Turning grass into gas



The promise of cellulosic biofuels sounds like a fable out of the Brothers Grimm: turning straw into liquid gold. Or rather, switchgrass into gasoline. It’s not magic. The process has been around since the early 1800s, when the chemist Henri Braconnot figured out how to strip sugars from cellulose—the basic building block of all plant life—and refine them into a crude form of ethanol.


For almost 200 years cellulosic ethanol has had the potential to be one of the world’s greenest fuels. Unlike corn ethanol, cellulosic doesn’t rely on food crops. It can be made from corn stover (leaves and stalks), switchgrass, miscanthus, bagasse (sugar cane refuse), wood, even municipal waste. But each of these feedstocks presents its own technical and environmental challenges.


The trick is to make the ethanol sustainably, in bulk, and at a price that competes with crude oil. Cellulosic refineries enjoyed a brief heyday in the early 1900s—Henry Ford’s first models could run on pure ethanol—but were driven out of business by cheap petroleum. Years ago, I spoke with a cellulosic researcher during a visit  to the National Renewable Energy Laboratory in Golden, Colorado. “The science works,” he told me. “The problem is economics.” Nobody could figure out how to produce it cheaply enough to turn a profit. So for nearly a century, cellulosic sat on the shelf.


The landscape changed in the mid-2000s. Faced with two wars and a spike in fuel prices, Congress and the Bush administration called for a radical increase in American biofuel production. The Renewable Fuel Standard (RFS), adopted in 2005, mandated a near doubling of the amount of biofuel blended into the nation’s fuel supply by 2012. It didn’t promise to break our addiction to foreign oil, but it was a first step.


That mandate led to an explosion of corn ethanol production. In early 2005, 81 ethanol refineries were producing 3.6 billion gallons per year. By 2007 an RFS-driven boom had contractors building 76 new plants capable of putting out an additional 5.6 billion gallons. So much corn was diverted into ethanol that a food-versus-fuel scare began rocking commodities markets. From 2005 to the middle of 2008 the world price for corn and soybeans more than doubled, causing food shortages and riots in many parts of Asia, Africa, and Latin America. Speculators fleeing the failing mortgage-backed securities market started putting huge bets on crop futures, further driving up commodities prices.


Enter cellulosic biofuels. Long championed by environmentalists, they suddenly found support even among America’s most strident oilmen. Republican James Inhofe of Oklahoma, the Senate’s leading climate change denier, hailed cellulosic as “a promising technology that could significantly increase fuel supplies” without hurting food prices.


With that kind of bipartisan support, Congress revised the renewable fuel standard in 2007 to include cellulosic biofuels. The target numbers—100 million gallons of cellulosic by 2010, 500 million by 2012—were ambitious, especially considering that not a single commercial-scale cellulosic refinery had ever been built in the United States. Not to worry, said cellulosic industry officials. They assured the Environmental Protection Agency, which administers the RFS, that refineries under construction would start producing millions of gallons within a couple of years.


Five years later, cellulosic refineries had produced just 20,069 gallons of fuel. Faced with high construction costs and interminable technical delays, many start-ups failed before producing a single drop. There were also some notorious frauds, such as Cello Energy. The EPA anticipated that Cello would produce 70 million gallons a year by 2010. Agency officials seemed to believe in the company. (And why not? CEO Jack Boykin was the former head of the Alabama Ethics Commission.) But after a judge found him guilty in 2009 of “oppression, fraud, wantonness, or malice” in his business dealings, Cello folded and took 70 percent of the nation’s hoped-for 2010 cellulosic fuel production with it.


It looked like a classic case of overpromise and underdeliver. “Congress set those RFS targets without actually discussing with the technical community what would be possible,” says Robert Brown, director of Iowa State University’s Bioeconomy Institute. “The growth curves set for cellulosic fuels were impossible.” No other clean-energy technology faced such a steep scale-up curve. Wind and solar power, geothermal, and corn ethanol required decades to reach the production levels we see today. Cellulosic companies were asked to do it in four years.


When they failed to hit their mark, vultures circled the industry. In late 2011 a Wall Street Journal editorial branded it “The Cellulosic Ethanol Debacle.” Two early cellulosic companies, Calysta and Coskata, switched to making gasoline from natural gas. BP and Shell abandoned their cellulosic projects. Congress began reconsidering the value of the RFS, using the unmet cellulosic targets as Exhibit A. Stock prices of cellulosic companies tanked. Investment capital fled.