industry into the next phase.
In the meantime, our industry must continue to attract and retain the attention of the visionaries – those who both understand the transformative potential of cellulosic ethanol and have access to risk-willing capital. Sebastian Søderberg recently paid tribute to one such visionary – Guido Ghisolfi of Beta Renewables. Sebastian pointed out that the hallmark of all such visionaries is their persistence, and I believe this is a quality that everybody in our industry needs to have. We need to keep making the case – with one voice – for the transformative potential of cellulosic ethanol and for the stable and consistent regulatory support needed to attract investment into the sector and make the transformative potential a reality.
Our goal with this blog is to get input from everyone who wants the industry to succeed on how we can move it forward. I’d like to start by getting your input on this issue. Use the comment section below to share your views on what steps we can take as an industry to communicate the transformational potential of cellulosic ethanol. We’d also like to know which form of regulatory support you think would help most in levelling the playing field for cellulosic ethanol.
And make sure to follow the Think Bioenergy blog and share widely with your colleagues, so we can work together to move this industry to the next level.