What's Greener? Algae? Or Ethanol?

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Friday, July 04, 2008

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What's Greener? Algae? Or Ethanol?

UK - "In my May article, Food Shock , I mentioned that biofuel production was consuming many of the crops normally used for food," writes Jennifer Barry (Global Asset Strategist) for The Market Oracle.

Riots have broken out over the sharp price rises of 37% last year, and 16% so far in 2008. Coffee, soybeans and wheat are increasingly diverted to biodiesel production, driving prices higher. Almost a quarter of America's corn crop was distilled into ethanol last year, and the percentage is expected to grow another 10% in 2008, she says.

The U.S. has been heavily criticized for subsidizing corn ethanol while restricting the import of Brazilian sugar ethanol, as sugar is about six times as economical a fuel source as corn. Many experts agree that corn ethanol is not very efficient, but claim it's just a “bridge” to the development of cellulosic ethanol. This embryonic technology is touted as the missing link to America's energy independent future.

Even if higher output was possible, more grain requires the use of much more fertilizer and pesticides. These chemicals are largely composed of petroleum which is the fuel we're trying to use less of!

The government's plan expects 55 million acres will be dedicated to energy crops like switchgrass in the future. However, only 70 million acres are planted with corn today. As there is a limit of arable land, cellulosic ethanol production would chase out much of current food and timber production.

Cellulosic ethanol will not be a cheap fuel. To reach the U.S. mandated 21 billion gallons of this ethanol by 2022, it's projected to require a hefty subsidy of $1.55 per gallon. In addition to the logistical nightmare of trucking a ton of biomass to be processed into 80 gallons of ethanol, capital expenditures at a cellulosic ethanol plant are projected to be two to three times that of grain ethanol plants.

In the alternative energy debate, it's important to question if ethanol is a good idea at all. It lowers fuel efficiency in cars by 30% over the same amount of gasoline. If you are using 10% ethanol gasoline as we must in Dallas, it shaves 3% off your mileage even if it doesn't negatively impact performance. If you switch to E85 fuel, your car will require about 1.5 times as much fuel per mile, and your fuel pump and injectors will have to be larger to allow an adequate amount of energy to reach the engine.

Ethanol creates new transportation and safety hassles as well. It can't be moved via pipeline, so it has to be shipped via ship, truck, or railcar. Transportation opens up opportunities for accidents and fires. Unfortunately, most fire departments lack the training and specialized supplies necessary to meet the unique challenges of ethanol blazes. Ethanol vapor is more flammable than gasoline, and its nearly invisible flame can't be extinguished with water.

So if ethanol is not the solution, are we stuck with burning fossil fuels in our cars? Sapphire Energy doesn't think so. Sapphire is a company founded to answer one question, "Why is the biofuel industry spending so much time and energy to manufacture ethanol - a fundamentally inferior fuel?"

Instead of trying to fix problems with ethanol, the founders of Sapphire Energy - a bioengineer, a chemist, and a biologist - set out a year ago to make transportation fuel from a renewable source. They chose a source that is not used to feed humans or livestock - algae. This plant-like organism has a lot of potential as species contain up to 50% oil. While corn can only produce about 20 gallons of oil per acre, algae could potentially yield 20,000 gallons.

View The Market Oracle story by clicking here.