Review of the Research Strategy for Biomass-Derived Transportation Fuels (Tcrp Report,)

Review of theResearch Strategy for

Biomass-Derived Transportation Fuels

Committee to Review the R&D Strategy for Biomass-DerivedEthanol and Biodiesel Transportation Fuels

Board on Energy and Environmental SystemsCommission on Engineering and Technical Systems

National Research Council

NATIONAL ACADEMY PRESSWashington, D.C.

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National Academy of SciencesNational Academy of EngineeringInstitute of MedicineNational Research Council



iv

COMMITTEE TO REVIEW THE R&D STRATEGY FOR BIOMASS-DERIVED ETHANOL ANDBIODIESEL TRANSPORTATION FUELS

DAVID L. MORRISON (chair), Office of Nuclear Regulatory Research (retired), Cary, North CarolinaGARY COLEMAN, University of Maryland, College ParkBRUCE E. DALE, Michigan State University, East LansingANTHONY J. FINIZZA, Atlantic Richfield Company (retired), Los Angeles, CaliforniaROBERT HALL, Amoco Corporation (retired), Winfield, IllinoisDONALD JOHNSON, NAE,1 Grain Processing Corporation, Muscatine, IowaROBERTA NICHOLS, NAE, Ford Motor Company (retired), Plymouth, MichiganDANIEL SPERLING, University of California, DavisSTEVEN H. STRAUSS, Oregon State University, Corvallis

Liaison from the Board on Energy and Environmental Systems

KATHLEEN C. TAYLOR, General Motors Corporation, Warren, Michigan

Project Staff

JAMES ZUCCHETTO, director, Board on Energy and Environmental SystemsMARY JANE LETAW, program officer and study directorCRISTELLYN BANKS, project assistant

1 NAE = National Academy of Engineering.



v

BOARD ON ENERGY AND ENVIRONMENTAL SYSTEMS

ROBERT L. HIRSCH (chair), Advanced Power Technologies, Inc., Washington, D.C.RICHARD MESERVE (vice chair), Covington and Burling, Washington, D.C.RICHARD E. BALZHISER, NAE,1 Electric Power Research Institute, Inc. (retired), Menlo

Park, CaliforniaEVERETT H. BECKNER, Lockheed Martin Corporation, Albuquerque, New MexicoE. GAIL DE PLANQUE, NAE, U.S. Nuclear Regulatory Commission (retired), Potomac,

MarylandWILLIAM L. FISHER, NAE, University of Texas, AustinCHRISTOPHER FLAVIN, Worldwatch Institute, Washington, D.C.WILLIAM FULKERSON, University of Tennessee, KnoxvilleROY G. GORDON, NAS,2 Harvard University, Cambridge, MassachusettsEDWIN E. KINTNER, NAE, GPU Nuclear Corporation (retired), Norwich, VermontROBERT W. SHAW, JR., Aretê Corporation, Center Harbor, New HampshireK. ANNE STREET, Alexandria, VirginiaJAMES SWEENEY, Stanford University, Stanford, CaliforniaKATHLEEN C. TAYLOR, NAE, General Motors Corporation, Warren, MichiganJACK WHITE, The Winslow Group, LLC, Fairfax, VirginiaJOHN J. WISE, NAE, Mobil Research and Development Company (retired), Princeton, New

Jersey

Liaisons from the Commission on Engineering and Technical Systems

RUTH M. DAVIS, NAE, Pymatuning Group, Inc., Alexandria, VirginiaLAWRENCE T. PAPAY, NAE, Bechtel Technology and Consulting, San Francisco, California

Staff

JAMES ZUCCHETTO, directorRICHARD CAMPBELL, program officerSUSANNA CLARENDON, financial associateCRISTELLYN BANKS, project assistant

1 NAE = National Academy of Engineering.2 NAS = National Academy of Sciences.





Acknowledgments

vii

The committee wishes to thank the representatives fromthe U.S. Department of Energy and the national laboratorieswho contributed significantly of their time and effort to thisNational Research Council study by giving presentations atmeetings and responding promptly to committee requests forinformation (see Appendix C). The committee also acknowl-edges the valuable contributions of organizations outside theU.S. Department of Energy that provided information rel-evant to the study. Finally, the chairman wishes to recognizethe committee members and the staff of the Board on Energyand Environmental Systems of the National Research Coun-cil for their hard work organizing and planning committeemeetings and for their individual efforts in gathering infor-mation and writing sections of the report.

This report has been reviewed by individuals chosen fortheir diverse perspectives and technical expertise, in accor-dance with procedures approved by the National ResearchCouncil’s Report Review Committee. The purpose of thisindependent review is to provide candid and critical

comments that will assist the authors and the NRC in mak-ing the published report as sound as possible and to ensurethat the report meets institutional standards for objectivity,evidence, and responsiveness to the study charge. The con-tent of the review comments and draft manuscript remainconfidential to protect the integrity of the deliberative pro-cess. We wish to thank the follow individuals for their par-ticipation in the review of this report: William G. Agnew,General Motors Corporation (retired); Dan Binkley, Colo-rado State University; David Bodde, University of Missouri-Kansas City; Toby Bradshaw, University of WashingtonCollege of Forest Resources; Robert Epperly, Epperly Asso-ciates, Inc.; Michael R. Ladisch, Purdue University; RonaldA. Sills, BP Amoco P.L.C.; Charles E. Wyman, DartmouthCollege Thayer School of Engineering.

While the individuals listed above have provided con-structive comments and suggestions, responsibility for thefinal content of this report rests solely with the authoringcommittee and the NRC.





Contents

ix

EXECUTIVE SUMMARY ............................................................................................................ 1

1 INTRODUCTION ................................................................................................................ 5Production and Manufacture of Bioethanol, 5Role of Government, 6Strategic Objectives for the Office of Fuels Development, 7Budget of the Office of Fuels Development, 9Study Goals, 9

2 CONTEXT FOR BIOMASS-DERIVED FUELS .............................................................. 11Historical Background and Public Policy, 11Advantages and Disadvantages of Biofuels, 11Alternative Fuels and Vehicle Technologies, 14Markets for Biomass-Derived Ethanol, 14Manufacturing Biomass-Derived Ethanol, 18Conclusions, 20

3 FEEDSTOCK DEVELOPMENT....................................................................................... 22Program Objectives and Overview, 22Allocation of Funding, 23Shift in Strategic Direction, 23Genomics, 24Conclusions, 26Recommendations, 26

4 PROCESSING TECHNOLOGIES .................................................................................... 27Program Objectives and Overview, 27Back to Fundamentals, 27Improving Conversion, 28Opportunities for Coproducts, 29Biodiesel, 30Conclusions, 30Recommendations, 30

5 CROSSCUTTING OPPORTUNITIES .............................................................................. 32Systems Analysis, 32Technology Integration, 32Increasing Links, 33Improved Peer Review, 33



x CONTENTS

REFERENCES ............................................................................................................................. 34

APPENDICES

A Biographical Sketches of Committee Members, 39B Office of Fuels Development Fiscal Year 1999 Budget, 41C Committee Meetings and Other Activities, 44D Barriers to Using Ethanol, 45E Major Components of a Poplar Genomics Initiative, 47



xi

Tables, Figures, and Boxes

TABLES

1-1 Funding Allocations for the Office of Fuels Development Biofuels Program, 102-1 Markets for Cellulosic Biomass-Derived Fuels, 152-2 Cost Estimates for Bioethanol Manufacturing, 183-1 Participants in the Feedstock Development Program, 1996–1999, 233-2 Allocation of Funds for Feedstock Development Projects, 24

FIGURES

1-1 Relative costs of processing steps in the NREL bioethanol process of 1991, 71-2 Appropriations for the National Biomass Ethanol Program, 92-1 Estimated manufacturing costs and the market value of cellulosic biomass-derived ethanol, 204-1 Schematic diagram of the conversion of biomass feedstock to ethanol fuel, 28

BOX

3-1 What Is Genomics? 25





EXECUTIVE SUMMARY 1

1

Executive Summary

The Office of Fuels Development (OFD), a component ofthe U.S. Department of Energy’s (DOE) Office of Transpor-tation Technologies, manages the federal government’s ef-fort to make biomass-based ethanol (bioethanol) andbiodiesel a practical and affordable alternative to gasoline.Through the National Biomass Ethanol Program, the OFD isoverseeing key research and development (R&D) andindustry-government partnerships for the establishment of acellulosic biomass ethanol industry. Cellulosic biomassresources being investigated include agronomic and forestcrop residues, woody crops, perennial grasses, and munici-pal wastes. Starch-based sources, such as cereal grains (e.g.,corn grain), are not included in this program. The objectiveof the program is to promote the commercialization ofenzyme-based technologies to produce cost-competitivebioethanol for use as transportation fuel.

The OFD requested that the National Research Councilestimate the contribution and evaluate the role of biofuels(biomass-derived ethanol and biodiesel) as transportationfuels in the domestic and international economies, evaluateOFD’s biofuels strategy, and recommend changes in thisstrategy and the R&D goals and portfolio of the OFD in thenear-term to midterm time frame (about 20 years). Duringthis period, a number of complex, interacting factors, includ-ing advances in the technologies used to produce biofuels ata competitive cost, the elimination of tax incentives, ad-vances in vehicle and engine technologies, growing concernsabout solid waste disposal and air pollution, and global mea-sures to reduce emissions of greenhouse gases to the atmo-sphere, will affect the position of biofuels in transportationfuel markets.

STRATEGIC PROGRAM OBJECTIVES

The OFD has established strategic program objectives topromote the steady development of bioethanol technologies.Currently, bioethanol cannot compete with gasoline, andmarkets are scheduled to be subsidized by tax credits at least

until 2007. Bioethanol is used today as a blending agent insome gasolines and as a neat fuel in internal combustionengines in a few vehicles. In the future, bioethanol may alsobe used in fuel-cell vehicles. In all cases, the comparativecost of bioethanol will be the controlling factor, although thecompetitiveness of bioethanol could improve if stringentregulations on the emission of greenhouse gases are adopted.

The current OFD program is based on the immediate ex-ploitation of low-cost feedstocks, such as residues from ag-ricultural and forest products and municipal solid waste. Inthe long term, other sources of cellulosic biomass, such asdedicated energy crops, may become available at competi-tive cost. The following program objectives are outlined inthe OFD National Biomass Ethanol Program Plan for FiscalYears 1999–2005:

• Near-term objectives (2000–2003). Demonstrate thecommercial-scale production of cellulosic ethanol byusing one or more low-value waste feedstocks, such asagricultural or forest residues.

• Midterm objectives (2005–2010). Demonstrate com-mercial-scale ethanol production for one or more etha-nol plants using agricultural/forest residues togetherwith components of dedicated biomass supply sys-tems, such as the energy crop switchgrass or residuesfrom woody crops, that have been used for fiber.

• Long-term objectives (2015–2020). Demonstrate thatethanol manufactured from dedicated energy crops,such as switchgrass and specific woody crops, is costcompetitive with gasoline. Beyond 2010, OFD willseek cost reductions through genetic improvements infeedstocks to increase process efficiencies and enhancethe value of coproducts.

To achieve these objectives, the OFD believes that it willhave to (1) meet the technology cost-reduction targets de-manded by the marketplace, (2) leverage the corn-ethanolindustry’s business and technical resources to expand the



2 BIOMASS-DERIVED TRANSPORTATION FUELS

ethanol market base, and (3) engage in cost-shared demon-stration projects with industrial partners to encourage theacceptance of new technology and reduce market barriers.

The projected cost of ethanol production from cellulosedeclined significantly in the 1980s as the technology wasimproved. However, since about 1991, there has been littleif any drop in the projected cost of about $1.28 per gallon(1995 dollars) based on the technology that OFD has beenpursuing. OFD maintains that this result arises from differ-ent bases used for the 1991 cost estimate and more recentcost estimates. Nevertheless, even taking into account dif-ferent bases, the committee believes that a leveling off hasoccurred and is concerned that this may reflect the inherentlimits of the process technology being pursued in the OFDprogram. Required cost reductions will require major, notincremental, improvements in the current processes and/orbreakthroughs (i.e., the replacement of current process stepsby much less expensive, much more efficient alternatives).

In the committee’s view, widespread market acceptanceof biobased ethanol is not achievable with DOE’s currenttechnology base. OFD’s most recent cost analysis indicatesthat potentially lower cost technologies are being developedoutside of the government program. Therefore, the OFD’smilestones should be used not only to track its progress to-ward the production of bioethanol but also to compare OFD’scosts with industry costs. OFD should consider working withmore scientists and engineers outside of OFD to improvebiomass conversion technologies.

OFD provides some support for several large-scalebioethanol plants that use both currently available, well dem-onstrated technology and some new technology, notably re-combinant organisms to ferment both five-carbon and six-carbon sugars to ethanol. The knowledge and experiencefrom these large-scale demonstrations should help identifythe risks and reduce the costs of bioethanol production. How-ever, scale-up is a much more expensive proposition thanfundamental investigation. Once the program supportingcommercialization has been completed, OFD should rees-tablish its leadership role by focusing on providing a techni-cal basis for the next generation of commercial ventures.

Recommendation. To reduce the cost of bioethanol and in-crease competitiveness with other energy sources in the nearterm (2000–2010) and midterm (2010–2020), the Office ofFuels Development should redirect the focus of its researchand development programs from demonstrations to technol-ogy fundamentals for both feedstock development and etha-nol conversion. Continued technical support should be pro-vided to the demonstration plants now in place to test andevaluate the results of this fundamental research and devel-opment. As industrial firms commercialize these lower costtechnologies, the role of the Office of Fuels Development inbiofuels research should be refocused on overcoming theremaining technical barriers.

MARKET POTENTIAL FOR BIOMASS-DERIVED FUELS

The motivation for developing bioethanol as a transporta-tion fuel is based on concerns about energy security, envi-ronmental quality, and trade deficits. Current research is fo-cused on the potential for bioethanol to reduce net emissionsof greenhouse gases to the atmosphere from dedicated en-ergy crops (e.g., woody crops, herbaceous perennials). Theimpact of the entire fuel cycle, which includes growing, har-vesting, processing, and consuming bioethanol, is expectedto add very little net carbon dioxide to the atmosphere. How-ever, the magnitude of net reductions of greenhouse gasesproduced by biomass is still the subject of heated debate, andthe entire life cycle of the fuel, including feedstock produc-tion, combustion, and transportation, has been the subject ofresearch on greenhouse gas emissions from bioethanolmanufactured from corn starch, woody crops, and herba-ceous crops. Although the benefits from the production ofbioethanol from corn or other residues have not been deter-mined, the benefits from dedicated energy crops are expectedto reduce net emissions of carbon dioxide to the atmosphere.

One concern about the introduction of biofuels is that thediversion of land to energy production could reduce the acre-age devoted to food production. In the case of biofuels, how-ever, the coproduction of biobased ethanol, biobased chemi-cals, and human food and animal feed products in“biorefineries” could actually reduce conflicts between theproduction of food and the production of fuels. A possibledisadvantage is that the large-scale harvesting of crop resi-dues could increase soil and wind erosion. With proper soilmanagement techniques, however, biofuels based on cropresidues may not degrade topsoil. In some cases, productionof perennial bioenergy crops could provide local benefits tobiofiltration (removal of unwanted nutrients from soil orgroundwater via plant root uptake and metabolism), erosioncontrol, and the creation of wildlife habitat. Thus, the eco-nomics and environmental effects of cellulosic biomass pro-duction will vary with the characteristics of the site.

Market factors will determine the effectiveness of OFD’slaunch of a new biofuels industry based on cellulosic bio-mass conversion. The current low price of oil, for example,would limit the success of a “technology push” program.The current subsidized market for ethanol as a blend stock ingasoline to satisfy octane and oxygenate requirements is sub-sidized by federal and some state tax incentives that shouldbe considered temporary. In the long run, all aspects of thecellulosic biomass-based fuel industry will have to be com-petitive with petroleum-based fuels. Meeting this difficultchallenge will require that OFD’s program achieve signifi-cant technical breakthroughs that lead to sharp reductions inmanufacturing costs.

Although the displacement of gasoline by neat ethanol isa long-term proposition, the subsidized use of ethanol as ablend agent has created near-term opportunities. The OFD



EXECUTIVE SUMMARY 3

has taken advantage of this market to encourage the com-mercialization of cellulosic biomass-conversion technologyby at least three companies that plan to use waste biomass,which is available at low cost. The establishment of com-mercial cellulosic biomass conversion can reinforce the cred-ibility of the concept and provide valuable information forfuture commercialization. However, the long-term commer-cial viability of cellulosic biomass ethanol as a blendingagent, as well as a neat fuel, will require that the product becompetitive without government subsidies.

Unlike bioethanol, biodiesel is not likely to become aneconomically viable fuel in the near future because the costsof raw material for biodiesel are very high. In Europe,biodiesel is produced from rapeseed oil, but without the Eu-ropean Union’s subsidy for farmers, rapeseed-basedbiodiesel would not be competitive in the marketplace. U.S.biodiesel manufacturing processes rely on soybean oil as asource of biomass. One gallon of biodiesel requires approxi-mately seven pounds of soybean oil; therefore, without theaddition of methanol and before processing, the cost ofbiodiesel would be more than $1.50 per gallon. The highcost of oilseed compared to starchy cereals and the high valueof soybean oil for food and feed products makes it anunattractive raw material for a low-cost commodity, such asbiodiesel. Although some niche markets have been estab-lished by legislation in response to environmental concerns,soybean-based biodiesel will remain too expensive to be-come an economically viable fuel.

Recommendation. Because of a lack of foreseeable oppor-tunities for reducing the production cost of biodiesel, theOffice of Fuels Development should consider eliminating itsbiodiesel program and redirecting those funds into thebioethanol programs.

REDUCING THE COST OF BIOETHANOL

Now that OFD has helped launch several new plants, thecommittee strongly believes that the focus of OFD’s programshould be shifted to fundamental scientific and engineeringstudies in search of breakthroughs that would reduce the costof producing bioethanol. Breakthroughs will require athorough understanding of the basic science and technical char-acteristics of materials and processing steps. This fundamen-tal understanding will also provide a firm basis for scalingup from small experimental-sized units to commercial plants.To benefit from advances in genetic engineering, a strongresearch program in the production of cellulosic feedstocksand the manufacture of ethanol will require time to mature.

The engineering expertise of OFD is located at the Na-tional Renewable Energy Laboratory. The committee is con-cerned that some of the processing technologies currently inthe National Renewable Energy Laboratory program havereached their inherent limitations and that even thoughincremental improvements may be achievable, much less

expensive and more effective alternatives will replace thesetechnologies. For example, pretreatment in the OFD programhas been largely overlooked for the last two decades becausea particular configuration was decided upon, and R&D hasfocused on downstream processing, even though pretreat-ment is a significant contributor to the overall cost of etha-nol. In addition to OFD’s program, a broad range of innova-tive research is being done outside of OFD that could improvethe manufacture of bioethanol. The committee agrees withscientific assessments that advances in pretreatment and bio-logical processing of biomass feedstocks will make a majorimpact on total cost of bioethanol and recommends that OFDsupport research and development on pretreatment of feed-stocks, increasing pentose sugar yields, improving enzymeactivity, consolidated bioprocessing, feedstock engineering toimprove processing, and fundamental studies of coproducts.A better fundamental understanding of underlying phenom-ena in all of these areas will be crucial to breakthroughs andthe development of innovative approaches for reducing costs.Because diverse approaches can make a positive impact onbiomass processing, the committee cannot provide a completelist of fruitful areas for research or accurately predict wherebreakthroughs might occur.

Another area for useful research is feedstock develop-ment. Currently, feedstock development is being pursued atOak Ridge National Laboratory and at regional feedstockdevelopment centers to increase yields and other desirabletraits of willow, switchgrass, and poplar; establish sustain-able crop management systems; and evaluate potential envi-ronmental and economic impacts of the production of cellu-losic biomass feedstocks. Because of the many scientificopportunities for genetic improvement in the midterm, OFDshould consider expanding its genetic engineering andgenomics programs, building on its established programs inbreeding and biotechnology. Compared to the conversionand processing programs, however, the feedstock develop-ment program is modestly funded. The committee believesthat the current program configurations may have to be re-evaluated to determine if additional funding for feedstockdevelopment is warranted.

Recommendation. The Office of Fuels Development shouldfocus on fundamental research in the following areas for re-ducing the costs of manufacturing bioethanol: (1) advancedpretreatments; (2) consolidated bioprocessing; (3) digestiveenzyme activity; (4) the development of diversified productsand coproducts during biomass processing or via plant me-tabolism; (5) reductions in the cost of raw materials via im-proved yield or the development of pest-resistant and stress-resistant plants; and (6) changes in feedstocks to makeprocessing and conversion more efficient by modifying plantbiochemistry.

Recommendation. Because of the many opportunities forgenetic improvement in the midterm, the Office of Fuels




Development should seriously consider expanding its ap-plied biotechnology and genomics programs to improvefeedstock yields, pest resistance, quality, and cropping sys-tems. Although the Office of Fuels Development is wellsuited to take the lead in these programs, the agency shouldwork in coordination with other government agencies andgrant programs (e.g., the U.S. Department of Agriculture andthe National Science Foundation), international partners, andthe forest, agricultural, and biotechnology industries.

Bioethanol production costs include both feedstock de-velopment (production, collection, and handling) and con-version processes (pretreatment, fermentation, distillation,pentose conversion, and cellulase production). Because theprocess of obtaining a liquid fuel from biomass entails sev-eral steps, a change in one part of the system can affect othercomponents. For example, as the limits on cellulase enzyme-specific activity at the molecular level are better understood,genetic engineering may lead to the development of plantmatter more amenable to enzymatic hydrolysis, thus increas-ing the efficiency of bioethanol manufacturing. An inte-grated analysis is a useful technique for determining rela-tionships between feedstock development and conversionprocesses and impacts on total costs for bioethanol. Agricul-tural and forest residues as well as dedicated energy cropsare potential sources of biomass for conversion to ethanol.Because feedstocks can contribute as much as 40 percent tototal bioethanol costs, OFD should thoroughly evaluate thelogistics and costs of producing, harvesting, collecting, andtransporting feedstocks and impacts on processing econom-ics. Furthermore, OFD researchers could use systems mod-eling to uncover opportunities for small-scale bioethanol pro-cessors and exporters of bioethanol conversion technologies.

To determine the best opportunities for major new technol-ogy options and cost reductions, OFD should undertake anintegrated review of both the feedstock and processing com-ponents of its programs.

Recommendation. The Office of Fuels Development shouldconsider developing an integrated systems model that en-compasses feedstock development, collection, storage, trans-port, and biomass processing. This model could reveal op-portunities for reducing costs, optimizing synergies amongtechnologies, and prioritizing projects to achieve programgoals in light of changing market opportunities.

PROGRAM MANAGEMENT

A strong R&D program will require careful monitoringof its performance. Peer review can be used to evaluate pro-posed R&D projects and measure performance of ongoingprojects. In the case of OFD, peer review can increase thelikelihood of the program developing cost-effective tech-nologies for the production of bioethanol. Researchers andprogram managers should be held accountable for ensuringthat their research is directed toward meeting specific per-formance goals. The committee encourages OFD to continueusing outside reviews to evaluate its biofuels programs. Tomake significant technological progress, OFD should reachout even more than it has in the past for ideas from institu-tions outside of government laboratories.

Recommendation. The Office of Fuels Development shouldestablish clear criteria for evaluating project performancelevels and should include reviewers from academia, indus-try, and other government programs in its evaluations.



INTRODUCTION 5

5

1

Introduction

In 1998, the U.S. Department of Energy (DOE) Office ofFuels Development (OFD) requested that the National Re-search Council (NRC) evaluate the OFD’s research and de-velopment (R&D) strategy and directions for biomass-derivedethanol (bioethanol) and biodiesel transportation fuels. TheNRC formed the Committee to Review DOE’s R&D Strategyfor Biomass-Derived Ethanol and Biodiesel TransportationFuels to conduct the study, and this report documents thecommittee’s findings and recommendations. (See AppendixA for biographical sketches of the committee members.)

The OFD, which is part of the DOE’s Office of Transpor-tation Technologies, has an annual budget of $41.8 millionto oversee the federal government’s program to make etha-nol from cellulosic biomass a practical and affordable alter-native to gasoline. The OFD works with the DOE nationallaboratories, other DOE offices, the U.S. Department ofAgriculture (USDA), universities, and corporations to de-velop technologies that would enable a bioethanol industryto become a mature market.

Through its National Biomass Ethanol Program, the OFDmanages R&D by government and industry-governmentpartnerships for the development of a cellulosic ethanol in-dustry. The mission of the National Biomass Ethanol Pro-gram is to promote the development of a robust industry byfacilitating the commercialization of technologies to producecost-competitive ethanol for use as an alternative transporta-tion fuel. OFD’s working definition of biomass is plant mat-ter produced by photosynthetic uptake of carbon from theatmosphere (OFD, 1998). Most biomass material consists ofplant cell walls, referred to as lignocellulosics or cellulosics.Biomass as defined here does not include corn grain.

OFD’s major R&D programs are the development of bio-mass feedstock at Oak Ridge National Laboratory (ORNL)and the development of biomass-conversion technologies atthe National Renewable Energy Laboratory (NREL). TheORNL feedstock development program is cofunded by theDOE Office of Power Technologies, which contributed 55percent of its funding in fiscal year 1999. Of the total

$41.8 million budget, approximately $2.8 million is allocatedto ORNL, and $36 million is allocated to NREL. NREL’sbudget includes a $14 million congressional mandate tosupport three cellulose-to-ethanol manufacturing facilities.

R&D at ORNL is directed toward the development andrefinement of environmentally sound agriculture and silvi-culture systems for the production, harvesting, and handlingof a reliable supply of perennial biomass feedstocks. Thefeedstock base has been expanded through breeding and se-lection to increase feedstock productivity over a broad rangeof climates and soil types and to optimize conversion to etha-nol. Improvements have also been made in technologies forthe environmentally acceptable collection and handling ofexisting low-value feedstocks, such as residues from the ag-riculture and forest industries.

The objective of the biomass-to-ethanol conversion pro-gram (centered at NREL) is to develop cost-effective con-version technologies for the production of ethanol from cel-lulose and hemicellulose fractions of biomass that willultimately lead to the establishment of a major domesticbiofuels industry. Initial R&D was focused on improvingthe efficiency of biomass-to-ethanol conversion processesfor existing low-value biomass feedstock. Technology trans-fer projects have focused on taking the processes developedin the laboratory and, working with industrial partners, es-tablishing commercial-scale test facilities to validate the eco-nomic viability of production processes.

PRODUCTION AND MANUFACTURE OF BIOETHANOL

Biofuels, such as ethanol, methanol, and other chemicals,are derived from plant matter, or biomass. Plants growthrough photosynthesis, in which sunlight acts as the energysource for combining carbon dioxide from the atmosphere,water, and nutrients from the soil into complex organic en-ergy-containing molecules (e.g., sugars, carbohydrates, cel-lulose). Much of the biomass in plants goes into the fibrouscellulosic part of the plant and not into the seed.




A number of feedstocks can be used to produce biofuels,all of which are derived from plants. The most commonbiofuel in recent years has been ethanol. In the United States,approximately 1.8 billion gallons (6.8 billion liters) of liquidethanol were manufactured in 1996–1997 from the starch incorn kernels (RFA, 1999); in Brazil, approximately 14 billionliters of ethanol were produced from sugarcane in 1996–1997(PCAST, 1999). Trees, as well as switchgrass, are being de-veloped for cellulose-to-ethanol manufacture and as a fuelsource for electric power generation. Eventually, crops mightbe grown for the sole purpose of producing fuels. For example,poplar or willow trees might be grown on energy plantations.In the near term, OFD appears to consider poplars as coprod-uct systems, in which the fiber can be used for material pro-duction and the residuals for bioenergy production.

Rather than growing a dedicated energy crop for fuelsmanufacture, residues from various production processescould be used as biomass feedstocks. Large amounts of bio-mass are left in the field after conventional food crops havebeen harvested or after trees have been cut by the forest prod-ucts industry. These residues range from sugarcane bagasse,rice straw, wood mill residues, and corn stover to forest resi-dues from logging and other activities. Although estimatesvary with region and local soil conditions, approximately100 million metric tons of corn residue in the United Statesare potentially available as biomass feedstock for ethanolmanufacture. This estimate is based on the assumption that30 percent of the corn residues are left in the field to con-serve soil and water (NRC, 1999c). Residues that have al-ready been collected have the advantage of low cost. Mu-nicipal waste, which contains organic matter, such as paper,paper products, wood, and other organic materials, is an-other potential source of feedstock. Because some wastescome from many sources, the composition of municipalwaste can be heterogeneous (NRC, 1999c). Therefore, theeconomic viability of using municipal waste is limited be-cause solid wastes often contain materials that could be haz-ardous or that could increase processing costs.

Producing a liquid fuel from biomass entails several pro-cessing steps. If a dedicated crop is used, it must be planted,fertilized, possibly irrigated, and harvested, much like a con-ventional food crop. Feedstock collection costs can increaseexponentially with distance, sharply constraining the opti-mal size of a plant (Sperling, 1988). Therefore, the costs ofcollection will limit the distance and area over which a cropmight be harvested and collected. The collected biomassconstitutes a cellulosic biomass feedstock that must then bepretreated.

Many pretreatments, including biological, chemical,physical, and thermal processes, have been investigated, butnone has been demonstrated at a commercial scale. OFD’scurrent pretreatment breakdown involves milling and expo-sure to acids and heat to reduce the size of the plant fibers,break down sugars from a portion of the material to yieldfermentable sugars, and make their component parts more

accessible to conversion processes. During hydrolysis, feed-stock components, primarily polymers of glucose and pen-toses, are hydrolyzed by acids and/or enzymes to ferment-able sugar monomers to produce sugars that can befermented into ethanol. Because cellulose polymers are moredifficult to hydrolyze than pentosan polymers, in currentpractice cellulose is hydrolyzed after pentose. The NRELmodel under development includes a simultaneous sacchari-fication and fermentation (SSF) process, in which hydroly-sis and fermentation take place in the same reactor. The pro-cess of fermentation involves using yeast or othermicroorganisms to convert sugar into ethanol, carbon diox-ide, and other minor components. The fermented mixture isthen distilled to remove the ethanol from the water and thendewatered via azeotropic distillation or an adsorptionprocess.

The ethanol must then be transported to service stationsfor distribution by pipeline, truck, barge, or railroad. Obvi-ously, each step, from the planting to final distribution, willentail some cost, and much of OFD’s R&D is intended toreduce the costs of the steps that contribute most to the costof the overall process (see Figure 1-1).

Another approach to producing ethanol from cellulosic bio-mass is gasification of the biomass to synthesis gas followedby microbial fermentation to form ethanol. Methanol can alsobe produced from the gasification of biomass using inorganiccatalysts. The dominant cost factors in the production ofmethanol are associated with the production of synthesis gas.The OFD program is not currently developing gasificationtechnologies for cellulosics-to-methanol conversion (Lynd,1996; Wyman et al., 1992). The projected costs of producingethanol from biological processes and methanol from gasifi-cation using current technologies are comparable. No signifi-cant cost reductions are projected for producing methanol bymature gasification technologies. After more than two decadesof R&D on gasification, DOE concluded in the mid-1990sthat biomass-based methanol would not be competitive withmethanol manufactured from natural gas.

ROLE OF GOVERNMENT

The motivation for developing bioethanol as a transporta-tion fuel is based on concerns about energy security, envi-ronmental quality, economic competitiveness, and stabiliza-tion of the agricultural sector. Congress has addressedenvironmental and energy security concerns through severalmandates, including the Alternative Motor Fuels Act of1988, the Clean Air Act Amendments of 1990, and the En-ergy Policy Act of 1992.

The Alternative Motor Fuels Act of 1988 encourages thedevelopment and widespread use of alternate fuels, includ-ing methanol, ethanol, and natural gas, as transportationfuels. It directs DOE to work with federal agencies to admin-ister programs to encourage the development of alternativefuels and the production of alternative-fueled vehicles.



INTRODUCTION 7

The purpose of the Clean Air Act Amendments of 1990was to improve the nation’s air quality. Title I requires cer-tain levels of oxygen in automotive fuel, which can be metwith the addition of oxygenates, such as ethanol, to gasolinein areas that exceed public health standards for ozone andcarbon monoxide (so-called nonattainment areas) as set bythe Environmental Protection Agency.

The Energy Policy Act of 1992, Section 502(a), directsDOE to “establish a program to promote the developmentand use in light duty motor vehicles of domestic replacementfuels” and further states that the “program shall promote thereplacement of petroleum motor fuels with replacement fuelsto the maximum extent practicable.” The program “shall, tothe extent practicable, ensure the availability of those re-placement fuels that will have the greatest impact of reduc-ing oil imports, improving the health of our nation’seconomy and reducing greenhouse gas emissions.”

Another issue related to the environmental and nationalsecurity concerns addressed by Congress is the issue of ex-ternalities. Externalities include, for example, environmen-tal damage caused by unpenalized or unregulated pollution.Environmental damage is not reflected in the cost to the pol-luter or the price of the product. An acknowledged role ofgovernment is to ensure that externalities are somehow in-corporated into decisions about the investment and use ofproducts and their production. For example, governmentregulations on the manufacture, use, and composition offuels do incorporate some externalities into the price

structure of fuels. The committee recognizes that changes ingovernment regulations for biomass-based fuels could sub-stantially change the relative market values of renewable andfossil fuels but has declined to speculate on possible changes.The projected market values in this report assume that nochanges will be made in government policies with respect toexternalities.

Another traditional role of government is supporting ba-sic science and long-range R&D—especially in areas thatare considered important to national policy but may not beof current interest to industry. The private sector has no in-centive to invest in R&D on many long-range technologiesalthough it is in society’s interest to prepare for an uncertainfuture by investigating promising advanced technologies.Underinvestment by the private sector may be attributable tothe inability of a firm or a small group of firms to capture thereturn on its investments in R&D or to the incentive struc-ture of a given sector of the economy that may inhibit invest-ment in innovation, especially for the long term(PCAST, 1997).

STRATEGIC OBJECTIVES FOR THE OFFICE OFFUELS DEVELOPMENT

The OFD is pursuing strategic objectives to encouragethe development of a bioethanol industry. Ethanol produc-tion is expected to progress from the exploitation of nichefeedstock opportunities, such as agricultural residues (e.g.,

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FIGURE 1-1 Relative costs of processing steps in the NREL bioethanol process of 1991. Source: Wyman, 1999.




corn stover, sugarcane bagasse, rice straw, and wheat straw),forest softwood residues, softwood by-products of the pulpand paper industry, and municipal solid waste, to productionbased on dedicated energy crops. The following programobjectives of the OFD are described in the National BiomassEthanol Program Plan for Fiscal Years 1999–2005(OFD, 1998):

• Near-term objectives (2000–2003). Demonstrate thecommercial-scale production of cellulosic ethanol byusing one or more low-value waste feedstocks, such asagricultural or forest residues.

• Midterm objectives (2005–2010). Demonstrate com-mercial-scale ethanol production for one or more etha-nol plants using agricultural/forestry residues togetherwith components of dedicated biomass supply sys-tems, such as the energy crop switchgrass or residuesfrom woody crops, that have been used for fiber.

• Long-term objectives (2015–2020). Demonstrate thatethanol manufactured from dedicated energy crops,such as switchgrass and specific woody crops, is costcompetitive with gasoline. Beyond 2010, OFD willseek cost reductions through genetic improvements infeedstocks to increase process efficiencies and enhancethe value of coproducts.

To achieve these objectives, the OFD believes that it willhave to (1) meet the technology cost-reduction targets de-manded by the marketplace, (2) leverage the corn-ethanolindustry’s business and technical resources to expand theethanol market base, and (3) engage in cost-shared demon-stration projects with industrial partners to encourage theacceptance of new technology and reduce market barriers(OFD, 1998). The strategic objectives focus on early dem-onstration of the production of ethanol to meet congressionalmandates, even though the government technology base isnot adequate to ensure the widespread acceptance of an etha-nol fuel at this time. In the committee’s view, a strong indus-trial R&D program to achieve significant advances inbioethanol production and feedstock production will requiretime to mature, especially to benefit from ongoing advancesin genetic engineering. The OFD can enhance the effective-ness of an industrial R&D program by providing a solid sci-entific basis for reducing costs of bioethanol manufacturingand economic risks in the near term and support technologyadvancements in the long term.

Stage-and-Gate Process

The OFD uses a stage-and-gate process to measureprogress toward meeting its R&D objectives (OFD, 1998).The stage-and-gate process is structured to facilitate the de-cision making at five stages, from process conceptualization

through technology deployment. Information generated bythis technical-economic model is used by OFD to measureeconomic progress at each stage of research and to ensurethat research is focused on the most promising technologies.

The stage-and-gate process requires go/no-go decisionsat the following stages: concept development, qualificationof opportunity, feasibility confirmation, process develop-ment, and commercial launch stages (OFD, 1998). In theconcept development stage, the concept must be wellenough described so that others can understand it and actupon it. Opportunities are qualified by OFD collaborators(e.g., industrial partners) who identify issues that must beresolved for the successful development and commercial-ization of promising technologies. Feasibility is achievedthrough demonstration or development of data that resolvethe issues identified in the previous stage. Through devel-opment, technology processes and products are created,demonstrated at bench side, measured against performancerequirements and risks identified and minimized. Commer-cial launch concludes the process with the design, construc-tion, and start-up of an operational plant by industry. Pass-ing from one stage to the next requires passing through a“gate” showing that each technical and business objectiveof that stage has been met. If the data do not pass a particu-lar gate, then development of that concept is stopped. Witheach stage, the gate review criteria become more businessoriented, and the level of management that approves thereview is higher.

Process economics are updated as new data are devel-oped using ASPEN Plus process simulation software to gen-erate material and energy balances, design criteria for ven-dors, and other information to estimate capital requirements.As actual process data are developed and incorporated intothe simulation, the estimate becomes more accurate.

The policy analysis system (POLYSYS) agricultural-sec-tor model developed by the University of Tennessee pro-vides some additional input to OFD on the relative profit-ability of bioenergy and conventional crops. The POLYSYSmodel simulates changes in policy, economic, resource, orenvironmental conditions and estimates the effects on theU.S. agricultural system. POLYSYS is a system of interde-pendent modules that simulate crop supply for 305 produc-tion regions; national crop demand and prices; national live-stock supply; and agricultural income. POLYSYS analysisis currently under way to measure the effects of conversionof existing crops to fuel on crop production, allocation ofland among crops, and returns to crops and farmers(APAC, 1999).

The approach outlined above provides a disciplined,rational way to manage R&D projects. Its validity, however,depends on the quality of the data and other information pro-vided by investigators, especially the inputs to the ASPENPlus model. Evaluating an untried approach to process im-provement is difficult, however, so the program is focused on



INTRODUCTION 9

improvements to known technologies as modeled by the newdata, rather than on introducing new untried technologies.

BUDGET OF THE OFFICE OF FUELS DEVELOPMENT

The funding appropriated for the National Biomass Etha-nol Program (Figure 1-2) was relatively stable from fiscalyear 1994 to fiscal year 1998. Funding was increased in fis-cal year 1999, and an additional increase has been requestedfor fiscal year 2000. Funding by program elements is shownin Table 1-1 (see Appendix B for details on the budget andprogram). Early demonstration of technologies and the in-volvement of industry are included in the congressional man-dates. The request for $53.4 million in fiscal year 2000 forthe OFD biofuels program includes $37.4 million for etha-nol production, $1.0 million for biodiesel production, $5.5million for feedstock production, $3.5 million for the re-gional biomass program, and $6.0 million for R&D on inte-grated bioenergy.

In 1999, the DOE launched a crosscutting Bioenergy Ini-tiative supported by the biofuels (OFD’s program), bio-power, and industrial programs. The purpose of the initiativeis to focus on technological advances that will foster an inte-grated and competitive bioindustry through partnering withindustry. Through additional funding, DOE will allocate partof its budget to the development of key technologies and thecoordination of all of DOE’s bioenergy-related R&D activi-ties. A Bioenergy 2020 Action Plan (drafted in 1998) envi-sions a national partnership among federal agencies and theprivate sector for an integrated biomass industry that willproduce power for homes, fuel for cars, and industrial chemi-cals from crops, trees, and residues (Reicher, 1998).Bioenergy 2020 will integrate the results of R&D from OFD

with other DOE R&D programs in biomass power and theforest products and agricultural industries program to de-velop technologies for the production of combinations offuels, power, chemicals, and other products from diversefeedstocks in different areas of the country.

STUDY GOALS

The committee was asked to evaluate the contribution androle of biofuels, biomass-derived ethanol, and biodiesel astransportation fuels in the domestic and international econo-mies; review OFD’s biofuels R&D strategy; and recom-mend, as appropriate, changes in this strategy and OFD’sportfolio for R&D. The time frame considered by the com-mittee extends out about 20 years. In the Statement of Task,the committee was asked to meet the following objectives.

1. Examine the likely contribution that biofuels can makedomestically and internationally in light of barriers(e.g., energy and economic costs, health impacts, en-vironmental and land constraints, infrastructure, etc.)to their deployment and use, and experience that hasbeen gained from past or current biofuels programs.

2. Examine the benefits of the deployment and use ofbiofuels.

3. Examine OFD’s strategic focus for biofuels and con-comitant R&D portfolio in light of potential opportu-nities.

4. Identify strategic directions for biofuels developmentand deployment and make recommendations, as ap-propriate, for the biofuels program.

The committee held three meetings and was given a

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FIGURE 1-2 Appropriations for the National Biomass Ethanol Program. Source: OFD, 1998.




number of presentations on OFD’s biofuels program andrelated issues (see Appendix C). The committee used theinformation from these sessions as input to its deliberations.

This report focuses on the main components of OFD’sbioethanol and biodiesel programs, most of which are di-rected toward the development of bioethanol technologies

TABLE 1-1 Funding Allocations for the Office of Fuels Development Biofuels Program

FY 1998 FY 1999 FY 2000 BudgetAppropriations Appropriations Requests

Ethanol ProductionAdvanced fermentation organisms $ 1,960 $ 2,200 $ 3,000Advanced cellulase 2,455 4,547 5,500Pretreatment 1,906 2,800 5,508Consortium for plant biotechnology research 2,455 1,250 0Integrated process development 8,265 11,500 11,500Cellulose-to-ethanol production facilities 7,091 13,653 11,933Feasibility studies 841 0 0

Subtotal 25,027 35,950 37,441

Biodiesel ProductionBiodiesel production technologies 600 750 1,000Waste oil assessment 200

Subtotal 800 750 1,000

Feedstock ProductionBiomass feedstock development centers 1,600 1,600 4,000Environmental effect of energy crop deployment 400 225 225Energy crop seedling/planting stock selection 100 100 100Large-scale woody crop plantation 150 125 125Switchgrass variety testing and scale-up 200 500 500Feedstock composition and multiproduct use 0 100 200Mechanization 50 150 350

Subtotal 2,500 2,800 5,500

Regional Biomass Energy ProgramRegional biomass resources 1,650 1,650 2,000Biofuels production resources 350 600 1,500

Subtotal 2,000 2,250 3,500

Integrated Bioenergy Technology 6,000

Totals 30,327 41,750 53,441

Source: OFD.

rather than biodiesel. Chapter 2 provides a brief history ofthe use of bioethanol as a transportation fuel and describesthe market conditions for biomass-based ethanol. Chapter 3addresses parts of the program related to feedstocks. Chap-ter 4 addresses biomass-to-ethanol conversion technologies.Chapter 5 addresses crosscutting program issues.



CONTEXT FOR BIOMASS-DERIVED FUELS 11

11

2

Context for Biomass-Derived Fuels

HISTORICAL BACKGROUND AND PUBLIC POLICY

International and domestic experience with the manufac-ture of fuels from biomass feedstocks (biofuels) is long andvaried. In the days of early automotive development, ethanolwas one of the candidate fuels. When fears about the stabil-ity of petroleum supplies briefly surfaced around 1920 andagain after the 1973 Arab oil embargo, investments inbiomass-derived ethanol (bioethanol) flourished (Sperling,1988). Scattered investments in bioethanol were also madein many other countries around the world.

Soon after 1973, oil-poor Brazil expanded its efforts toconvert sugarcane to bioethanol and blend it into gasoline withroughly 22 percent ethanol and 78 percent gasoline (22:78proportions). In 1979, Brazil began manufacturing vehiclesthat could run on hydrous ethanol (95 percent ethanol,5 percent water). By the mid-1980s, almost all new cars inBrazil were designed to run exclusively on ethanol. In the pastdecade, however, the Brazilian government has tried to re-verse the program because of the financial subsidy required.Because of the large percentage of vehicles on the road thatrequire ethanol, however, ethanol fuel manufacture has con-tinued, although very few new cars are designed for ethanol.

Until the 1980s, the motivation for developing bioethanoland other alternative fuels in the United States and almosteverywhere else was energy security and domestic economicdevelopment. Since the mid-1980s, the primary motivationhas gradually shifted to meeting environmental objectives,primarily the improvement of air quality. Growing interestin the past few years in addressing climate change by reduc-ing emissions of greenhouse gases to the atmosphere hasgiven a new impetus to the development of biomass fuels.The primary U.S. policy sustaining investments in ethanolhas been tax subsidies in the form of federal and state gaso-line tax exemptions.1

In addition, ethanol and other oxygenates, such as methyltertiary-butyl ether (MTBE), displace aromatics, especiallybenzene, from gasoline. The advantages and disadvantages

of biofuels that will influence their marketability are de-scribed in the following sections.

ADVANTAGES AND DISADVANTAGES OF BIOFUELS

Air Quality

The Clean Air Act Amendments of 1990 included theimplementation of Environmental Protection Agency (EPA)regulations for reformulated gasoline to mitigate near-ground ozone pollution, a principal component of smog inthe United States. Requirements were established for refor-mulated gasoline to be used in gasoline-fueled vehicles inspecified nonattainment areas (areas that fail to meet EPAair quality standards). Although the introduction and im-provement of vehicle emission control devices contributedto a decline in ambient atmospheric concentrations of car-bon monoxide and tropospheric ozone in virtually all urbanareas, many areas continued to exceed the National AmbientAir Quality Standards (NAAQS) (NSTC, 1997). The CleanAir Act Amendments also stipulated that nonattainment ar-eas were required to adopt programs to add an oxygenatedorganic compound to gasoline to shift the air-to-fuel ratioand lower emissions of carbon monoxide. The oxygenatedgasoline was required to contain an oxygen level of at least2.7 percent by weight and lower the fuel-to-air ratio.

The Clean Air Act Amendments of 1990 require the useof reformulated gasoline with oxygen in areas of the UnitedStates that have substantial ozone pollution, particularly inthe summer months when near-ground ozone is most

1 The ethanol tax credit is currently $0.54 per gallon and applies toethanol and the ethanol portion of the gasoline additive ethyl tertiary-butylether. The Transportation Equity Act for the 21st Century (TEA 21),H.R. 2400, extends the tax credit through 2007 but specifies the followingreductions in tax credits: $0.01 reduction in credit in 2001–2002; $0.02reduction in 2003–2004; and $0.03 reduction in 2005–2007.




prevalent. Reformulated gasolines are designed to lower theemissions of pollutants that contribute to near-ground ozoneformation. Overall emissions of ozone precursors from gaso-line-fueled motor vehicles have substantially decreased inrecent decades, largely as a result of government mandatesand industry’s development and use of new emission con-trols on motor vehicles. The contribution of on-road vehiclesto the total inventory of ozone precursor emissions is ex-pected to continue to decline in the future (NRC, 1999b). Ifit does, the impact of using oxygenates in reformulated gaso-line to mitigate near-ground ozone concentrations would alsodecline. Thus, the magnitude of the effect of reformulatedgasoline on the downward trend is uncertain. A recent NRCreport addresses this subject in detail (NRC, 1999b).

Vehicle emissions of carbon monoxide are major con-tributors to air pollution. A key factor influencing vehicleemissions is the air-to-fuel ratio.2 Additional oxygen in thecombustion mixture of fuel and air in the engine decreasesthe amount of carbon monoxide emitted from the tailpipe. Inolder vehicles with open loop controls, the addition of etha-nol to the fuel is necessary to increase the oxygen level in thecombustion chamber and lower carbon monoxide emissions.In newer vehicles, regardless of whether there is oxygen inthe fuel, new technologies have contributed to decreases intailpipe emissions. Onboard diagnostic systems are now inplace that can detect malfunctioning emission control sys-tems. In addition, older high-emitting vehicles are disappear-ing with fleet turnover. Hence, as new vehicles with onboarddiagnostic systems become dominant in the vehicle fleet, thebenefit of oxygenates is expected to decline.

Although ethanol can lower exhaust emissions somewhat,problems can occur with high evaporative emissions. TheReid vapor pressure of the mixture increases with ethanol-gasoline blends, making evaporative emissions more diffi-cult to control. This may be partially offset by the lowerreactivity of the alcohol after release into the atmosphere,which creates less ozone. Nevertheless, high-level blends ofethanol (e.g., E85) have lower evaporative emissions thanvehicles fueled with low-level ethanol blends (e.g., E10),making this less of an issue for dedicated ethanol vehicles.Because of the low vapor pressure, however, dedicated etha-nol vehicles have a difficult cold start-up, which can result inan increase of emissions of hydrocarbon and aldehyde atstart-up.

In summary, the benefit in terms of air quality from re-duced vehicle emissions from ethanol-gasoline blends rela-tive to petroleum-based fuels may not be substantial enoughto be a significant market driver. The use of ethanol-gasolineblends as a transportation fuel is more likely to be influencedby economic, regulatory, and political factors.

Greenhouse Gases

Many scientists believe that the full fuel-cycle impacts ofgrowing, harvesting, processing, and consuming biofuelscould add very little carbon dioxide (a greenhouse gas) tothe atmosphere. The carbon dioxide released by the con-sumption of biofuels in vehicles would be offset by the up-take of carbon dioxide by the plants (e.g., grasses or trees)used as feedstock to manufacture the fuel. Because some ofthe plant biomass would be used for running the biofuel pro-cessing plant, some would be left over and could be con-verted to electricity (thus reducing carbon dioxide from othergenerators of electricity). The latest and most detailed esti-mates indicate that the net reduction in greenhouse gases,relative to a gasoline-consuming vehicle, could range from60 to 90 percent (Brown et al., 1998; Delucchi, 1991; Wanget al., 1998). Only solar hydrogen has shown as much poten-tial for reducing net additions of carbon dioxide to the atmo-sphere. There is considerable debate, however, on the mag-nitude of the net carbon dioxide reductions of biofuels. Theentire life cycle of the fuel, including feedstock production,combustion, and transportation stages, has been consideredin analyses of greenhouse gas emissions for bioethanolmanufactured from corn starch, woody crops, and herba-ceous crops (Wang et al., 1998). More studies are needed,however, to estimate potential greenhouse benefits, if any,from the production of bioethanol from corn residues.

Ecological Effects

The systemic effects on the ecosystem of a cellulosic bio-mass industry might be beneficial to the environment, de-pending on the ecological factors and the intensity and modeof biomass removal (see Tolbert and Wright, 1998). Thecollection of forest residues, for example, could reduce theaccumulation of kindling that feeds forest fires. Crown firesremove large amounts of carbon from forest ecosystems andmake them susceptible to extensive nutrient loss through soilerosion. Therefore, the removal of forest residues, in con-junction with stand-thinning, could substantially improve thehealth of trees by reducing competition for resources, espe-cially in arid areas, and usually increases the pest resistanceand growth of remaining trees. Thinning also reduces habitatfor insect and disease populations, such as bark beetles, ma-jor forest pests that often develop epidemic populations indense, stressed stands of trees. Harvesting agricultural cropresidues could also potentially reduce the breeding habitatand create less amenable conditions for the reproduction for

2 Controls of air-to-fuel ratio can be divided into two classifications:open-loop and closed-loop controls. Generally, with open-loop control,air-to-fuel ratios are predetermined (typically stoichiometric or richer) butchanged by ambient and operating conditions. With closed-loop control,the air-to-fuel ratio is automatically adjusted to achieve a given goal, inthis case maintaining the stoichiometric mixture necessary to destroycarbon monoxide, oxides of nitrogen, and volatile organic compounds(NRC, 1996).




certain crop pests. For example, most fungi are less able tosporulate and spread disease in less dense, drier, better aer-ated crop residues. Saprotrophic root diseases are also lesslikely to develop in these conditions.

However, the removal of residues also has some signifi-cant ecological risks. If crop residues are overharvested, ex-posed bare soil will be more susceptible to soil and winderosion. The removal of residues may also reduce popula-tions of beneficial microorganisms that retard disease. Mostimportant, the continued removal of residues may substan-tially reduce the carbon and nutrient content of soils andreduce the water and nutrient retention of soils. In woodycrops, these problems could be ameliorated by the selectiveremoval of nutrient-poor wood, leaving branches, bark, andfoliage on site.

The ecological effects of dedicated energy crops can alsohave considerable ecological benefits or risks, depending oncropping intensity and the systems to which they are com-pared (Ranney and Mann, 1994; Tolbert and Schiller, 1996).Growing perennial crops in agricultural areas in place of tra-ditional annual crops is expected to greatly reduce soil ero-sion, agrochemical usage, and soil and nutrient runoff. Theextensive, long-standing, deep root systems of perennialcrops is expected to present an efficient biofilter for surfacewater and near-surface groundwater during the growing sea-son, reducing the movement of dissolved nutrients and agro-chemicals into streams, lakes, and deep groundwater. How-ever, converting natural habitat to the production of biomasscrops may reduce habitat quality and have an adverse envi-ronmental impact, depending on the extent of specific habi-tats and the species that depend on it. These factors wouldhave to be considered on a larger regional context when plan-ning regional feedstock programs (Christian et al., 1994).However, the diversity of seral stages over a landscape bywoody biomass crops at different stages of development(harvest, site preparation, planting, and the different stagesof crown closure and stand development) may provide a vari-able array of habitats and thus support more diverse wildlifepopulations than any single natural or agronomic habitat.For example, many ungulate, bird, and carnivore species areknown to utilize short-rotation, hybrid poplar plantations.

International Market

The development of a cellulosic bioconversion industrywould create domestic industrial expertise in both process-ing and feedstock production that could be transferred toother countries and would benefit the U.S. economy. In itsMay 1999 report, the Panel on International Cooperation inEnergy Research, Development, Demonstration and Deploy-ment of the President’s Committee of Advisors on Scienceand Technology recommended that the United States pro-mote collaborative international energy research, develop-ment, demonstration, and deployment on industrial-scalebiomass energy conversion technologies, emphasizing the

technologies that would provide both electricity and one ormore coproducts (e.g., heat, fluid fuels, chemicals, as well asfood/feed/fiber). The panel also recommended collaborativeresearch on the restoration of degraded lands that could beused for growing crops optimized to provide the feedstocksfor multiple product strategies. The U.S. Agency for Inter-national Development and USDA would generally have thelead role for these collaborative efforts. The feedstock de-velopment and biomass processing technologies under de-velopment by DOE could meet these criteria. However, theeconomics and environmental effects associated with theproduction and use of biomass-derived transportation fuelsdepend strongly on site-specific characteristics and the par-ticular national economy and will have to be evaluated on acase-by-case basis.

In a presentation to the committee by an industrial firm,Arkenol, Inc., on its efforts to develop international businessprospects in China, Russia, Brazil, and Europe, the limits onmarket opportunities for biomass-derived transportationfuels were apparent (Miller, 1999). Based on this presenta-tion, as well as Brazil’s past experiences with ethanol as amotor vehicle fuel, the committee concluded that marketsthroughout the world for bioethanol are less influenced bycurrently available technologies than by tax incentives, avail-ability, and the cost of petroleum fuels, as well as a signifi-cant market share of vehicles that can effectively use thealternate fuel. Many of these issues, however, go beyond thescope and concerns of DOE’s biomass-derived transporta-tion fuels R&D program.

Land Resources

The introduction of biofuels could increase competitionfor land resources. By diverting agricultural land to energycrop production, less land may be devoted to food produc-tion. This concern could be mitigated if cellulosic feedstockwere grown on marginally productive land that is less desir-able for food production. Approximately 35 million acres ofless-productive land has been set aside in the USDA Conser-vation Reserve Program as incentives to producers to takeland prone to environmental degradation out of production;this land may be suitable for growing perennial grasses andtrees for biomass conversion to coproducts (e.g., biobasedchemicals) along with ethanol fuel. Large-scale displacementof conventional transportation fuels with cellulosic ethanolwill require significant production from dedicated energycrops. In addition, advances in biotechnology may lead togenetically modified crop plants with traits that could be usedfor both energy and food production. The manufacture ofbiofuel based on agricultural residues left on the field prob-ably would not interfere with food production.

Biorefineries that produce multiple products could greatlyreduce the competition for land resources. The existing pro-totype biorefineries (corn wet mills) produce food and feedproducts in addition to fuel. Some of the most likely




scenarios for cellulosic biomass conversion to bioethanolcould actually increase food and animal feed reserves. Herethere are at least two possible scenarios. First, the herba-ceous feedstocks for bioethanol manufacture, such as switch-grass, can contain 5 to 12 percent protein depending on thegrowth conditions and time of harvest. Protein cannot readilybe converted to a fuel and, if burned, will emit nitrogenoxides. Therefore, some biomass protein is likely to becomeanimal feed or even human food (Dale, 1983; de la Rosa etal., 1994). In the second scenario, an economical pretreat-ment of cellulosic biomass that makes lignocellulosic sugarsavailable for fermentation would also make these sugarsavailable for digestion in animal feed. Therefore, with a vig-orous cellulose bioethanol industry, world supplies ofdigestible energy could be increased.

The conflict over land use is based on concerns for pro-tection of soil quality, preservation of natural habitats, andmaintenance of biodiversity. Because land use decisions arecomplex, future uses of land cannot be predicted with cer-tainty. The resolution of these issues will depend on manyfactors, including the pressures of human population andconsequent demands for food, fiber, fuel, and human settle-ments, land and environmental policies, and the state of fu-ture economies.

Renewable Fuels

Biomass-based fuels are renewable energy sources thatcould contribute to a domestic source of liquid transporta-tion fuels, and cellulosic bioethanol could help reduce U.S.dependence on foreign sources of oil. An NRC report(1999c) estimates that cellulosic bioethanol manufacturedfrom by-products of agriculture could supply up to 10 per-cent of liquid transportation fuels. Reliance on oil from thePersian Gulf today has forced the United States to maintaina military presence there, leaving the country vulnerable toprice shocks because petroleum reserves are in a geopoliti-cally unstable part of the world (Lugar and Woolsey, 1999).In the long term, as petroleum and natural gas reservesdwindle, the value of renewable energy sources may in-crease. The contribution of cellulosic biomass-derived fuelswill depend on several factors: the cost of conversion to etha-nol, the depletion of competing sources (e.g., fossil fuels),the impact of environmental regulations, and the global de-mand for liquid transportation fuels.

ALTERNATIVE FUELS AND VEHICLE TECHNOLOGIES

The Alternative Motor Fuels Act (AMFA) passed in 1988created a federal program of financial support for R&D anddemonstration of alternative motor vehicles and alternativefuels (methanol, ethanol, and natural gas). As an incentivefor automakers to produce alternative-fuel vehicles, theAMFA provided fuel-economy credits for meeting corporate

average fuel economy (CAFE) standards.3 The AMFAchanges the way an alcohol or natural-gas vehicle is treatedin the calculation of the CAFE standard. Because only thegasoline portion of the fuel is considered in the CAFE calcu-lation, manufacturers of vehicles operating on alcohol ornatural gas can earn credits that can be used to offset short-falls in fuel economy in previous years. As a result of thislegislation, automakers began to manufacture vehicles thatcould operate on both nonpetroleum and petroleum-basedfuels (so-called flexible-fuel vehicles).

In 1993, the flexible-fuel vehicle was introduced as abridge to the dedicated-alcohol vehicle. (In general, vehicleswill be more efficient if optimized for a single fuel [e.g.,gasoline or ethanol].) A flexible-fuel vehicle can run on anyblend of gasoline and alcohol and is produced in both metha-nol and ethanol versions. The first year of manufacture, 3,000flexible-fuel vehicles were sold. In 1998, 250,000 were sold(Lambert, 1999). Under AMFA, CAFE credits are also avail-able for flexible-fuel vehicles, although the credits are sub-stantially less than for dedicated-fuel vehicles. Automakersare opting for the lesser credits, however, because there areonly about 50 ethanol refueling stations, mostly in the Mid-west, and 50 methanol stations in California. Therefore, theopportunity for these vehicles to operate on alcohol, at leastin the foreseeable future, is small.

Ethanol is only one of many alternative fuels under con-sideration. The future energy needs of the world are notlikely to be filled by any one fuel because alternative fuelswill vary from region to region, depending on the availabil-ity and economics of resources. In general, however, liquidfuels are most compatible with existing distribution systemsand engines (i.e., they require the least departure from thetechnologies in place today both for vehicles and for the re-fueling infrastructure).

A critical issue for introducing any alternative fuel ve-hicle will be an adequate refueling infrastructure. If refuel-ing stations are available, consumers will be more likely toconsider purchasing vehicles with new technology. In addi-tion, the alternative fuels must be competitive in price withthe commonly available fuel (i.e., gasoline).

MARKETS FOR BIOMASS-DERIVED ETHANOL

In a free market economy, new businesses and industriesare generally developed based on demand in the marketplace(so-called “market pull”). OFD’s success in launching a new

3 The Energy Policy and Conservation Act of 1975 established corpo-rate average fuel economy (CAFE) standards as a means of increasing fuelefficiency and decreasing reliance on imported oil. Compliance with thesestandards is based on a calculation of fuel efficiency (measured in milesper gallon) for a car manufacturer’s new model passenger cars and light-duty trucks.




biofuels industry based on cellulose conversion will be lim-ited by the absence of market pull and the reliance on “tech-nology push.” Many key market factors are beyond OFD’scontrol, including the low price and easy availability of rawmaterial for hydrocarbon fuel and the extent to which poli-cies developed to implement global climate change treatiespull renewable fuels into the marketplace. For these reasons,the effectiveness of the OFD program should not be mea-sured solely by near-term commercial success. Technologi-cal improvements and cost reductions achieved by the pro-gram may be very important in the midterm and long term.

If competitive costs can be achieved, fuel ethanol pro-duced from cellulose could potentially compete in the fol-lowing auto fuel markets (see Table 2-1):

• the current subsidized market, in which bioethanol isblended with gasoline generally at about 10 percentconcentration to satisfy oxygenate and octane require-ments

• a future unsubsidized market, in which bioethanol isblended with gasoline to satisfy octane requirements

• a long-term market, in which bioethanol is used as an

TABLE 2-1 Markets for Cellulosic Biomass-Derived Fuels

Advantage Disadvantage Market sizea Time Period

Ethanol-gasoline blend agent Oxygenateb and octane Cost offset by subsidy, 1.8 billion Present to 2007e

(subsidized) enhancement; lower therefore, not a current gal/yrd

carbon monoxide market disadvantagec

emissions in oldervehicles

Gasoline-ethanol blend alternative Octane enhancement Lower energy content More than After 2007(unsubsidized) than gasoline; high blend 10 billion

vapor pressure and water gal/yraffinity

Ethanol neat fuel in internal Lower greenhouse Lack of infrastructure More than Long termcombustion engine emissions for and distribution system; 120 billion

dedicated energy lower energy content gal/yrcrops than gasoline

Ethanol for fuel cells Lower greenhouse Lack of infrastructure More than Long termgas emissionsf and distribution system; 120 billion

lower energy content than gal/yrgasoline

Diesel and biodiesel Lower emissions of Cost of feedstock very Fraction Long termsulfur and aromatic high of 33compounds; no billionrequirements to gal/yrh

modify engineg

a Maximum potential for each market without quantifying the realistic percentage that could be achieved.b Oxygenate advantage to meet EPA regulations for ozone reductions will probably be discontinued.c Current fuel markets do not recognize that ethanol has 20 percent energy debit compared to hydrocarbon fuels.d Based on current cornstarch-based ethanol market.e Subsidy for ethanol may not end in 2007.f Reformer cells under development must meet emissions criteria.g Benefits proportional to the blend level of biodiesel.h Based on 4.64 quadrillion BTU per year of distillate (low-sulfur diesel) fuel.

Source: RFA, 1999; EIA, 1998.




essentially neat fuel in concentrations of 85 to 95percent

• a market that may develop over the long term, in whichbioethanol could be used to generate hydrogen for ve-hicles powered by fuel cells

Generally, the value of cellulosic fuel ethanol in thesemarkets will be determined by the price of competing mate-rials, as well as differences in performance between ethanoland other fuels. In estimating the market value of bioethanol(the net wholesale price received by the manufacturer whenthe retail price of bioethanol is comparable to the price ofcompetitive fuel) the committee did not consider credit forreduction in greenhouse gases because the basis for thiscredit has not been established. This situation could changein the future as nations establish implementation programsto support international agreements to control climatechange.

The price of gasoline components differs somewhatamong individual refiners and blenders depending on thecrude oil processed, the degree of crude oil self-sufficiency,refinery configuration, available excess refining capacity,and market niche. Typical industry practice includes the de-termination of company-specific values for gasoline compo-nents using sophisticated optimization models. An averagevalue for ethanol in these markets can be estimated usinghistorical overall-market average prices for gasoline and oc-tane premium as related to the price of crude oil. The ethanolvalues determined for internal combustion engines are basedon the assumption that no significant changes in market fun-damentals would impact the price differential between crudeoil and gasoline, the relative octane value, and the gasolinevapor pressure specifications. Actual market prices vary overtime depending on supply and demand. The values estimatedhere are based on expected average prices over several years.

Ethanol as a blend agent for gasoline has some disadvan-tages because of its higher affinity for water and its highblend vapor pressure. Refiners have been reluctant to trans-port ethanol blends by pipeline because of potential contactwith water. For this reason, ethanol is often splash-blendedat a storage terminal instead of as part of the normal blend-ing procedure at the refinery. When ethanol is blended withgasoline at the terminal, the blend generally has a higheroctane number than the octane number required for regulargasoline, often referred to as “octane giveaway.” Blenderslocated at terminals with proprietary pipelines can avoid thisproblem by blending ethanol with gasoline that has loweroctane. Ethanol’s high blend vapor pressure can entail sig-nificant processing costs because other materials with highvapor pressures traditionally found in gasoline have to beremoved and used elsewhere to make room for ethanol. Oc-tane giveaway and other performance debits are discussedmore fully in Appendix D.

Current Subsidized Market

The blended ethanol market, which satisfies some oxy-genate and octane requirements, is currently subsidized. Inaddition to the federal excise tax exemption, 16 states offeradditional incentives of up to $0.40 per gallon (e.g., in NorthDakota and Wyoming) (DOE, 1996, 1997; DOT, 1998). Thecurrent size of this subsidized market is about 1.8 billiongallons per year of ethanol, primarily ethanol derived fromcorn grain. To compete in this market, ethanol fromcellulosics would have to be cost competitive with ethanolfrom corn grain.

Ethanol is only one of several products made from corn ina wet milling operation; other products include food and in-dustrial starches, dextrose, high-fructose corn sweetener, andmilling coproducts, such as corn gluten feed, gluten meal,and corn oil. Therefore, estimates of manufacturing corn-based ethanol must allocate portions of the raw material,plant capital, and operating costs among the various prod-ucts, which leaves room for differences of opinion in theprocessing costs of ethanol from a wet milling operation. Acost estimate was first made in 1980 (Keim, 1980) and up-dated using generally accepted engineering methods. Thisestimate compares favorably with the cost estimate of com-mittee members and peers. The cost for both is about $1 pergallon. Fuel ethanol from a wet mill plant without majorcoproducts would cost about $1.50 per gallon (in 1999 dol-lars cost updated). The cost of ethanol from a dry mill plantwould be $1.40 per gallon (Katzen et al., 1994), reflectingthe lower value of coproduct credits.4

Future Markets for Gasoline-Ethanol Blends

Even though the federal ethanol tax credit is currentlyscheduled to expire in 2007, ethanol proponents have ob-tained extensions of the credit several times in the past, al-though at reduced levels. Although it is not clear when taxincentives for blending bioethanol into gasoline will end, anunsubsidized market for fuel-ethanol blends may eventuallydevelop. The ultimate potential for ethanol as a source ofoctane in this market is more than 10 billion gallons per year.By the time this market develops, however, oxygenated fuels

4 In a wet mill corn ethanol plant, the corn is steeped for 24 to 48 hoursthen fractionated into germ (from which oil is extracted), starch, fiber, andgluten (corn protein). The starch is then converted into dextrose and fer-mented to alcohol. Normally, the corn refinery makes several products,such as food and industrial starches, dextrose, fructose, corn oil, glutenmeal, and corn gluten feed. In a dry mill, the corn is “mashed” (i.e., ground),slurried in water, cooked with enzymes to convert the starch to glucose, andfermented. The two products from a dry mill are ethanol and distiller’sdried grains (an animal feed).




may not be significant contributors to decreases in carbonmonoxide tailpipe emissions.

The committee considers octane enhancement as a pri-mary source of value for bioethanol in an unsubsidized fuel-ethanol blend market. The market for fuel-ethanol blendscould be limited to premium grades, which have the highestoctane. The average value for ethanol blended in premiumgasoline in this market would depend on average prices forgasoline and incremental octane, which in turn will dependon the price of crude oil. For example, if crude oil costs $15per barrel, the ethanol value would be about $0.64 per gal-lon; if crude oil costs $25 per barrel, the ethanol value wouldbe about $0.99 per gallon.5 If ethanol is blended with amidgrade fuel, the market value of bioethanol would de-crease by 20 percent; if ethanol is blended with a regulargrade fuel (regular grade fuel is characterized by a lowerrelative value of octane), the value would decrease by30 percent.

Because of its oxygen content, a gallon of ethanol con-tains about 33 percent less energy than a gallon of hydrocar-bon gasoline. However, ethanol blends have been shown tobe more energy efficient than gasoline. Therefore, the netenergy debit is only about 20 percent per gallon of ethanol ina gasoline blend (Miller et al., 1996). This amounts to a2 percent energy debit for a typical 10 percent ethanol blend.There is no energy debit for ethanol in reformulated gasolinethat has a specified oxygen content. The energy debit onlyoccurs when the addition of ethanol increases the oxygencontent of gasoline.

Neat Fuel Markets

Internal Combustion Engines

The internal combustion engine, the primary automotivetechnology used in vehicles today, consumes about 120 bil-lion gallons of fuel per year in the United States (EIA, 1998).Future scenarios that include neat ethanol (85 to 95 percentethanol blended with gasoline) as a replacement for some ofthis fuel must be based on the properties of the fuel, the

introduction of new technologies, and required fuel infra-structure changes.

Although ethanol has higher octane than premium gaso-line, higher octane is expected to add little additional valuein the marketplace, at least in the midterm. The manufactureof high-compression engines that would derive the full ben-efit of ethanol octane cannot be justified as long as ethanolsales volumes are relatively low. The only practical vehiclesfor neat ethanol in the foreseeable future are flexible-fuelvehicles, which are designed to use either gasoline or etha-nol. The compression ratio of flexible-fuel vehicles is set bythe lower gasoline requirement.

Neat ethanol fuel will have to compete with gasoline onan energy equivalent basis, which lowers the value for neatethanol because ethanol has 33 percent less energy per gal-lon than gasoline. This lower energy content may be some-what offset by higher efficiency. A limited evaluation by theEPA found that neat ethanol was about 5 percent more effi-cient than gasoline in the one flexible-fuel vehicle modeltested to date (Adler, 1999). Further testing will be neces-sary to determine fuel efficiencies in a wide variety ofvehicle models.

Today there is no significant infrastructure for transport-ing and distributing neat ethanol to the motor fuel market-place. The investment for a new supply infrastructure willhave to be made before ethanol sales begin, which presents amajor hurdle for fuel ethanol, or any new fuel. The amor-tized cost of the new infrastructure has been estimated to beon the order of $0.08 to $0.11 per gallon when the system isoperated to capacity (Sperling, 1988; Wang et al., 1998). Forthe purposes of estimating the value of ethanol in this mar-ket, the committee assumed the amortized cost of the newsupply infrastructure would be $0.10 per gallon. On this ba-sis, ethanol values would be $0.34 per gallon for a crude oilprice of $15 per barrel and $0.53 per gallon for crude oil at$25 per barrel when used as a premium-grade, high-octane fuel.

Fuel Cells

Fuel cells, which generate energy through electrochemi-cal reaction of hydrogen and oxygen, are under develop-ment as a potential alternative to internal combustion en-gines. Although fuel cells have the potential to increaseefficiency significantly, the initial motivation for fuel-celldevelopment has been the reduction in emissions of criteriapollutants. A number of hydrogen-rich fuels, such as gaso-line, methanol, and ethanol, could be used with fuel cells.Gasoline used for fuel cells may be a new low-cost gradethat may require additional pumps and storage tanks at ser-vice stations or may simply replace an existing grade ofgasoline. If ethanol or methanol is used, then a new fueldistribution system will be required.

5 These ethanol values are based on the following assumptions: no sig-nificant changes in market fundamentals that would impact the differentialbetween crude oil and gasoline, average fuel octane value and gasolinevapor pressure specifications; estimated values would provide a reasonablereturn on investment; and industry would make the necessary investmentsin pipeline infrastructure to permit transporting ethanol-gasoline blendsfrom refineries. The correlation of gasoline price to crude oil price is basedon recent historical U.S. refining margins (Ting, 1999). The market valuerelationships between various grades of gasoline fuels is based on publisheddata and personal communication with William Piel (1999). Changes inavailability of MTBE were not reviewed for this study or considered inthese calculations.




The technology for fuel cells is not developed sufficientlyto permit this study committee to develop an estimate forrelative value of fuel ethanol in this market. Controlling fac-tors will be the cost of delivery and the performance of hy-drogen. A critical step will be processing of fuels other thanhydrogen onboard the vehicle. The NRC Standing Commit-tee to Review the Research Program of the Partnership for aNew Generation of Vehicles (NRC, 1999a) noted that anintegrated systems analysis to assess cost and performanceissues of onboard processing has not been done and that themajor efforts to date have focused on gasoline. Although thedesign phase of the fuel cell is in the very early stages, R&Dengineers are working on multiple-fuel fuel-cell systems.

MANUFACTURING BIOMASS-DERIVED ETHANOL

A primary goal of the OFD bioethanol R&D program isto reduce the cost of manufacturing ethanol from cellulosicbiomass through improvements in technology. The OFDperiodically assesses the technical and economic status ofthe biomass-to-ethanol process to establish goals and direc-tions for future R&D strategies.

Prior Estimate

In June 1991, an assessment of ethanol manufacturingcosts based on the best available technology was made bythe Fuels and Chemicals Research and Engineering Divisionof the Solar Energy Research Institute (SERI, the predeces-sor of NREL). A plant size of 58 million gallons of ethanolper year (1,920 dry tons of feedstock per day) was used forthe analysis (Schell et al., 1991; Hinman et al., 1992). Basedon the equipment list generated from the process flow dia-grams, the total capital cost of the plant in 1990 dollars wasestimated to be $141.24 million. The annual capital chargerate was 20 percent. The feedstock used for the analysis waswhole-tree wood chips delivered to the plant site for $42 perdry ton. The results of this economic assessment are summa-rized in Table 2-2. To determine the five-year adjustment to1995 dollars, the committee applied the Chemical

Engineering Purchased Equipment Index to capital-cost andfixed-cost items factored from the plant cost, applied theInorganic Chemical Index to adjust the cost of chemicalsand nutrients, and applied the Labor Index to adjust the costof labor. No adjustment was made in the cost of feedstockand the by-product electricity credit (Wooley et al., 1999).The manufacturing costs adjusted to 1995 dollars of $1.28per gallon are shown for comparison with more recenteconomic analyses.

Current Estimates

Recently, NREL, in conjunction with Delta-T Corpora-tion, prepared a series of economic assessments for ethanolmanufacturing costs based on the most recent understandingof the technology from the NREL R&D program andNREL’s understanding of related industrial technology(Wooley et al., 1999). The plant size used was 52.2 milliongallons of ethanol per year (2,204 dry tons of feedstock perday). Projections of cost reductions expected by years 2005,2010, and 2015 were also calculated to guide the programdirection and prioritization for R&D. ASPEN Plus materialand energy balances were used as a basis for equipment siz-ing, and ICARUS cost estimation software was used to de-termine capital costs in conjunction with vendor quotes formost of the major equipment (Wooley et al., 1999). All costswere in 1995 dollars.

Using current NREL technology, the total capital cost ofthe plant was estimated to be $204 million, with a totalproject cost of $212 million. A capital charge rate of17.7 percent was used to estimate manufacturing cost pergallon. The feedstock was poplar hardwood chips deliveredto the plant at a cost of $25 per bone-dry ton. The total manu-facturing cost for NREL of $1.36 per gallon is shown inTable 2-2. The relatively low feedstock cost is assumed tocorrespond to the first few commercial plants where nicheopportunities for low-cost residue feedstock will probablybe available.

OFD recognizes that other available technologies may bemore cost efficient and desirable than the ones under

TABLE 2-2 Cost Estimates for Bioethanol Manufacturing

Cost per Gallon (in 1995 dollars) Cost per Gallon (in 1995 dollars)($25 per ton of feedstock) ($42 per ton of feedstock)

DOE and best of industry (1991) — 1.28DOE program (1999) 1.36 1.61Near-term best of industry (2002) 1.10 1.32Iogen (unsubstantiated claim) — 0.90DOE and best of industry (2005) 0.87 1.08DOE and best of industry (2010) 0.78 0.95DOE and best of industry (2015) 0.70 0.86

Sources: Schell et al., 1991; Hinman et al., 1992; Wooley et al., 1999; Foody, 1999.




development by NREL, especially pretreatment technologiesthat can produce higher conversions of hemicellulosic sug-ars and microorganisms that can produce enzyme more effi-ciently (Hettenhaus and Glassner, 1997; Wooley et al.,1999). Superior ethanologens that ferment hemicellulosesugars to ethanol are also available. When these technolo-gies are incorporated into OFD’s design and cost models,the estimated manufacturing cost is lowered by 19 percent.The following are NREL’s estimates for best-of-industrytechnology for 2002 (Wooley et al., 1999):

• a yield increase of 12 percent to 76 gallons of ethanolper ton of feedstock resulting in a manufacturing in-crease of 12 percent to 58.7 million gallons of ethanolper year

• a capital-cost reduction of 18 percent to $173 million• a manufacturing cost reduction from $1.36 per gallon

to $1.10 per gallon of ethanol at $25 per ton of feedstock

As the industry grows, the availability of niche, low-costfeedstock is expected to decline. As a result of cost increasesfor feedstock of $25 per ton to $42 per ton, manufacturingcosts will increase from $1.10 per gallon to $1.32 per gallonof ethanol (Nguyen, 1999).

Comparisons of the current cost estimate in Table 2-2with the estimate done in 1991, adjusted for inflation, showthat there has been little if any drop in the projected cost tomanufacture ethanol. The capital estimate for the manufac-turing plant in 1999 is 50 percent higher than for the plant inthe earlier estimate. According to OFD, the costs increasedin the 1999 estimate because of a more complete assessmentof technology costs reflecting a level of operation at the pilot-plant scale and more accurate material and energy-balancetechniques in the ASPEN Plus modeling tools. The 1991cost estimates may have been too optimistic because theywere not as detailed and complete as the recent estimate.

Improvements

OFD anticipates that its R&D program will yield majorreductions in the costs of cellulosic ethanol over the next 15years by concentrating R&D on cellulase enzymes and fer-mentation organisms. By 2005, OFD estimates that improve-ments in the thermostability of enzymes should yield a three-fold improvement in specific activity. Wooley andcolleagues (1999) estimate the following improvements willbe made in ethanol manufacturing for 2005 (1995 dollars):


• a capital-cost reduction of 17 percent to $143 million• a manufacturing cost reduction from $1.10 to $0.87

per gallon of ethanol at $25 per ton of feedstock

• a manufacturing cost reduction from $1.32 to $1.08per gallon at $42 per ton of feedstock

By 2010, OFD projects that enhancements in the cellu-lose binding domain (i.e., improvement in interaction be-tween the enzyme and the surface of biomass), improve-ments in enzyme activity (i.e., changes in amino acidsequence of the enzyme protein to improve enzyme catalyticactivity), and reduced nonspecific binding (i.e., geneticmodifications of enzyme to reduce losses through adsorp-tion to lignin) will lead to a tenfold increase in enzyme per-formance. OFD plans to fund research in the enzyme areaconducted by industrial researchers. The OFD projects thatsubstantial improvements will occur through the develop-ment of microorganisms capable of producing 5 percentethanol at temperatures higher than 50°C. Wooley et al.(1999) estimate the following improvements for 2010 (com-pared to 2005):


• a capital cost reduction of 10 percent to $129 million• a manufacturing cost reduction from $0.87 to $0.76 of

ethanol at $25 per ton of feedstock• a manufacturing cost reduction from $1.08 to $0.95


By 2015, genetic engineering will lead to higher levels ofcarbohydrates in crops grown for ethanol manufacture. Thecellulose fraction in the feedstock is expected to increasefrom 42.7 percent in the base case to 51.2 percent in 2015.The following improvements are estimated for 2015 (com-pared to 2010) (Wooley et al., 1999):


• a capital-cost increase of 2 percent to $131 million• a manufacturing cost reduction from $0.76 to $0.70

per gallon of ethanol at $25 per ton of feedstock• a manufacturing cost reduction from $0.95 to $0.86


OFD’s cost estimates are based on potentially lower costtechnologies that are being developed outside of its own pro-gram. Even lower cost technologies than these may becomeavailable. For example, Iogen, a Canadian enzyme companythat has been involved in cellulosic ethanol research for morethan 25 years, recently claimed it had developed a processcapable of manufacturing ethanol from biomass crops forabout $0.90 per gallon (Foody, 1999). Iogen recently joinedwith Petro-Canada, one of Canada’s largest oil and gas




producers, to build an ethanol demonstration unit for thepurposes of scaling up Iogen process technology(McCoy, 1998).

OFD manufacturing cost estimates are also showngraphically in Figure 2-1 and compared to the estimatedvalue of bioethanol in potential markets. Although OFDhas made significant improvements in planning and esti-mating, the lack of demonstrated cost reduction in the lastdecade is a cause for concern (see Figure 2-1). Major costreductions will be essential for ethanol to compete in anonsubsidized motor-fuel market. A comparison of themanufacturing cost for cellulosic ethanol using the coretechnology being researched by OFD with the value of fuelethanol in the potential markets outlined earlier in thischapter shows a wide gap between bioethanol manufactur-ing cost and market value.

FIGURE 2-1 Estimated manufacturing costs and the market value of cellulosic biomass-derived ethanol. NOTE: These calculated ethanolvalues are based on the following assumptions: no significant changes occurred in market fundamentals that would affect the differentialbetween crude oil and gasoline, average fuel octane value, and gasoline vapor pressure specifications; estimated values provide a reasonablereturn on investment; and industry makes the necessary investments in pipeline infrastructure to transport ethanol-gasoline blends fromrefineries. The correlation of gasoline price to crude oil price is based on recent historical U.S. refining margins (Ting, 1999). The marketvalue relationships between various grades of gasoline fuels is based on published data and personal communications from William Piel(1999). Changes in the availability of MTBE were not reviewed for this study or considered in the calculations.

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CONCLUSIONS

Conclusion. Because of the uncertainty of future govern-ment regulations and/or subsidies for biofuels, the Office ofFuels Development should not rely on subsidies as marketdrivers for biomass-based ethanol but should assume thatbiomass-based ethanol must become cost competitive withother transportation fuels when setting program goals andjudging progress.

Conclusion. Although cost estimates for the manufacture ofbioethanol made in 1991 were not as complete or detailed asrecent cost estimates, there has been apparently little if anydrop in the projected cost of bioethanol based on technolo-gies under development in the Office of Fuels Developmentprogram.




Conclusion. The international market for biofuels will de-pend on economic conditions and resource availability ofindividual countries.

Conclusion. In the near term, the primary market for ethanolfuel will be as a gasoline blend agent. Major market

penetration of ethanol transportation fuel is likely to occuronly in the long term.

Conclusion. The issue of an infrastructure must be addressedas part of the potential widespread use of bioethanol in thetransportation sector.




22

3

Feedstock Development

PROGRAM OBJECTIVES AND OVERVIEW

The objective of feedstock research by OFD is to developlow-cost lignocellulosic biomass to be used for ethanol andcoproduct conversion. This objective is to be achieved by(1) developing agricultural and silvicultural systems for theefficient production, harvesting, and handling of perennialcrop biomass from different regions of the United States;(2) improving the yield and quality of biomass by traditionalplant breeding and biotechnology; and (3) developing envi-ronmentally acceptable methods for collecting and handlingbiomass, including residues from agriculture and forestryand municipal wastes (OFD, 1998). In addition to this over-all objective, the program is also charged with consideringsustainability and the environmental effects of biofuels onwater, soil, atmosphere, and biological diversity.

Feedstocks are a major cost of bioethanol production (seeFigure 1-1), accounting for approximately 40 percent of to-tal production costs (Wyman, 1999). Studies have shownthat improvements in biomass yield are the most effectivemeans of reducing dedicated feedstock costs and have, there-fore, attracted major investments in research on breeding andagronomics. Other major opportunities for reducing feed-stock costs include improvements in harvesting systems(Tuskan, 1999), derivation of coproducts, and improvementsin feedstock quality to reduce processing costs.

Initial research was focused on identifying potential spe-cies and sites for growing low-cost biomass. More than 100woody and 35 perennial herbaceous species were screenedfor their potential biomass yield and their adaptability tovarious climates (Wright and Tuskan, 1997). Based on thisresearch and industry’s interest in using currently availablesources of biomass for demonstration projects, the programis now focused on three areas: (1) agricultural and forestresidues, (2) woody biomass as a coproduct from short-rota-tion woody crops grown primarily for other purposes, and(3) perennial herbaceous crops.

OFD considers the use of residues, including agricultural,

forest, industrial, and municipal wastes, to have high poten-tial as a source of low-cost cellulosic feedstock. Primaryagricultural residues include sugarcane bagasse, corn stover,wheat straw, and rice straw. Forest residues include wastefrom lumber mills, logging, fire control, and thinning opera-tions. OFD estimates that between 100 and 200 million tonsof corn stover and wheat straw are potentially available at acost of less than $45 per ton (OFD, 1998). Studies are underway on the effects of supply, cost, storage, and harvestingcorn stover on agronomic systems and soil fertility(Hettenhaus, 1999).

Initial research included evaluating the potential of usinga number of woody species, including poplar, sweetgum,sycamore, silver maple, black locust, and eucalyptus. How-ever, the program is now focused primarily on poplar be-cause of the broad geographic range over which it can begrown. Rapid acceptance and utilization of hybrid poplarsfor high-value fiber production by the pulp and paper indus-try was also a significant factor. OFD has played an impor-tant role in the development of poplar hybrids and silvicul-tural methods now used by forest industries in several partsof the country (Wright and Tuskan, 1997). The high-yield,intensive-culture systems used in the Pacific Northwest arethe most dramatic examples. Because of the high value offiber and wood products compared to bioenergy products,for the near term DOE considers poplars as coproduct sys-tems (i.e., residuals not used for wood or pulp would enter abioenergy stream).

Dedicated energy crops being investigated in the OFDprogram include switchgrass and willow, both of which arebeing developed as biomass crops for cellulose-to-ethanolproduction and as fuel sources for generating electricity.Research on switchgrass has increased in recent years be-cause its economic potential appears to be superior to thepotential of woody crops. Switchgrass can be readily grownby farmers using current equipment, and, as a C4 crop (i.e.,the initial carbon dioxide fixation products are four-carbonacids), it is suitable for growing in the large areas of warm,



FEEDSTOCK DEVELOPMENT 23

droughty lands available for bioenergy crops. However, be-cause of the uncertainties in the economic analyses, the suit-ability of woody crops for integrated, coproduct-orientedsystems, and the expectation of greater environmental ben-efits from tree plantations over herbaceous systems, OFD isalso continuing to support research on woody feedstocks.

Environmental issues are another important driver ofbioenergy crop development. OFD has been working closelywith the environmental community and has initiated severalin-house studies and studies in partnership with universitiesto evaluate the environmental aspects of energy crop culture.These studies have focused on the effects on soil fertility,water quality, and wildlife habitats compared to the effectsof alternative crops and natural vegetation.

OFD has also conducted detailed modeling analyses oflife-cycle impacts for carbon management of bioenergycrops compared to fossil-fuel alternatives (Wang, 1997;Wang et al., 1998). Perennial bioenergy cropping systemscan provide diverse local environmental benefits (e.g.,biofiltration, erosion control, and creation of wildlife habi-tat), as well as benefits in terms of global carbon manage-ment. By evaluating environmental and economic trade-offsat several scales, OFD has provided a foundation for the de-velopment of national policies that may help the UnitedStates reduce net additions of carbon dioxide to the atmo-sphere while solving some of the environmental and eco-nomic problems of rural communities.

ALLOCATION OF FUNDING

The feedstock development program involves a widerange of projects both within DOE and in cooperation withuniversities, industry, and other government agencies (seeTable 3-1). Research is divided regionally and nationally.Regional divisions are the Midwest/Plains States (switchgrassand poplar), the Southeast (switchgrass and poplar), the North-east (willow), the Lake States (poplar), and the Pacific North-west (poplar). Regional development centers conduct researchfocused on breeding and agronomics to increase crop yieldand on plant physiology and biotechnology. Up to now, Con-gress has not supported significant increases in funds. In fiscalyear 1998, the feedstock development projects accounted for8.2 percent of the OFD R&D program; in fiscal year 1999,they accounted for 6.7 percent. The request for fiscal year2000 is 10.3 percent of the OFD budget.

OFD’s initial focus was on woody crops, for which37 percent of its research funds were allocated in 1994–1995(compared to 22 percent for herbaceous crops). However,since 1996, both crop types have received approximately33 percent of research funds for crop development (seeTable 3-2). Allocations for environmental sustainability alsoincreased from 12 percent in 1996 to 20 percent in 1999. Theeconomics of production were a major focus during 1996and 1997, accounting for 25 percent of funds spent, butreceived almost no funding in 1999. Research in

biotechnology, which includes tissue culture, genetic map-ping, and genetic engineering, has received extremely lowfunding, ranging from 2 to 4 percent.

SHIFT IN STRATEGIC DIRECTION

Like other elements of OFD’s R&D program, research onfeedstocks has been dominated by short-term goals, most ofthem involving production or commercialization. Invest-ments in new science and technology have been limited inscope and funding. OFD’s support for research in biotech-nology, molecular genetics, and physiology to provide newoptions for production systems has been very modest.

In general, OFD has focused on the management and

TABLE 3-1 Participants in the Feedstock DevelopmentProgram, 1996–1999

Crop DevelopmentWoody Crops

Iowa State UniversityMississippi State UniversityWashington State UniversityState University of New YorkUniversity of WashingtonOregon State UniversityU.S. Department of Agriculture, Forest Service, North Central Forest

Experiment StationHerbaceous Crops

Auburn UniversityOklahoma State UniversityTexas A&M UniversityUniversity of GeorgiaUniversity of TennesseeVirginia Polytechnic Institute and State UniversityU.S. Department of Agriculture, Natural Resources Conservation

Service, Plant Materials CentersU.S. Department of Agriculture, Agricultural Research ServiceChariton Valley Resource Conservation and Development District

Environmental SustainabilityAlabama A&M UniversityAuburn UniversityClark UniversityClemson UniversityU.S. Department of Agriculture, Forest Service, Forestry Sciences

LaboratoryU.S. Department of Agriculture, Center for Forested Wetland

ResearchNational Council for Air and Stream ImprovementTennessee Valley Authority

EconomicsKansas State UniversityUniversity of TennesseeUniversity of Minnesota-CrookstonNatural Resources Research InstituteU.S. Department of Agriculture, North Central Forest Experiment

StationWesMin Resource Conservation and Development Council

Source: ORNL, 1999a.




breeding of biomass feedstocks to provide basic informationon the culture of these high-intensity systems and to identifyvarieties adaptable to the conditions where the feedstockswould be grown. Until these basic parameters were estab-lished, it was impossible for OFD to evaluate the economicsof the production systems or attract private-sector participantsto share the costs of further development. As research in theseareas progresses, major improvements are being made in theproductivity of both woody and herbaceous crops. Consider-able work remains to be done, however, to improve the basicproduction methods for switchgrass, prompting a recommen-dation by a panel of reviewers that OFD continue work onproduction systems and focus work in biotechnology towarddefined production targets (OFD, 1998).

The feedstock development program is involved in sev-eral kinds of partnerships, including interdisciplinary teamsof scientists and university-industry-government collabora-tions in breeding, culture, biotechnology, and analysis ofenvironmental impacts. Through these partnerships, OFDhas been able to leverage its investments. Partnerships havebeen particularly successful with woody crops, where verymodest government investments have prompted large con-tributions of funds or in-kind resources from forest indus-tries, land-grant universities, and the USDA.

OFD uses diverse, often informal, methods of project se-lection and review. Some projects have been selected after aformal call for proposals; some have been arranged by con-tract with particular institutions; some have been arranged aspartnerships with a number of contributors. Formal projectreviews have been infrequent and sporadic. Despite this vari-able structure, the committee believes that OFD’s researchfunds have been allocated effectively. The results of OFDfunding have included fundamental advances in breeding,

genome analysis, and genetic engineering that have enabledexpansions in commercial production and applications ofnew technologies to crop improvement. Nevertheless, thecommittee believes that a more formal process for selectingprojects and monitoring progress, including regular peer re-views, would ensure quality, especially if the funding base isincreased significantly.

Although OFD’s support for the establishment of basicbreeding and production systems for the major bioenergycrops is appropriate, the committee does not believe that OFDshould support long-term regional breeding and productionprograms. Once breeding systems have been established and anumber of productive clones or varieties identified for eachregion, OFD should shift its focus toward research on majortechnological improvements that would be too costly for re-gional programs to undertake but could have a national, andeven international, impact. This research should include con-tinued studies of the environmental issues raised by newlydeveloped biotechnologies. Responsibility for incrementalimprovements in breeding and production systems should berelegated to private industry, regional USDA programs, orland-grant universities, as appropriate.

Biotechnology presents a major opportunity for improv-ing biomass crop yield and product quality in the midterm tolong term. However, at OFD’s current level of activity, littleprogress can be expected. In the last few years, “genomics”has become a major scientific and commercial enterpriseworldwide (Box 3-1), and private sector investments nowexceed $200 million per year, dwarfing public-sector invest-ments (NRC, 1998a). As a result of research on genomics,the agricultural seed and chemical industries have been radi-cally restructured. Discoveries are being made daily, provid-ing new tools for understanding and solving problems in cropproduction. These discoveries have no historic parallels inbiology and are creating a wealth of new information forresearchers. OFD should take advantage of advances ingenomics in its attempts to bring down the costs of bioenergycrop production.

Leveraging these advances will require significant stud-ies in bioenergy crops. Because of the high functional con-servation across species of protein-encoding gene sequences,genes identified in model organisms can be rapidly identi-fied and studied in biomass crops, but only if gene catalogsand genetic engineering methods have been developed. Be-cause genetic mapping, gene function studies in transgenicplants, and field trials of newly created materials will take along time, OFD should begin work soon so that improvedvarieties are ready for production systems in the 2010 to2020 time frame.

GENOMICS

Major investments will be required to develop thegenomics tools and genetic engineering systems to makegenomics technology applicable to bioenergy crops.

TABLE 3-2 Allocation of Funds for FeedstockDevelopment Projects

Project 1996 1997 1999

Crop developmenta

Woody speciesb 28%d 32% 34%Herbaceous speciesc 30% 26% 38%

BiotechnologyWoody species 4% 3% 2%Herbaceous species 0% 0% 4%

Environmental sustainability 12% 13% 20%

Economics 26% 26% 2%

a Crop development includes management, breeding, and physiology re-search.

b Includes poplar and willow.c Includes switchgrass.d Percentage based on total research funding for all projects.

Source: ORNL, 1999b.



FEEDSTOCK DEVELOPMENT 25

Genomics technology can lead to the development of new,high-yield, pest-resistant varieties of plants and enable ma-jor modifications to the production characteristics and feed-stock quality that would be very difficult to achieve via tra-ditional breeding. Once the necessary genes are available inthe gene pools of bioenergy crops, genomics could also en-able the production of novel coproducts.

The following key elements of advanced biotechnologywill be necessary for bioenergy crops:

• large sets of gene sequences from bioenergy crops thatrepresent most of the functional genes in their genomes

• maps of the genetic and physical locations of genes,including their locations with reference to the com-plete gene sequences of model plant species (e.g.,Arabidopsis thaliana)

• methods for rapid and inexpensive mapping and ex-pression studies of the genes that affect economicallyimportant traits

• efficient means of producing transgenic plants to testthe function of isolated and modified genes, includinggenes from other species

OFD should carefully assess its goals for improving feed-stock via genomics biotechnology and focus on the areasthat are technically feasible and most likely to lead to reduc-tions in cost. A detailed list of the tools and research projectsneeded to implement genomics in a bioenergy crop, usingpoplar as an example, is provided in Appendix E.

The two model species on which OFD has chosen tofocus, poplar and switchgrass, both have major advantagesthat will facilitate the application of biotechnology. As amember of the monocotyledonous grass family Poaceae,switchgrass is closely related to rice, maize, sorghum, andsugarcane, organisms that are also being intensively studied.More than 76,000 genes (i.e., distinct expressed sequencetags) have already been determined from maize by privateindustry. The entire rice genome is being sequenced by aninternational public consortium. The extensive synteny (con-servation of gene order) between the switchgrass genome

and these well studied genomes should facilitate the rapidgene-level analysis of switchgrass.

Some obstacles must first be overcome, however, beforebiotechnology can be effectively applied to switchgrass.First, substantial progress will have to be made on breedingand production systems. Then, because of its polyploid na-ture and lack of a gene-transfer system, considerable workwill be necessary on basic genetic and tissue culture proto-cols as a basis for the development of genetic mapping andtransformation methods (ORNL, 1998).

Poplars and willows, which are members of the dicotyle-donous family Salicaceae, have no close relatives under ge-nomic study. However, these species have a number of traitsthat would facilitate genomic studies. Most of them are dip-loids and have a small genome, which would simplify geneidentification and mapping. Many can be readily crossed,producing hybrids that show heterosis, which would facili-tate genetic mapping. Several pedigrees already exist forpoplars as a result of breeding programs and ongoing ge-nomic studies. And poplars can be readily transformed viamethods of asexual gene transfer; thus they have given riseto many more transgenic plants than any other woody spe-cies. OFD funds have contributed to this capability throughsupport of the crop development centers in the Pacific North-west (PNW, 1999).

In addition to their biological tractability, both poplarsand willows are of considerable interest to other organiza-tions that might cofund genomic research. The USDA andother multispecies grass genome programs (e.g., Interna-tional Grass Genome Initiative) are logical partners for re-search on switchgrass, and the forest industry and the U.S.Forest Service are logical participants in studies of poplar.Although poplars are not a major economic species for theforestry industry, they are widely recognized for their valueas a model species for forest biotechnology. Poplars can pro-vide the proof of concept for biotechnology targets muchfaster and at much lower cost than conifers, the main com-mercial species for most forest industries. The DOE Agenda2020 program, which is funded by the DOE Office of Indus-trial Technologies, is an example of a grant program

BOX 3-1What Is Genomics?

Genomics is the intensive, large-scale study of the structure and function of genes. The initial focus of genomicsresearch is on mapping and sequencing large numbers of genes. A typical plant contains about 20,000 genes. Studies canrange from the development of maps of the genome to determining the complete DNA sequence of all chromosomes. Thenext phase of genomics research involves clarifying gene function at the cellular and organismal levels. This includes deter-mining how they are regulated, how they interact, how variations in structure affect function, and how they can be used ingenetic engineering.




cofunded by industry and DOE that includes research in bio-technology (AFPA, 1994).

Through genetic engineering, new genes, and thus newbiochemical pathways, can be transferred into plants en-abling the creation of novel coproducts in bioenergy crops.The bioenergy crops of the future may be the feedstock forbiorefineries for which energy is only one, perhaps the leastvaluable, of several products. Coproducts under commercialdevelopment via the genetic engineering of plants includevaccines and other high-value pharmaceuticals, industrialand specialty enzymes, and novel fragrances, oils, and plas-tics. Bioenergy crops might logically be engineered to pro-duce high quantities of cellulytic enzymes, such as cellulaseor xylanase, which could be used directly for feedstock pro-cessing and thus reduce the cost of cellulase required forproduction. For other feedstocks, such as corn stover andswitchgrass, genes and genetic engineering methods will beavailable from major biotechnology companies as a result oftheir work on maize and rice. For poplars, the genes devel-oped for dicot crops can often be directly tested or adapted.

Modifications of feedstock biomass are a highly desir-able way to facilitate processing; however, the necessarymodifications will vary with the energy product and pro-cesses. For example, higher lignin quantity is likely to bedesirable for combustion to produce electricity because ofits high energy density compared to polymerized sugars. Forfermentation to ethanol, however, lignin could be reduced ormodified so that it can be removed at less expense and withless interference for processing enzymes and microorgan-isms. Hemicellulose structure also appears to be importantfor processes that use enzymatic digestion. Feedstock, there-fore, will have to be engineered differently for different prod-ucts, pretreatments, and processing methods. A number ofgenes are already known that could be tested in transgenicplants for their effects on feedstock processing into ethanol.Many more possibilities for quality engineering will becomeavailable as catalogs of genes expressed in lignocellulosictissues are uncovered by genomics studies (Sterky et al.,1998). To understand how feedstock should be engineeredfor different products, pretreatments, and processing meth-ods, the research programs of OFD’s processing and feed-stock development groups should be integrated.

Investigations in genetic engineering and genomics ofbiomass feedstocks could be integrated to avoid duplicationof effort via the establishment of virtual centers that wouldinclude DOE and other government laboratories, universi-ties, the private sector, and international partners. These vir-tual centers would be designed to share complementary tasksacross several facilities that have the technologies in hand.Some functions that are national in scope may be more ef-fective if they are centralized, but others will be more effec-tive if they are regionalized to take into account study

materials created by local breeding programs and genetictraits expressed in specific environments. Studies should becarefully prioritized and monitored by DOE with the aid of anational review panel to ensure that project proposals do notoverlap but contribute to the goals of the investigations ofthe virtual center. Apart from tool development, these inves-tigations should be directed toward target traits that havebeen selected for their scientific, technological, and eco-nomic values, and consider environmental acceptability aswell as production goals.

CONCLUSIONS

Conclusion. Given the resources available to the Office ofFuels Development, the feedstock program funds have beenwell allocated, and research programs have clarified produc-tion and environmental issues.

Conclusion. The feedstock program is appropriately in-volved in extramural projects with investigators from uni-versities, industry, and other government agencies.

Conclusion. Given the importance of the cost of dedicatedfeedstock to the economics of bioenergy production and thepotential for technological advances via breeding and bio-technology, research on feedstock development may be in-adequately funded to achieve substantial reductions in thecost of feedstock even in the long run.

RECOMMENDATIONS

Recommendation. A more formal process for the selec-tion and review of feedstock projects and outside partici-pants should be established and the use of peer reviewsexpanded, especially if there are significant increases inprogram funding.

Recommendation. Because of the many opportunities forgenetic improvements in the midterm, the Office of FuelsDevelopment should seriously consider expanding its ap-plied biotechnology and genomics programs to improvefeedstock yields, pest resistance, quality, and cropping sys-tems. Although the Office of Fuels Development is wellsuited to take the lead in these programs, the agency shouldwork in coordination with other government agencies (e.g.,U.S. Department of Agriculture and the National ScienceFoundation) and grant programs, international partners, andthe forest, agricultural, and biotechnology industries.

Recommendation. Investigations in genetic engineering andthe genomics of biomass feedstocks should be integrated toavoid duplication of effort.



PROCESSING TECHNOLOGIES 27

27

4

Processing Technologies

PROGRAM OBJECTIVES AND OVERVIEW

Current R&D on processing technologies is focused onimproving the conversion of low-value biomass feedstocksto ethanol. According to the Bioethanol Strategic Roadmap,NREL’s primary guide for the development of its conver-sion goals were set by the anticipated needs of the market-place (NREL, 1998). Based on the assumptions that ethanoltax incentives will expire after 2007 and that petroleumprices will remain relatively flat until 2010, NREL estimatesexpected cost reductions of nearly 66 cents per gallon by2010 (OFD, 1998). NREL believes that, with improvementsin pretreatment and enzyme-based hydrolysis, bioethanolwould be competitive in the marketplace at that price with-out tax incentives. NREL identified two critical break-through technologies necessary to reduce costs: (1) increas-ing the specific activity of cellulase enzymes and(2) increasing the temperature of the fermentation step. Be-yond 2010, NREL will seek further cost reductions throughgenetic improvements in feedstocks (Wooley et al., 1999).

OFD also supports R&D in the following areas to reducethe costs of producing bioethanol:

• the development of a countercurrent reactor for thepretreatment of biomass

• methods for processing lignin residues for new highervalue products

• the integration of all unit operations• the evaluation and optimization of process config-

urations

BACK TO FUNDAMENTALS

A primary aspect of OFD’s conversion-technology devel-opment plan is supporting the near-term development of abioethanol industry. In accordance with congressional man-dates, OFD provides some funding support for bioethanol

conversion at Arkenol, Inc. (Sacramento, California), BCInternational (Jennings, Louisiana), and Masada Resources(Orange County, New York). All of these plants use locallyavailable feedstocks, such as crop residues (e.g., corn stoveror rice straw) or municipal solid wastes, for cellulose-to-ethanol conversion. These facilities all use both currentlyavailable, well demonstrated technologies and some newtechnologies, notably new recombinant organisms to fermentboth five-carbon and six-carbon sugars to ethanol. Theknowledge and experience gained from these commercial-ization projects should provide valuable information for fu-ture commercialization.

NREL’s modeling analyses indicate that significant reduc-tions in the cost of ethanol manufacturing were made duringthe 1980s. However, the committee’s analysis indicates thatcost reductions have leveled off since 1991 (see Figure 2-1).The committee is concerned that some of the processing tech-nologies currently in the NREL program have reached theirinherent limitations and that, even though incremental im-provements may be achievable, much less expensive and moreeffective alternatives should replace these technologies.

In addition to OFD’s program, a broad range of innova-tive research is being done outside of DOE that could im-prove bioethanol conversion technologies. Researchers havealready identified several opportunities for improving cellu-losic-to-ethanol conversion and lowering manufacturingcosts in the following research areas (Himmel et al., 1997;Lynd, 1996; Lynd et al., 1996; Wyman, 1999):

• advanced pretreatments to increase sugar yields andreduce sugar degradation

• improved cellulase and hemicellulase enzymes• consolidated bioprocessing of hydrolysis and fermen-

tation• product diversification including coproduction of

nonfuel products (e.g., organic chemicals and biobasedmaterials) with bioethanol




A better fundamental understanding of underlying phenom-ena in all of these technology areas will be crucial to thedevelopment of innovative approaches to reducing costs.

An understanding of the fundamental mechanisms under-lying pretreatment, cellulose and hemicellulose hydrolysis,and consolidated processing can lead to insights on the areasthat have the greatest potential for improvement throughR&D. As the knowledge base grows, researchers will be ableto develop meaningful comparisons among technologies andinvestigate the effects of changes in key performance pa-rameters on process economics. Approaches to innovationthat rely largely on trial and error are inefficient, risky, andless likely to support scale-up and commercialization by in-dustry. Investment in basic R&D will be key to identifyingtechnical opportunities to lower the costs of manufacturingcellulosic bioethanol.

IMPROVING CONVERSION

The ethanol manufacturing process that has been mostthoroughly investigated by NREL is shown in Figure 4-1.Biomass is ground to an appropriate size and treated withdilute sulfuric acid to convert most of the hemicellulose tosoluble pentose sugars, which are then separated from thefeedstock material. The remaining plant material (mostlycellulose and lignin) is then hydrolyzed with enzymes. Theresulting sugar solutions (glucose, xylose, arabinose, galac-tose, and mannose) are combined and fermented to produceethanol, which is then distilled. Residual solids in the distil-lation mixture are burned to provide process steam and ex-cess electricity, which is sold into the electric grid.

In the current NREL process, cellulase hydrolysis andfermentation take place simultaneously in the same vessel, aprocedure referred to as SSF (simultaneous saccharificationand fermentation). A portion of the biomass is also divertedto a separate fermentation step in which the enyzmes forcellulose hydrolysis are produced. Although a wide variety

of types of cellulosic biomass are referred to in the literature,most laboratory and pilot-plant work to date has been fo-cused on hardwoods (primarily poplar species). Apparentlylittle experimental work has been done on grasses, such asswitchgrass, or crop residues, such as corn stover.

The current conversion process makes use of technolo-gies that have largely been developed in house at NREL.One technology, notably the acid hydrolyis/pretreatment, hasremained essentially unchanged for almost 20 years (Lynd,1996; NREL, 1998). Because processing downstream of thepretreatment step is greatly affected by the characteristics ofthe pretreated material and the hydrolyzed sugar solutions,innovation in downstream processing has also been limited.

Research on pretreatment has been underfunded relativeto the high cost of this processing step and its significanteffects on the costs of subsequent hydrolysis and fermenta-tion steps (Lynd, 1996). Although large increases for re-search on pretreatment for fiscal year 2000 have been re-quested, the committee believes OFD should consider usingpretreatment technologies under development elsewhere toimprove bioethanol manufacturing processes.

Diverse pretreatment processes under evaluation mayhave the potential to unlock vast reserves of cellulosic bio-mass (NRC, 1999c). The most thoroughly researched pre-treatment processes are dilute acid hydrolysis, steam explo-sion, ammonia fiber explosion, and treatment with organicsolvents (Lynd, 1996). Less is known about liquid hot waterpretreatment (van Walsum et al., 1996), and none of thesepretreatments is currently a commercial success (NRC,1999c). Lynd (1996) has established some criteria for deter-mining the ideal pretreatment: produces reactive fiber; yieldspentoses in nondegraded form; does not significantly inhibitfermentation; requires little or no size reduction; can work inreactors of reasonable size and moderate cost; produces nosolid residues; has a high degree of simplicity; and is effec-tive at low moisture contents. This committee agrees withLynd’s assessment that the dilute acid hydrolysis process

Sizereduction

Dilute acidpretreatment

Enzymeproduction

Ethanolrecovery

Residualsolids

processing

Simultaneoussaccharification and

fermentation

Hydrolysate withhemicellulose

sugars

FIGURE 4-1 Schematic diagram of the conversion of biomass feedstock to ethanol fuel. Source: NREL, 1998.




used by NREL does not meet these criteria, nor does steamexplosion. Lynd suggests that other processes, such as liquidhot water and ammonia fiber explosion, merit further evalu-ation. Because improvement in performance of pretreatmenttechnology is intimately associated with fermentation andenzyme production steps, leap-forward advances in pretreat-ment will require that NREL focus on the best available tech-nologies, keeping in mind basic process design.

OFD recognizes that investing in research on enzymaticprocesses will be critical to improving the efficiency of thebioethanol process in the long term. The strategic plan forthe next five years emphasizes two key activities: (1) devel-oping more active cellulase enzymes that can operate athigher temperatures and (2) developing microbes capable offermenting a broad range of sugars at relatively high tem-peratures (OFD, 1998). The ideal microorganism or systemof organisms for producing ethanol from cellulosic biomassin a process featuring enzymatically mediated hydrolysiswould simultaneously exhibit the following properties:(1) synthesis of an active cellulase enzyme system at highlevels; (2) fermentation and growth on sugars from both cel-lulose and hemicellulose; and (3) production of ethanol.Many organisms under evaluation have either an inability touse a range of carbohydrates (e.g., cellulose, xylan) andsimultaneously produce ethanol at high yields, or differingrequirements for oxygen for various functions essential tothe process (Lynd, 1996).

Although the committee agrees that cellulase enzymes area key component of bioethanol research, hemicellulase en-zymes have the potential to unlock additional sources of sug-ars for fermentation. NREL currently has little R&D onhemicellulase enzymes, which can hydrolyze the hemicellu-lose fraction of biomass. Another outside panel of expertsfrom industry and academia has recommended that NRELconsider this area of research, which could lead to additionalsources of sugars for further processing (Glassner, 1998). Itshould be noted that Iogen and other private-sector compa-nies have made substantial investments in R&D on enzy-matic hydrolytic processing and that these cellulase tech-nologies are potentially lower in cost than those underdevelopment at NREL (Foody, 1999).

Given that cellulase enzymes can be inhibited by the sug-ars they produce, private-sector research has focused on in-creasing the consumption of these sugars by fermentativeorganisms as the sugars are produced, and significantprogress has been made in this area. The logical extension ofthis work is called “consolidated bioprocessing” and refersto the production of enzymes by the fermentation organism(or by another organism in the vessel with the fermentationorganism) (Hogsett et al., 1992; Lynd, 1996). Consolidatedbioprocessing reduces biological inhibition and increasesreaction rates.

The committee recognizes that various approaches to pro-cessing are possible and that improvements in pretreatment

and enzymatic hydrolysis can significantly reduce the over-all costs of manufacturing bioethanol (see Figure 1-1). Theimpact of specific technologies currently under developmenton overall performance and cost cannot be determined, how-ever, because the relationships among these processing stepsare not completely understood. Thus, improvements in thebasic process design, as well as improvements in pretreat-ment, enzymatic technologies, and fermentation organisms,will be essential to reducing the costs of bioethanol.

OPPORTUNITIES FOR COPRODUCTS

Early in this century, the petroleum refining industry fo-cused on producing kerosene and took in little revenue fromother products. At that time, gasoline was essentially a wasteproduct. Over time, however, much more complex oil refin-eries evolved with a very large product slate, including prod-ucts with a much greater profit margin. OFD’s analysis ofthe costs of petroleum refining and the profitability of gaso-line indicates the advantages of a process that can producecoproducts along with ethanol fuel. A plant that manufac-tures valuable coproducts will probably be more profitablethan one that manufactures only ethanol. Although thesources of biomass are diverse, most plant-derived biomasscontains the following components: cellulose, hemicellulose,lignin, oil, starch, and protein. In addition, some biomasscomponents, such as protein, do not lend themselves to fuelbut could be an important and valuable source of income fora bioethanol plant.

Biorefineries that can produce high-value as well as low-value products will be more competitive with oil refineries.Biorefineries that can produce a variety of products will notonly benefit from increased profitability from the highermargin products but will also benefit from their ability tochange their product mix in response to changing demands.In fact, corn wet mills, a prototype biorefinery, already pro-duce many products, and the number of products they pro-duce is growing. NREL, however, has focused only on thefermentation of ethanol and coproducing electricity by burn-ing residual solids.

The Bioenergy Initiative will focus on increasing the po-tential for the coproduction of ethanol fuels, organic chemi-cals, and electricity from biomass. The initiative will be a col-laboration among the DOE offices engaged in biomass-relatedactivities.1 The committee encourages DOE to extend thesepartnerships to other agencies, such as USDA, to promote re-search on coproducts of bioethanol manufacturing.

The OFD believes that the abundance of corn stover andgrass feedstocks and the ease of converting these sources of

1 For example, the OFD may collaborate with the Office of Power Tech-nologies, which supports R&D on the conversion of biomass to electricity,and the Office of Industrial Technologies, which works with the agricul-tural and forest products industries.




biomass to ethanol (compared to converting woody biomass)should facilitate the commercial introduction of this tech-nology (Hettenhaus and Glassner, 1997). Accurate materialbalances on corn stover and candidate grasses will be crucialto ensuring that all components of these materials, includingnonfuel components, are used effectively. Corn stover is anunderutilized resource, and if its collection and distributioncan be expedited and some conservation issues addressed,the conversion of corn stover (and other agriculturalresidues) in countries with large agricultural sectors couldbecome feasible. The role of OFD in these internationalprojects will have to be evaluated in terms of U.S. domesticobjectives, but this could be a fruitful area for research.

BIODIESEL

Interest in biodiesel in the United States has been focusedon soybean oil as the primary feedstock because of its abun-dance and relatively low cost among vegetable oils. MostEuropean biodiesel is made from rapeseed oil, a cousin ofcanola oil (Tyson, 1998). Biodiesel can also be preparedfrom spent cooking oil and other waste fats, which are lessexpensive than soybean oil but of variable composition andlimited availability. Biodiesel is prepared by transesterifyingthe oil to the fatty ester and glycerol (a by-product).Transesterification is necessary to convert the triglyceride,which has undesirable flow and combustion properties, intoan acceptable motor fuel.

In Europe, the European Union subsidizes farmers grow-ing oilseed crops. Without this subsidy, rapeseed-basedbiodiesel would not be competitive in the marketplace. Re-searchers have attempted to extract biodiesel directly fromoilseed crops to eliminate the expensive transesterificationprocess. However, biodiesel in this form has poor perfor-mance characteristics when used in current diesel engines(NRC, 1999c).

In an efficient crushing operation, a bushel of soybeanscan produce 47.5 pounds of meal and 11.1 pounds of oil.Meal, oil, and bean prices are all related and are all influ-enced by the global demand for food oil and protein. At thetime of this writing, soybean oil prices were at a historic lowof $0.215 per pound. One gallon of biodiesel requires ap-proximately seven pounds of soybean oil. Thus, even at thistime, the cost of raw material alone for biodiesel would bemore than $1.50 per gallon. Therefore, even if processingcosts were minimal, the potential for reducing costs enoughto make an economically viable fuel are also minimal.

Congress has enacted some legislation to meet environ-mental concerns by establishing niche markets for biodiesel,but no further infusion of OFD funds is needed to supportthis project. If an oil-producing species emerges with a po-tential for widespread agricultural production at substantiallylower cost than soybean oil, OFD could reconsider its in-volvement in the development of biodiesel fuels.

CONCLUSIONS

Conclusion. Technologies will have to be greatly improvedfor the emerging bioethanol industry to survive without sub-sidies. A broad range of innovative research is being doneoutside of the U.S. Department of Energy that could improvebioethanol conversion technologies.

Conclusion. The committee is concerned that some of theprocessing technologies currently in the Office of FuelsDevelopment program have reached their inherent limita-tions and that, even though incremental improvements maybe achievable, much less expensive and more effective alter-natives should replace these technologies.

Conclusion. The new bioethanol industry would benefitfrom a more thorough fundamental understanding of keyprocesses and feedstock technologies.

Conclusion. Reducing the cost of biodiesel will be extremelydifficult because of high feedstock costs.

RECOMMENDATIONS

Recommendation. To reduce the cost and increase the com-petitiveness of bioethanol with other energy sources in thenear term (2000–2010) and midterm (2010–2020), the Officeof Fuels Development should redirect the focus of its re-search and development programs away from demonstra-tions of specific technologies to fundamental research thatsupports new technologies in both feedstock developmentand ethanol conversion. Continued technical support shouldbe provided to the demonstration plants now in place to testand evaluate the results of this fundamental research anddevelopment. As industrial firms commercialize lower costtechnologies, the role of the Office of Fuels Development inbiofuels research should be refocused on fundamental andexploratory research directed toward overcoming the re-maining technical barriers.

Recommendation. The Office of Fuels Development shouldfocus on fundamental research in the following areas for reduc-ing the costs of manufacturing bioethanol: (1) advanced pre-treatments; (2) consolidated bioprocessing; (3) digestive en-zyme activity; (4) the development of diversified products andcoproducts during biomass processing or via plant metabolism;(5) reductions in the cost of raw materials via improved yieldsor the development of pest-resistant or stress-resistant plants;and (6) changes in feedstocks to make processing and conver-sion more efficient by modifying plant biochemistry.

In the long term, the new bioethanol industry will benefitmost from a comprehensive understanding of fundamentalbiological and engineering principles that could be provided




by a refocused federal research program. For example, ratherthan trying to expand the limits of native organisms, the Of-fice of Fuels Development research program could investi-gate the underlying mechanisms of these limits in naturethrough genomics and other fundamental studies. Armedwith a fundamental understanding of natural limitations,companies would be in a better position to undertake theirown applied development programs.

Recommendation. The Office of Fuels Development shouldreturn to its traditional role of providing a technical basis forfuture commercial ventures. Advancing the technology basewill help new processing plants improve their competitive

position and pave the way for the next generation of process-ing plants.

Recommendation. The Office of Fuels Development shouldsupport and encourage, perhaps by interagency cooperationwith the U.S. Department of Agriculture and other federalagencies, work on coproducts of bioethanol manufacturing.

Recommendation. Because of a lack of any foreseeableopportunity for reducing the production costs of biodiesel,the Office of Fuels Development should consider eliminat-ing its biodiesel program and redirecting those funds into thebioethanol program.




32

5

Crosscutting Opportunities

In the previous chapters, the committee approachedOFD’s R&D on biomass-related ethanol and biodiesel trans-portation fuels in terms of feedstock development and con-version technologies. This approach was based on the cur-rent organization of the OFD program, with R&D onfeedstock development centered at ORNL and R&D on con-version technologies centered at NREL. Some commonthemes that emerged in the process of reviewing the R&Dprogram are described in this chapter.

SYSTEMS ANALYSIS

Advances in R&D have the potential to reduce the costsof bioethanol to a competitive level with petroleum-basedfuels. Production costs for bioethanol include feedstock de-velopment (production, collection, and handling) and con-version processes (pretreatment, fermentation, distillation,pentose conversion, and cellulase production) (Wyman,1999). The process of producing a liquid fuel from biomassentails several steps, and a change in any component of thesystem can affect the other components. For example, im-proved pretreatment would improve the efficiency of down-stream fermentation and enzyme processes. Little is known,however, about the impact of changes in feedstock geneticson the efficiency of pretreatment. An integrated analysiscould determine the relationship between feedstock devel-opment and conversion processes on the total costs ofbioethanol.

Agricultural and forest residues, as well as dedicated en-ergy crops, are potential sources of biomass for conversionto ethanol. Because feedstocks can contribute as much as40 percent to total bioethanol costs, OFD should make acomplete evaluation of the logistics and costs of producing,harvesting, collecting, and transporting feedstocks and theireffects on processing economics. Because feedstock resi-dues, such as corn stover, tend to be dispersed, the collectioncosts of cellulosic biomass usually increase exponentiallywith distance from the processing plant, and the feedstock

collection costs could sharply constrain the optimal size ofan ethanol manufacturing plant. Therefore, R&D systemsanalyses should also evaluate the potential for small-scaleprocessing facilities to decrease the distance between thecollection points and the processing plants.

OFD could also consider systems analyses that could bedeveloped further by the private sector for international mar-kets. For example, studies could be performed on processingalternatives that could lower the capital intensity and raisethe labor intensity of production processes. Flexibility in thisregard would enhance a company’s potential for exportingbioethanol conversion technology to regions that have lowerlabor costs and less available capital than the United States.

An integrated review of both the feedstock and processingcomponents of OFD’s programs could determine the best op-portunities for major new technology options and for reducingcosts with minimal environmental impact. Process engineersand plant scientists from NREL and ORNL could then col-laborate on the development of advanced models that wouldoptimize bioethanol costs across the entire system from feed-stock production through manufacturing. A systems approachwould enable researchers to identify and target crosscuttingopportunities to overcome technological barriers.

Recommendation. The Office of Fuels Development shouldconsider developing an integrated systems model that en-compasses feedstock development, collection, storage, trans-port, and biomass processing. This model could reveal re-search and development directions for reducing costs,optimizing synergies among technologies, and prioritizingprojects to achieve program goals in light of changing mar-ket opportunities.

TECHNOLOGY INTEGRATION

R&D should be integrated to address the overall manu-facturing system. For example, research on pretreatmentshould be coordinated with enzyme development and



CROSSCUTTING OPPORTUNITIES 33

fermentation because pretreatment will reduce the need forenzymes, affect the types of enzymes needed, and also affectthe fermentation step. Furthermore, R&D in plant geneticscould lead to the development of feedstocks that are ame-nable to particular pretreatments. Other R&D on bioethanolprocessing may also be amenable to integration.

R&D conducted at several technology-based researchcenters would improve coordination across research areasand contribute to a knowledge base that would support thedevelopment of future technologies. Technology-based re-search centers should attract the very best, most knowledge-able people available and should be adequately funded.Technology-based research centers might be established, forinstance, to focus on pretreatment (as mentioned above),enzyme development, genetic engineering genomics, andcoproduct production. These centers should be designed andmanaged to promote collaboration and communicationamong researchers. Because many experts are working inacademia and because of the several distinct technologiesessential to bioethanol research, coordinated research cen-ters could facilitate interdisciplinary and crosscutting re-search. At the same time, the participation of experiencedprocess design engineers from industry could keep researchfocused on reducing costs. A broad community of profes-sionals would stimulate innovative research in the key tech-nologies for the future biofuels industry.

Recommendation. In keeping with its management role inthe development of biofuels for the nation, the Office ofFuels Development should reinforce its program in cross-cutting research. The establishment of several technology-based research centers would facilitate the integration of re-search results and foster collaboration among experts fromgovernment, industry, and academia.

INCREASING LINKS

Cellulosic biomass could potentially be used as raw ma-terial to produce a variety of products, including liquid fuels,organic chemicals, and electric power. For example, abiorefinery could integrate the production of ethanol liquidfuel with high-value organic chemicals (e.g., specialty en-zymes) to increase the profitability of processing plants. Thecommittee commends DOE for establishing a Bioenergy Ini-tiative to develop national partnerships with other federalagencies and the private sector. Integrated R&D on bio-energy will encompass existing R&D by DOE on transpor-tation fuels, biomass power, and forest products and agricul-tural industry programs to encourage the development of avariety of fuels, power sources, chemicals, and otherproducts based on the diversity of cellulosic biomass feed-stocks across the country (DOE, 1999). By extending its

relationships with other federal agencies, university, andindustrial partners, OFD could take advantage of fundamen-tal knowledge and technologies that could reduce the costsof biomass production and processing.

Recommendation. The Office of Fuels Development shouldstrengthen its links and take advantage of synergies betweenits research and development program and other programsof the U.S. Department of Energy, government agencies,universities, and industry to leverage public-sector funds andtake advantage of scientific and engineering advances in theintegrated processing of diverse feedstocks and options for avariety of products.

IMPROVED PEER REVIEW

A strong R&D program in biofuels will require carefulmonitoring of its performance. The OFD has shown that it issensitive to the allocation of public funds for achieving itsR&D goals by developing quantitative milestones to mea-sure program performance. A recent report of the President’sCommittee of Advisors on Science and Technology recom-mended that industry, national laboratory, and universityoversight committees work with DOE to provide overall di-rection to energy R&D programs. In addition, the report rec-ommended that all DOE energy programs be subjected tooutside technical peer reviews every one or two years(PCAST, 1997).

The committee also encourages OFD to continue usingoutside reviews to evaluate its biofuels program. Outsidereviews can provide a basis for regular input on proposedR&D projects and measurements of the performance of on-going projects. Effective outside reviews can increase theprobability of success of a program. In the case of OFD,improvements could increase the likelihood of the develop-ment of cost-effective technologies for the production andmanufacture of bioethanol.

To reinforce these reviews, OFD should seek input fromresearchers involved in biofuels activities outside of theR&D program under review, as well as disinterested scien-tists and engineers from the academic and industrial com-munities. This will increase the technical quality and objec-tivity of the review process. Researchers and programmanagers should be held accountable for research directedtoward specific performance goals and established mile-stones. If the planned objectives are not achieved, OFDshould determine the reasons for the shortfalls.

Recommendation. The Office of Fuels Development shouldestablish clear criteria for evaluating project performancelevels and should include reviewers from academia, indus-try, and other government programs in its evaluation.




34

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APPENDIX A 37

APPENDICES






APPENDIX A 39

39

APPENDIX

A

Biographical Sketches of Committee Members

David L. Morrison (chair) is an adjunct professor at NorthCarolina State University. He recently retired from the U.S.Nuclear Regulatory Commission where he was the directorof the Office of Nuclear Regulatory Research. His previouspositions include technical director of the Energy, Resourceand Environmental Systems Division, MITRE Corporation;president of the Illinois Institute of Technology ResearchInstitute; and director of program development and manage-ment, Battelle Memorial Institute. He has been a member ofthe National Research Council (NRC) Energy EngineeringBoard and the National Materials Advisory Board, chair ofthe NRC Committee on Alternative Energy R&D Strategies,chair of the NRC Committee on Industrial Energy Conser-vation, and a member of the Committee on Fuel Economy ofAutomobiles and Light Trucks and the Committee to Re-view the United States Advanced Battery Consortium’s Elec-tric Vehicle R&D Project Selection Process. His areas ofexpertise include research management, energy and environ-mental research, materials science, nuclear chemistry, physi-cal chemistry, and the assessment of energy technologies.Dr. Morrison has a Ph.D. in chemistry from the CarnegieInstitute of Technology.

Gary Coleman is assistant professor, Natural Resource Sci-ences and Landscape Architecture, Molecular and Cell Biol-ogy Program, at the University of Maryland. He has been apostdoctoral research assistant, Oregon State University; aresearch biologist for Uniscope Inc.; and a forester in theU.S. Forest Service (Rio Grande). His research interests in-clude genetic engineering, molecular biology, and the physi-ological aspects of trees, including poplars. He is president-elect, Washington Section, American Society of PlantPhysiologists and serves on a number of review panels forthe U.S. Department of Agriculture. He has a Ph.D. in horti-culture-forestry from the University of Nebraska.

Bruce E. Dale is professor and chair, Department of Chemi-cal Engineering, Michigan State University. Previously, he

was professor, Chemical Engineering and Agricultural En-gineering; director, Food Protein Research and DevelopmentCenter; and director, Engineering Biosciences Research Cen-ter, Texas A&M University; associate and assistant profes-sor of chemical engineering, Colorado State University; anda visiting scientist, National Bureau of Standards (Boulder).He has served as co-chair of the NRC Committee onBiobased Industrial Products: National Research and Com-mercialization Priorities. He is a National Merit Scholar andhas received a number of awards. He has a Ph.D. in chemicalengineering from Purdue University.

Anthony J. Finizza is the former chief economist atARCO, where his responsibilities included monitoring al-ternative fuel vehicle developments and energy/economicstudies. From 1970 to 1975, he was regional vice presidentof Data Resources, Inc., and from 1968 to 1970, he wasvice president and economist of Northern Trust Company.Dr. Finizza has contributed his expertise to various profes-sional organizations, including the International Associa-tion for Energy Economics, of which he was president in1996. He received his Ph.D. in economics from the Univer-sity of Chicago.

Robert Hall was with the Amoco Oil Company where heheld a number of positions, including general manager, Al-ternative Fuels Development; manager, Management Sys-tems and Planning; director, Research and Development(R&D) Department; and supervisor, Amoco Chemical Com-pany Process Design and Economic Division. He has exten-sive experience in R&D on alternative fuels, strategic plan-ning, management, and technology innovation. He hasserved on the NRC Committee on Production Technologiesfor Liquid Transportation Fuels and the Committee on Stra-tegic Assessment of the Department of Energy’s Coal Pro-gram and is past chair of the International Council on Alter-nate Fuels. He has a B.S. in chemical engineering from theUniversity of Illinois.




Donald L. Johnson (NAE) is vice president, Product andProcess Technology, Grain Processing Corporation. He hasalso been senior development engineer and manager, Prod-uct Development Groups; and director, Chemicals Researchand Development Departments at A.E. Staley Manufactur-ing Company. He is a member of the Advisory Council,College of Applied Science, Miami University, and memberof the Departmental Visiting Committee, Botany Depart-ment, University of Texas at Austin. His primary interestsand expertise are in the utilization and processing of renew-able resources for food ingredients and industrial chemicals.He has an Sc.D. in chemical engineering from WashingtonUniversity and a B.S. in chemical engineering from theUniversity of Illinois.

Roberta Nichols (NAE) was with the Ford Motor Companyfrom 1979 to 1995 in several positions: manager, ElectricVehicle (EV) External Strategy and Planning Department,North American Automotive Operations; manager, EVExternal Affairs, EV Planning & Program Office; manager,Alternative Fuels Department, Environment and Safety En-gineering Staff; and principal research engineer, AlternativeFuels Department, Scientific Research Laboratory. She wasalso a member of the Technical Staff at Aerospace Corpora-tion from 1960 to 1979. She is a fellow, Society of Automo-tive Engineers, a recipient of the National AchievementAward from the Society of Women Engineers, and a recipi-ent of the Clean Air Award for Advancing Air PollutionTechnology from the South Coast Air Quality ManagementDistrict. Dr. Nichols has served on a number of advisorygroups on alcohol-based transportation fuels. Her expertiseincludes alternative fuel vehicles, electric vehicles, internalcombustion engines, and strategic planning. She has a Ph.D.in engineering from the University of Southern California.

Daniel Sperling is professor of civil engineering and envi-ronmental science and policy and founding director of theInstitute of Transportation Studies at the University of

California, Davis (ITS-Davis), where he oversees large re-search programs on mobility (including the use of small EVsand smart car sharing), fuel-cell vehicles, and environmentalassessments of ITS technologies. Dr. Sperling specializes inadvanced transportation technologies, energy and environ-mental impacts, and travel behavior and is a recognized inter-national expert on transportation technology policy. He hasconducted extensive studies on advanced automotive tech-nologies for low emissions, including approaches to tech-nology development and realization, has expertise in trans-portation engineering, and has conducted extensiveinvestigations on alternative fueled vehicles and sustainabletransportation. Dr. Sperling is a recent member of the NRCCommittee on Liquid Fuel Options, the Committee on Trans-portation Options for Megacities, and the Committee onTransportation and a Sustainable Environment. He wasfounding chair of the NRC Alternative Transportation FuelsCommittee from 1989 to 1996 of the Transportation Re-search Board. He received a Ph.D. in transportation engi-neering from the University of California, Berkeley.

Steven H. Strauss is professor, Department of Forest Sci-ence, Molecular and Cellular Biology and Genetics, OregonState University and director, Tree Genetic Engineering Re-search Cooperative, College of Forestry, Oregon State Uni-versity. His past positions include visiting scientist, INRA,Versailles and Orleans, France; visiting professor, Collegeof Forestry, Australian National University; and visiting sci-entist, CSIRO Division of Plant Industry, Australia. He hasbeen a National Science Foundation (NSF) PresidentialYoung Investigator and has served on a number of NSF,U.S. Department of Agriculture, and NRC panels. He ischairman, International Union of Forestry Research Organi-zations Working Party on Molecular Genetics of ForestTrees. His research interests include genetic engineering,genome mapping, and population genetics of forest trees. Hehas a Ph.D. in forest genetics from the University of Califor-nia, Berkeley.



APPENDIX B 41

41

APPENDIX

B

Office of Fuels Development Fiscal Year 1999 BudgetEXCERPT FROM U.S. DOE BUDGET INFORMATION

Total Biofuels Conversion Funding $35,950,000

Advanced Fermentation Organisms R&D

Research and development of advanced fermentation or-ganisms to improve process efficiency, including the devel-opment of Zymomonas mobilis with enhanced capabilities(FY 1998) and the development of organisms with increasedstability and robustness, and ability to ferment mixed sugarsfrom waste feedstocks and the model energy crop switch-grass (FY 1999) will improve process efficiency and lowerthe cost of ethanol production from biomass. Testing of thesestrains at pilot scale and small scale commercial facilitieswill be completed to demonstrate reliable performance ofthese first generation organisms. Research and developmentof advanced organisms (second generation), such as Lacto-bacillus, with greater efficiencies that can ferment additionalbiomass feedstocks provide further costs reductions and thepotential for expanding biomass ethanol applications.

Subtotal $2,200,000

Advanced Cellulase R&D

Analyses indicate that the production of ethanol, usingenzymes for the breakdown of biomass materials to sugarsfor fermentation is limited to a great degree by the high costof enzymes. Research and development partnerships withenzyme producers will provide highly productive, low costcellulase systems. Collaborations with enzyme and biomassethanol producers will accelerate the use of commerciallyavailable cellulase systems.

Subtotal $4,547,000

Pretreatment R&D

Physical and/or chemical pretreatment of biomass facili-tates enzyme and fermentation reactions, thereby improvingprocess efficiency and lowering costs. An advanced pretreat-ment reactor, the countercurrent pretreatment reactor, wasdesigned, fabricated and delivered to the National

Renewable Energy Laboratory process development unit inFY 1998. In FY 1999, focus is on installation of the reactorsystem. In addition, bench scale testing of cost-effectivetechnology for softwood feedstocks and potential chemicalco-product, will improve process economics of producingethanol from thinnings from forests.

Subtotal $2,800,000

Consortium for Plant Biotechnology Research

The 50:50 cost-shared, long term R&D projects with TheConsortium for Plant Biotechnology Research, Inc., (CPBR)for peer-reviewed university research will not be continuedin order to focus on more applied research activities thatsupport program goals and objectives.

Subtotal $1,250,000

Integrated Process Development

In FY 1998 integrated bench-scale studies were conductedto evaluate and optimize unit operations, with emphasis ondetoxification studies, to improve the overall process. Theperformance of a genetically improved fermentation organ-ism capable of fermenting available sugars was validated atthe bench scale. In FY 1999, integrated bench-scale studieswill evaluate the overall process and performance of softwoodthinning from private and public forests, including NationalForests, in cooperation with industrial partners. Technologiesfor the coproduction of ethanol and high value products willbe researched and developed by the Michigan BiotechnologyInstitute (MBI). DOE will provide $3.0 million to MBI, inaccordance with Congressional guidance.

Subtotal $11,500,000

Cellulose-to-Ethanol Production Facilities

Laying the groundwork for a broad-based cellulosic bio-mass-to-ethanol industry, cost-shared partnerships to design




and construct ethanol production facilities are being devel-oped. In FY 1998, an additional commitment to design andconstruct biomass waste-to-ethanol facilities was obtained.DOE’s commitment for the BC International project (BCI)that was initiated in FY 1997 was $4,00,000, with BCI cost-share of $27,600,000, or 87 percent. An additional $750,000was included under Biomass Power for the Gridley Project.A minimum 50 percent cost share was required from anypartner entering into an agreement.

In FY 1999 DOE’s commitment with BCI for theJennings, Louisiana plant will be completed, in accordancewith Congressional language. An additional commitmentwith an industrial partner was established that will lead tothe design and construction of an ethanol facility in RioLinda, California. DOE share for the Rio Linda facility was$4,000,000, in accordance with Congressional language.An additional commitment with industry partners will beestablished that will lead to the design and construction ofcommercial demonstration facilities in targeted areas: Cali-fornia and Alaska.

Subtotal $13,653,000

Switchgrass Variety Testing and Scale-up Research

Switchgrass variety field tests are being conducted in thefive major growing regions of the U.S. Field trials estab-lished at five USDA National Plant Materials Testing Cen-ters will evaluate newly developed switchgrass liners. Cost-shared 100-300 acre scale-up plantings of switchgrass willbe evaluated to provide yield, operational issues, and costdata. In FY 2000, field tests and scale up data will be col-lected and evaluated and field trial near waste-to-ethanolfacilities/sites will be established.

Subtotal $625,000

Feedstock Composition and Multiproduct Use

Altering plant composition to improve conversion effi-ciencies will provide potential benefits and costs reductionsin the production of fuels, chemicals and electricity. The tai-loring of plants so that all components of the plant can effec-tively be used to produce multiple products will provide po-tential costs reductions and broader opportunities foradaptation of feedstock production systems.

Subtotal $100,000

Mechanization Research

Mechanization systems for energy crops to lower harvest-ing/handling cost, will address a major obstacle to the wide-spread use of energy crops. Cost-shared opportunities for

switchgrass handling and storage specifically as a means ofimproving the ethanol production costs will be explored.Handling and storage systems for the use of agricultural resi-dues to produce ethanol will improve costs and process effi-ciencies.

Subtotal $150,000

Total Regional Biomass Energy Program $3,500,000(jointly funded with Biopower)

Regional Biomass Resource Activities

Regionally-focused activities with State and local gov-ernments and industry will develop the capability to produceand use biomass resources for multiple products.

Subtotal $2,000,000

Biofuels Production Activities

Using the regional program infrastructure, support willbe provided for cost-shared site studies for biofuels produc-tion facilities, including resource assessments and analysesof local, State, and regional nontechnical issues.

The potential of biodiesel will be improved by testingnew biodiesel fuel formulations to enhance fuel performanceof high efficiency engines in collaboration with the Office ofHeavy Vehicle Technologies, USDA, and the NationalBiodiesel Board.

Subtotal $1,500,000

Total Biodiesel Funding $750,000

Biodiesel Production Technologies

Based on a completed assessment, research and develop-ment will improve biodiesel process technology, using wastegrease streams to lower production costs. In addition, im-proved oilseed production has the potential of loweringbiodiesel production costs. Working with industry, activitiesto facilitate market penetration will lead to increasedbiodiesel production and use.

Subtotal $750,000

Total Feedstock Production Funding $5,100,000(jointly funded with Biopower)

Biomass Feedstock Development Centers

Research will be conducted to develop economically vi-able model energy crops at integrated biomass feedstock



APPENDIX B 43

development centers in the Pacific Northwest (poplars),Southeast (switchgrass), and Midwest/Plains States(switchgrass and poplars), where breeding to select forhigher yields and other desirable traits is linked closelywith studies on management, physiology, growth-limit-ing factors, and advanced biotechnology. Fields studiesto evaluate nutrient effects on carbon sequestration andstorage will provide additional vital information on en-ergy crops.

Subtotal $3,600,000

Environmental Effects of Energy Crop Deployment

Research to evaluate the effects of large scale deploy-ment of energy crops on the environment, such as water andsoil quality, chemical fates, and biodiversity will providecredible data that could be used to guide deployment in amanner that ensures energy and environmental benefits.

Subtotal $400,000

Energy Crop Seedling/Planting Stock Selection Research

Advanced biotechnology and other methods will developtechniques that can be used to select energy crop seedlingsor other planting stocks that are less susceptible to diseaseand/or pest, reducing the risk of mortality and increasingtechnical/economic viability. Desirable genotypes of switch-grass will be selected, propagated, and transferred to green-house/field tests to verify the selection process.

Subtotal $100,000

Large Scale Woody Crop Plantation Research

Research will be conducted to develop and evaluate man-agement techniques to overcome the water use efficiency con-straints in the Southeast. Technical assistance and cost sharingwill be provided for existing large scale plantings in the Mid-west/North Central region to obtain performance and cost data.

Subtotal $125,000




44

APPENDIX

C

Committee Meetings and Other Activities

1. Committee Meeting, December 17–18, 1998, Wash-ington, D.C.

Program OverviewJohn Ferrell, Director, U.S. Department of Energy

Office of Fuels Development

Ethanol Production Technology R&DDavid Glassner, National Renewable Energy Lab-

oratory

Biodiesel OverviewK. Shaine Tyson, National Renewable Energy Lab-

oratory

Feedstock DevelopmentJanet Cushman, Oak Ridge National Laboratory

Fuel Cycle Analysis and Greenhouse Gas BenefitsMichael Q. Wang, Argonne National Laboratory

Ethanol Market Issues, Analytical Approach and Re-sults

Barry McNutt, U.S. Department of Energy Office ofPolicy and International Affairs

Roger LeGassie, TMS, Inc.

U.S. Department of Agriculture Biofuels ActivitiesJim Craig, U.S. Department of Agriculture

2. Second Committee Meeting, February 11–13, 1999,Irvine, California

Opportunities and Technological Challenges ofBioethanol

Charles Wyman, BCI, Inc., and Dartmouth University

Cellulase Technologies James Hettenhaus, Chief Executive Assistance, Inc.

Outlook for Bioethanol DevelopmentRus Miller, Arkenol, Inc.

California PerspectiveDean Simeroth, California Air Resources Board

Biomass Chemicals and Co-ProductionWilliam Hitz, Dupont Company

Feedstock Development ProjectsGerald Tuskan, Oak Ridge National Laboratory

Impact of Genetics/Genomics for Biomass EnergyCrops

Toby Bradshaw, Washington State University

3. Third Committee Meeting, April 8–10, 1999, Wash-ington, D.C.

Ethanol DevelopmentPatrick Foody, Sr., and Brian Foody, Iogen Cor-

poration



APPENDIX E 45

APPENDIX

D

Barriers to Using Ethanol1

45

Manufacturers interested in entering the bioethanol mar-ket will rely on economic analyses to facilitate company de-cision making. Although a market may exist for bioethanolas a blending agent with gasoline, manufacturers must takeinto account the dissimilar nature of alcohol and the hydro-carbons in which it is blended. The disadvantages of usingethanol as a gasoline blend agent are ethanol’s higher affin-ity for water and its high Reid vapor pressure. Because ofmanufacturers’ reluctance to transport ethanol blends bypipeline to avoid potential contact with water, ethanol mustbe blended with specification-grade gasoline at the terminal.This results in an ethanol-gasoline blend that exceeds octanerequirements and leads to some excess product octane (oc-tane giveaway).

AFFINITY FOR WATER

The transportation and storage systems used for ethanol-gasoline blends must be essentially water free. Even moder-ate quantities of water can cause ethanol-gasoline blends toseparate into two phases, which can reduce engine perfor-mance. Ethanol can also act as a cosolvent that facilitates theincorporation of small quantities of water into the ethanol-gasoline blend. Water can collect in low spots of hydrocar-bon-handling systems, such as pipelines, storage systems,and vehicle fuel systems. The water typically contains rustand other particulates but normally does not cause a problembecause the water remains in place when contacted by hy-drocarbons and can be periodically drained. The “scouring”action of ethanol-gasoline blends can incorporate this dirtywater into the gasoline. Once the dirty water has been elimi-nated, the system remains clean as long as ethanol is present,

but the periodic use of ethanol blends can result in a recur-ring problem. Initial ethanol use in a geographic region hasbeen reported to cause batches of off-specification gasolineand plugged automobile fuel filters, as well as occasionaldamage to fuel injectors.

To avoid potential problems with water, most refiners donot transport ethanol-gasoline blends by pipeline. Thus, con-siderable “splash blending” of ethanol takes place at distri-bution and storage terminals instead of at the refinery wheregasoline is normally blended to final specifications. Ethanolblends are then shipped by truck from terminals to retail ser-vice stations. Common carrier pipelines transport only fun-gible products (i.e., products that meet standard productspecifications and are, therefore, interchangeable with prod-ucts from other sources). Thus, when ethanol is blended at aterminal, the blend stock is specification-grade gasoline. Theaddition of 10 percent ethanol to regular gasoline produces ablend with an octane number about two units above the num-ber required for regular gasoline. This causes an octane give-away when the ethanol blend is sold as regular gasoline.

If terminals are supplied by proprietary pipelines or trucksfrom a refinery, octane giveaway can be avoided by blend-ing with a gasoline blend stock with lower than specificationoctane. The nonoxygenated blend stock used in reformulatedgasoline is fungible and can be shipped by common carrierpipeline to terminals for blending without octane giveaway.When 10 percent ethanol is added to regular gasoline, octanegiveaway can be essentially eliminated if the resulting blendis sold as midgrade gasoline; when ethanol is blended withmidgrade gasoline it can be sold as premium gasoline. Oc-tane giveaway in the U.S. market is estimated to range from25 percent to 50 percent of the product sold.

Transportation systems could also be cleaned up to per-mit the shipment of ethanol-gasoline blends from a refineryby pipeline, but most companies are reluctant to invest thefunds for this system upgrade, possibly because the futureavailability of ethanol is considered to be uncertain. Ethanolfrom corn is only economical because of government

1 The information in this appendix is based on a presentation, GasolineVolatility: Environmental Interactions with Blending and Processing, byGeorge H. Unzelman, president, Hyox, at the National Petroleum RefinersAssociation Annual Meeting, March 17–19, 1996, San Antonio, Texas.




subsidies, and the federal subsidy is scheduled to be elimi-nated by 2007. In addition, the price of grain is unrelated tothe price of crude oil, and a price squeeze on grain couldforce some ethanol manufacturers to shut down their manu-facturing plants.

VAPOR PRESSURE

Even though ethanol alone has a relatively low vaporpressure, when used as a gasoline blend agent its effectivevapor pressure is quite high. The Reid vapor pressure forethanol-gasoline blends is about 18 psi for 10 percent etha-nol content. This high vapor pressure is a disadvantage forethanol-gasoline blends. When ethanol is added to a prop-erly formulated gasoline blend stock, as it is with refineryblending, low boiling hydrocarbon components, such asbutanes and even pentanes, must be reduced to meet gaso-line vapor pressure specifications. The removal of these lowboiling hydrocarbons is expensive because gasoline is theirhighest value use. Blending of ethanol at the terminal canresult in a blend that exceeds vapor pressure specification,especially during the summer, when a 1-psi waiver is

currently granted for ethanol blends (except in reformulatedgasoline).

Lower gasoline vapor pressure reduces evaporative emis-sions during tank filling and fuel storage. Because of thisenvironmental benefit, the summer vapor pressure specifi-cation for gasoline has been, and is expected to continue tobe, lowered over time. For a vapor pressure specification ofless than about 7.6 psi, there is no room for butane in a10 percent ethanol-gasoline blend. To meet specifications,therefore, pentane must be removed. This so-called “pentanebackout” causes a step increase in the cost of gasoline be-cause the amount of pentane required to offset the additionof ethanol is about five times the amount of butane, and thealternative value of pentane is much lower than for butane.In general, companies consider it to be impractical to meetsummer vapor pressure specifications below about 7.6 psiwith 10 percent ethanol blends.

The vapor pressure of ethanol blends can be reduced byusing special coblending agents, such as higher alcohols, orby blending to higher ethanol concentrations. However,either of these approaches to reducing vapor pressure alsoreduces the value of ethanol as a gasoline blend agent.



APPENDIX E 47

47

APPENDIX

E

Major Components of a Poplar Genomics Initiative

If the U.S. Department of Energy decides to focus moreof its resources on the biotechnology of feedstock crops,genomics would be a logical subject for research. In the fol-lowing discussion, the tools, type of experiments, and targettraits for a major genomics project in a bioenergy crop areoutlined using poplars as an example. These structuralgenomics studies would provide the tools for mapping andisolating a large number of genes. With this foundation,many different kinds of traits could be studied, and experi-ments could be performed to determine their roles and usethem in breeding or genetic engineering. All of the optionsoutlined below do not have to be undertaken to makeprogress in this area; however, a significant program to studya single feedstock species is likely to entail a recurring an-nual cost of at least $2 million for a number of years.

A comprehensive genomics project should have the fol-lowing components: structural genomics, materials forstudying trait variation and expression, and functionalgenomics.

• Structural Genomics. The establishment of tools forstudying and mapping genes, such as large sequencedatabanks, genome maps, and high-efficiency trans-formation methods.

• Materials for Studies of Trait Variation and Expres-sion. The development of large, carefully designedpedigrees and field experiments and other experimen-tal materials based on trait expression, in which genesfor key traits can be either mapped or directly identi-fied via differential expression.

• Functional Genomics. Experiments for mapping andisolating genes for valuable traits via fine-mapping,

intensive studies of gene expression via microarraypanels, synteny comparisons to model organisms, andhigh-throughput transformation.

STRUCTURAL GENOMICS

The following components could be included in the areaof structural genomics:

• dense microsatellite-based genetic marker maps• dense expressed sequence tag sequence banks• physical mapping via bacterial artificial chromosomes• expression chips (microarrays) of the majority of genes

in the genome• physical map synteny relationships with Arabidopsis• high-throughput transformation methods• high-throughput single-nucleotide polymorphism map

arrays

MATERIALS FOR STUDY OF TRAIT VARIATIONS ANDEXPRESSIONS

Research on materials for the study of trait variations andexpressions could include the following subjects:

• traits on segregating pedigrees and field trials in hy-brid and intraspecific pedigrees

• ribonucleic acids from tissues with contrasting traitexpression (e.g., distinct tissues and ages)

• phenotypic targets of economic importance and dis-tinct expression in woody plants— heterosis and yield




— wood chemistry and structure—disease resistance—shoot phenology and stress tolerance—maturation, flowering onset and sterility, and

rootability

FUNCTIONAL GENOMICS

Research on functional genomics could include studies inthe following areas:

• high-precision quantitative trait loci analysis andsynteny-based candidate gene selection

• transformation tests of candidate genes selected fromexpressed sequence tag banks

• complementation, suppression, and overexpressiontests of identified genes via transformation

• large population of activation-tagged transgenic treesto directly identify genes for diverse traits

• additional bacterial artificial chromosome libraries fortrait-specific experiments



Documents

Review of the Research Strategy for Biomass-Derived Transportation Fuels (Tcrp Report,)