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Moving beyond corn-based ethanol

Corn prices are surging, ethanol is booming. We haven't felt this kind of euphoria since the giddy early 70s when the Soviet Union needed grain and American farmers were told to •feed the world.'

Of course, that party ended quickly. And now some are wondering if the ethanol euphoria will meet a similar demise.

Most of the folks I talked to at the Advancing Renewable Fuels conference in St. Louis two weeks ago were involved in corn ethanol. And because that is what's driving the biofuel boom right now, they're worried about what's down the road - specifically, •cellulosic ethanol,' made from plant fiber, waste products or wood chips.

This meeting featured big names: Energy Secretary Sam Bodman, USDA Secretary Mike Johanns, and the President himself. It also included notables like John Deere CEO Bob Lane, ADM CEO Patricia Woertz, former CIA director James Woolsey and a flock of public and private institution leaders from the auto, petroleum and biofuel industries.

Nearly every one of them talked about the promise of cellulosic ethanol, a potentially cheaper and more plentiful energy source that may some day be the fuel of choice in this country.

A big maybe

Right now, cellulosic is more hope than promise. But that hasn't stopped the government from sinking big bucks into the idea. Bodman's Department of Energy is putting up $250 million to

Energy Secretary Bodman

build two new research centers devoted to cellulosic ethanol. They are looking into raw materials such as switchgrass, or reclaimed waste products like wood chips or corn stalks.

"The key is finding the right enzymes that will efficiently break down the feedstocks into sugars that can then be converted to ethanol,•bCrLf he says. "Solving this problem will allow us to expand the supply of plant materials we can use for ethanol—and lower its cost.•bCrLf

Just like those giddy days when the American farmer was sent out to feed the world, there's a host of challenges that come along with that idea. We also need to build up and adapt the infrastructure for delivering renewable fuels to consumers and meet the distribution challenge. Maybe crops or trees will be grown, processed and the energy consumed in regions.  No one knows for sure.

"This work will ultimately be done by the private sector, but government can—and should, in my opinion—serve as a catalyst for these developments,•bCrLf says Bodman.

The Energy Department has set two important goals for biofuels: the first is to make cellulosic ethanol a practical and cost-effective alternative to gasoline by the year 2012. The second is to displace 30% of our current consumption of gasoline with biofuels by the year 2030.

DOE's futuristic map of where bioenergy crops may be grown.

To reach this 30 by 30 goal, America must raise its production of biofuels from the current level of five billion gallons a year to 60 billion gallons a year—quite a substantial jump. Ray Orbach, Under Secretary for Science at DOE, thinks it's possible.•bCrLfThe U.S. is capable of producing 1 billion dry tons of biomass annually and 55 million acres of perennial bioenergy crops, enough for 60 billion gallons of cellulosic ethanol,•bCrLf he told the audience in St. Louis. "And it's possible to have cellulosic ethanol available in five years.•bCrLf

Not so fast

Cellulosic ethanol now appears to be the best biofuel alternative for reducing crude oil imports, but making it commercially feasible on a wide scale is a formidable challenge, notes USDA Chief Economist Keith Collins. "The capital requirement per gallon is much higher than corn ethanol,•bCrLf he says. "Ethanol yield is lower per ton of feedstock and conversion is complex, requiring enzymes that cost substantially more than for corn ethanol.                                   

"Harvesting, bailing, storing, and transportation of biomass are expensive,•bCrLf he continues. "All these barriers are recognized, and greater government and private sector research and investment capital are now being directed at overcoming them.•bCrLf

So is cellulosic a threat or opportunity for today's farmers involved in corn-based ethano? Guess it depends on how good you are at adapting to changing markets. It's not too early to start making some strategic decisions about the future.