Rethinking the Future of Biofuels: Leveraging Three Routes Forward

The Obama administration is thinking creatively about how to address the 2015 requirement for renewable fuels. In doing so, it needs to consider the efficiency and process improvements that are taking place at existing U.S. biorefineries.

In a new white paper released this week by the Institute of Transportation Studies at UC Davis (ITS-Davis), we measure the incremental changes that are occurring in the U.S. biofuels industry and discuss their relevance in advancing domestic environmental goals.

Our research shows that a variety of biofuel innovations are doing more today to reduce greenhouse gas emissions (GHG) emissions than the long-sought advanced biofuels and could help speed deployment of those biofuels. The study, “Three Routes Forward for Biofuels: Incremental, Transitional, and Leapfrog,” was authored by a team of researchers at ITS-Davis’ Sustainable Transportation Energy Pathways Program (NextSTEPS).

The U.S. Environmental Protection Agency (EPA) has been criticized in the past for its year-by-year easing of the federal Renewable Fuel Standard (RFS) targets, which proponents say are important to achieve continued GHG reductions. EPA’s prior leniency on cellulosic biofuels requirements stems from disappointing progress in the development of these biofuels. By contrast, partly due to its use of smaller “bins,” the California Low Carbon Fuel Standard (LCFS) has helped encourage a series of incremental changes in the way current biofuels are being produced that provide immediate benefits and could help pave the way to the EPA’s and country’s long-term goals.

In the ITS-NextSTEPS study, we identify three routes forward for biofuels: (1) an Incremental route in which small improvements are made at existing biorefineries, (2) a Transitional route in which cellulosic “bolt-on” production and other innovations leverage existing biorefinery investments and build know-how with cellulosic materials and processes; and (3) a Leapfrog route that focuses on major technological breakthroughs in cellulosic and algae-based pathways at new, stand-alone biorefineries.

From this perspective, the study looks at an emerging trade-off between investment risk today and carbon emissions reductions in the future. Incremental improvements occurring at many biorefineries today (such as process efficiency) could result in reductions in GHG emissions per unit fuel, and in many cases have a payback period of less than two years for the fuel producer. The nation’s small and medium-sized biorefineries are generally willing to take this risk. Given the large volumes of conventional biofuels in the U.S. (about 15 billion gallons in 2013), these incremental improvements at corn ethanol and biodiesel plants add up to significant overall carbon dioxide (CO2) reductions. By 2030, the improvements will translate into annual reductions of 20-30 million metric tons in the rated GHG emissions of these biofuels. That is equivalent to removing 750,000 to 1.5 million “light duty vehicles” (i.e. passenger cars) from U.S. roads.

The Leapfrog route to large scale, advanced facilities (such as cellulosic) requires more risky investments with longer payback periods. But this route has the potential for much greater GHG reductions once the technology matures and many plants are in operation. But neither the LCFS nor RFS incentives, nor the roughly $8 billion in public and private investments over the past five years, has succeeded in making much progress.

Finally, a Transitional route may offer a key bridge between these two worlds. This route leverages existing biorefineries to produce small quantities of cellulosic fuel. These medium- risk, medium-reward technologies may be just what the advanced biofuel industry needs to pave the way to large-scale cellulosic production. The study notes, however, that, to date, the majority of the transitional technologies in the U.S. have focused on cellulosic ethanol, rather than “drop-ins” that do not have a “blend wall” problem and can be used in ships and aircraft. Efforts to encourage small transitional investments in drop-in biofuels are also needed.