Hearings and Business Meetings
June 19, 2006
SD-366 Energy Committee Hearing Room 02:30 PM
Dr. Michael Pacheco
Director of the National Bioenergy Center, National Renewable Energy Laboratory
Invited Testimony for the U.S. Senate Committee on Energy and Natural Resources
Prepared Statement of
Dr. Michael Pacheco
Director, National Bioenergy Center
National Renewable Energy Laboratory
June 19, 2006
Mr. Chairman, thank you for this opportunity to discuss how biofuels can provide our nation with an abundant, renewable source of energy, and in particular, help reduce our dependence on imported oil. I am the director of the National Bioenergy Center at the National Renewable Energy Laboratory in Golden, Colorado. NREL is the U.S. Department of Energy’s primary laboratory for research and development of renewable energy and energy efficiency technologies. I am honored to be here, and to speak with you today.
The committee is to be commended for your hearing on the Renewable Fuel Standard and the future potential of biofuels such as biodiesel, cellulosic ethanol, and E-85. Researchers at NREL are dedicated to helping our nation develop a full portfolio of renewable energy technologies that can meet our energy needs. Given the seriousness of the energy challenges we face as a nation, there is a lengthy list of renewable and conventional energy options that must be pursued. If we narrow our focus, however, and consider specifically just those things we can do to create a viable alternative to oil – then our choices become more limited. Developing an industry to maximize the production of biofuels like ethanol, biodiesel, and other biofuels must be a priority – because biomass is the only renewable option we have for liquid transportation fuels.
Among the many benefits of biofuels are some significant advantages regarding air emissions. Both ethanol and biodiesel are oxygenates and hence can reduce the hydrocarbons, carbon monoxide and soot emitted from the tail pipes of gasoline and diesel vehicles. Biodiesel and ethanol can significantly reduce toxic compound emissions. Ethanol additionally can cut by 25% the emissions of smog forming hydrocarbons from fuel evaporation.
The emerging biofuels industry
Biomass is plant material – most commonly trees, grasses or agricultural wastes – that can be turned into energy. There are a lot of ways biomass can provide energy, and for decades there has been a valuable biopower industry in this country that produces electricity from biomass. Your hearing this afternoon on the future potential of biofuels is timely and appropriate. We only recently have come to fully comprehend just how valuable a contribution biofuels can make, and how we can mobilize the technology and the entrepreneurial wherewithal to make it happen.
I strongly believe that the goals set forth in the Renewable Fuel Standard are not only achievable, but that they represent a minimum of what is needed. Accelerated development of a cellulosic ethanol industry is a goal that I believe is required and can realistically be accomplished – if we put adequate resources behind the effort. And, accelerating the adoption of E-85 is critical to displacing a large fraction of petroleum with ethanol.
When President Bush came to our laboratory earlier this year, he talked about a national goal of replacing more than 75% of our oil imports from the Middle East by 2025. And he affirmed that the best way to do that is through increasing our research on advanced energy technologies.
NREL’s Director, Dr. Dan Arvizu, and I were privileged to take the President through one of our key research buildings, the Alternative Fuels User Facility. We toured our process development equipment in this facility and I explained what goes on there – the research needed to accelerate the growth of a vital bioenergy industry in the United States.
Our goal is to make renewable biomass-derived fuels and chemicals the solution for ending, as President Bush himself memorably put it, our nation’s “addiction” to oil. And with the President’s Advanced Energy Initiative, we are on course to bring the nation’s first commercial cellulosic ethanol production facilities into existence by 2012.
Biomass: A plentiful resource
While much remains to be done, we as a nation start with some significant strength. The biomass resource in the country is huge, and the potential for it to grow is significant.
The Department of Agriculture and the Department of Energy recently looked at the question of whether the nation’s biomass resource could foster a biofuels industry large enough to meet a significant portion of our nation’s future fuel needs. The report, now commonly referred to as “The Billion Ton Study,” for the first time confirmed that the U.S. could yield more than a billion tons of biomass annually for energy needs. And, importantly, we could do this without negatively affecting the nation’s ongoing needs for food or fiber. This is significant because the 1.3 billion tons of biomass that was forecasted contains as much energy as 3.5 billion barrels of oil.
Let me provide some perspective on that. These 3.5 billion barrels are about 60% of the 6 billion-plus barrels of oil the U.S. consumes each year. Domestically, the United States, including Alaska, currently produces about 2 billion barrels of oil per year. That’s only 67% of the potential we see from biomass. U.S. oil production peaked in the early 1970s at the same level of production, about 3.5 billion barrels per year. The U.S. has never produced more than 3.5 billion barrels a year of oil.
I should emphasize that such a transition to biofuels will not happen overnight. It will take a significant and sustained national effort to get us there. Still, “The Billion Ton Study” clearly demonstrates the biomass resource is real, and large enough to ultimately replace a large fraction of the petroleum-derived fuels we depend on today. DOE is in the midst of developing a vision for replacing 30% of current motor gasoline with ethanol by 2030 and this should help guide us in realizing the potential of biofuels.
Moreover, the resource is regionally diverse. We envision that every state in the nation could produce biomass and could benefit economically from an expanding biofuels industry.
We also are encouraged by the fact that there already exists a strong and growing ethanol fuels industry in this country. The U.S. currently produces more than 4 billion gallons a year of ethanol, almost exclusively from corn grain, and the industry is growing 30% annually.
To understand where we are today and where we need to go, we need to see ethanol technology issues and biomass resource issues as interrelated. To move the ethanol industry to where we need it to be, we have to move beyond corn grain as the primary biomass resource. One of the most abundant potential resources we have is corn stover, the non-food parts of the corn plant, including the stalks, leaves and husks. Other resources are forest thinnings, hardy grasses like switch grass, and fast growing trees.
To use these and other resources we need to perfect new technologies that convert the cellulosic materials of the plants into fuel.
Breaking down the economic barriers
So, why aren’t we producing ethanol from cellulosic biomass today? Simply put, the cost is too high. If we were to build a facility today for converting cellulosic biomass to ethanol, it would produce ethanol at about twice the price of one of today’s existing corn grain ethanol facilities. But we are making steady progress. The focus of the DOE Biomass Program and the National Bioenergy Center is to make cellulosic ethanol as cheap as corn ethanol within the next 6 years. Longer term, DOE and NREL are targeting a cost of cellulosic ethanol
as low as 60 cents per gallon, but this will require revolutionary approaches for producing, collecting, and converting biomass.
The targets we have set to accomplish this are ambitious, but we believe they can be met with adequate research support. Our goal is to reduce the cost of producing cellulosic ethanol from $2.25 a gallon in 2005, to $1.07 in 2012. To get there we are working to greatly increase production efficiencies, and boost the average yield from 65 gallons per ton as it is today, to 90 gallons per ton in 2012.
One of the reasons I’m optimistic that we will meet these targets is our encouraging progress to date. Over the past 5 years, we’ve been able to drastically cut the cost of ethanol from cellulosic biomass, corn stover in particular, by reducing the cost of enzymes in partnership with two major enzyme manufacturers, and improving the biomass conversion process.
In the late 1990s, the high cost of cellulase enzymes forced the use of an entirely different biomass conversion process called acid hydrolysis, even though the acid hydrolysis process has inherent limitations in what it can yield. That has changed because of a partnership between DOE and two of the world’s largest biotechnology companies – Genencor and Novozymes. The consequences of that research collaboration have been impressive. The cost of enzymes for producing cellulosic ethanol has been reduced more than tenfold. As a result, all major process development work on cellulosic ethanol production is now focused on the more efficient enzymatic hydrolysis process – proof that the nascent industry is already benefiting from these scientific breakthroughs. We continue to work toward further reductions in the cost of these enzymes.
Integration of biorefineries into existing industries
Another exciting area of work is in the development of what are coming to be called “biorefineries”. Our scientists at NREL, together with those at other DOE national laboratories, universities and corporations, are leading the development of fully integrated refineries that use biomass, instead of petroleum, to produce fuels, chemicals, synthetic materials – virtually all of the products we use from a conventional oil refinery today. Biorefineries utilize a complex array of processing facilities to break down, convert and recombine a wide range of biomass components into fuels and chemicals, in a manner similar to how petroleum refineries convert petroleum crude oil. We envision that future biorefineries will utilize a wealth of resources we either underutilize or don’t use at all today. That includes agricultural residues, forestry residues, dedicated energy crops, municipal solid waste, algae and by-products of the food and grain industry.
A range of biorefinery R&D work is underway in partnership with industry. DOE’s biomass program is partnering with a number of the major ethanol technology providers and ethanol producers, including Abengoa, ADM, Broin and Cargill, to increase the yield of ethanol from existing corn ethanol facilities and expand the slate of feedstocks. In many ways, a cellulosic biorefinery can be viewed as an expansion of a corn ethanol facility. That’s why we believe tomorrow’s cellulosic ethanol industry will not replace today’s corn grain ethanol industry, it will evolve from it.
At the same time, DOE is partnering with chemical industry leaders, such as DuPont, to develop new opportunities for producing both fuels and chemicals from biomass. DOE is partnering with the forest products industry to explore and develop biorefinery concepts that can integrate into existing forestry operations. And, most recently, NREL is partnering with oil industry technology 4
developers to explore novel options for integrating biomass streams into existing petroleum refineries. These and other partnerships are speeding the progress of new technologies to the marketplace, and may uncover new options for producing fuels from biomass.
Thermal technologies such as gasification, pyrolysis and hydrothermal systems are all worthy of further research and development to determine how these technologies and the respective biofuel products impact the cost, efficiency and integration into existing fuels infrastructure.
Ethanol reduces use of petroleum
You may have heard some discussion about the energy efficiency of ethanol. The first ethanol plants built in the late 1970s were costly and energy intensive, and that sparked a debate about whether it made good “energy sense” to replace gasoline with ethanol. Today’s ethanol industry is considerably more cost effective and energy efficient. Researchers at DOE, USDA and elsewhere have shown that the net energy benefits of fuel ethanol are clear and considerable.
The figure below summarizes results from the “Well to Wheels” study conducted by Argonne National Lab, General Motors and several other partners including two major oil companies. As shown in the figure, the energy contained in ethanol made from corn is about 1.4 times the fossil energy used to produce the ethanol, and 10 times the petroleum used. For cellulosic ethanol, the ratio of energy in the ethanol to the fossil energy used also increases to about 10 Btu in the ethanol for every 1 Btu of fossil fuel used. From the perspective of science, at least, this debate has been decided in favor of continued development of ethanol. Ethanol is proving to be a very effective option for reducing our dependence on petroleum – regardless of whether it is made from corn or cellulosic materials.
There is little doubt that ethanol will be, and should be, the first biofuel that we can use to reduce our dependence on petroleum. However, NREL and the National Bioenergy Center recognize that other biofuel options need to be developed as well.
Biodiesel and other derivatives of fats, oils and greases can make a significant contribution. Researchers at DOE and USDA have shown that the energy contained in biodiesel is 3.2 times the fossil energy used to produce the biodiesel. A wide variety of seed oils, animal fats and waste oils from all parts of the country can be converted to biodiesel. Aquatic species such as algae can also play a major role in the long term because they do not require fertile soils, can grow in brackish water, and yet
algae can produce very high yields of oil. Considerable research and development will be required to realize the potential of algae as a source of oil feedstock.
There is a small but rapidly growing biodiesel industry in the United States. The growth of this industry is currently limited by a number of barriers to market penetration, including the need to develop new fuel quality standards, uncertainty regarding impact on NOx emissions, and by lack of understanding of how this new fuel affects engine performance and durability. This is especially true for new diesel engines equipped with advanced emission control technologies that will be introduced beginning next year. NREL’s Center for Transportation Technologies and Systems is working to address these issues in partnership with biodiesel producers and engine manufacturers. We, along with industry, believe additional engine testing is needed to better understand the performance of B20 (20% biodiesel) and lower blends in the advanced emission control diesel engines that will enter the market in the 2007-2010 time frame in response to EPA regulations. This engine test work would advance biodiesel technologies by ensuring compatibility with these new (and much different) engines.
Other NREL vehicles and fuels research
I would be remiss if I did not note the other important research being conducted at NREL which also is contributing to the next generation of vehicles and fuels. NREL’s Center for Transportation Technologies and Systems is working to address the biodiesel utilization issues noted above. Similar R&D is needed to more accurately quantify the air quality benefits of ethanol and develop engines that are optimized to operate on ethanol as well as on gasoline. A number of vehicle efficiency improvements are also being investigated including technologies to dramatically reduce fuel use for air conditioning. Other promising answers to our future transportation needs are gasoline-electric and diesel-electric hybrid systems and so-called “plug-in hybrids”. Plug-in hybrid vehicles use both a gasoline engine and the electric outlet of your home to eventually achieve fuel economy of more than 100 miles per gallon.
Continued research hastens fuels development
In conclusion, let me review some key points. Biomass is the only renewable option for producing liquid transportation fuels. The U.S biomass resource can supply a large portion of demand for gasoline and we can greatly expand the resource base when world petroleum production begins its decline. The biofuels industry can use resources from every region of the country and could become a needed stimulus for ailing rural economies. Ongoing research, like research into biorefineries, will create many new products beyond the biopower, ethanol and biodiesel we are producing today.
The President’s Advanced Energy Initiative holds the promise of accelerating our work so that we can help get this industry up and running, to benefit the American people, even sooner. The initiative envisions a more aggressive research effort in all key areas: further reductions in enzyme costs, advances in process technology to reduce capital and operating expenses and advances in feedstock R&D that will reduce the cost of production, collection and transportation of biomass to the biorefinery.
As director of the nation’s research center for bioenergy, I can assure you that a sustained, high level of investment for research in bioenergy will provide major benefits for future generations. We need to keep apace with this work because biofuels are an environmentally and economically beneficial way to bridge the gap between rising energy demand and peaking oil production, while reducing U.S. dependence on imported oil. Thank you. 6