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Alternative Fuel Market Still Small - 3/22/08

Hobert Pruitt
Beyond Fossil Fuel Columnist

Due to soaring oil prices, climate concerns and dwindling oil reserves, alternative fuel is getting a great deal of interest. Biofuels account for only a tiny part of the overall fuel market. Biofuel sales reached $25.4 billion in 2007. Fuels including biodiesel, ethanol and synthetic crude are growing in popularity, but still only account for 2.6 percent of the total fuel output in 2006. Even with government support, alternative fuels are not likely to exceed more than 5 percent of the market by 2015.

Marc Levinson is a senior commodities research analyst for JP Morgan. Referring to the U.S. Renewable Fuel Standard which raised targets on biofuel consumption, he said there is “no way” the U.S. biofuel industry will be able to meet the targets. He believes the U.S. biofuel industry could either find more efficient ways to covert plant matter into biofuel or import from countries like Brazil. They are a heavy producer of sugar that can be used to produce ethanol.

Critics of biofuels believe the use of food for fuel is adding to higher commodity prices, which is causing a depletion of food supplies.

There have been advances in producing biofuels from nonfood biomass and waste matter which could help the situation. The most promising is cellulosic technology; Cellulose is a glucose generating complex carbohydrate found in the walls of plants. Cellulose can be extracted from many types of agriculture waste as well as wood pulp, wheat stalks, and algae.

Novozyme a Danish company has discovered a biomass eating bacteria capable of breaking down cellulose quickly. This bacteria is already in use by a number of ethanol concerns including Abengoa Bioenergy and Abengoa of Spain.

Xethanol a U.S. company is converting citrus waste into ethanol using enzymes and yeast for fermentation. They have recently broke ground on a plant in Florida with the capacity to convert citrus waste into 500,000 gallons of cellulosic ethanol a year.

Choren Industries a German company, partnered with Royal Dutch Shell, will build the first dedicated biomass to liquid commercial plant. The plant will produce a second generation synthetic diesel fuel from biomass including wood pulp and waste which will be known as SunDiesel.

I believe the biofuel made from food is a very big mistake; it has already caused increases in food cost and will continue to affect other unrelated food like wheat. Biomass should be the only source used in the production of ethanol.

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