Final Notes from BIO’s World Congress

On June 29 at BIO’s World Congress, Steen Riisgaard, CEO of Novozymes, and Stephen Tanda, Board Member of Royal DSM N.V., released a report from the World Economic Forum on The Future of Industrial Biorefineries. The report says that a biorefinery value chain could create revenue for agricultural inputs ($15 billion US), for biomass production ($89 billion), for biomass trading ($30 billion), for biorefining inputs ($10 billion), for biorefining fuels ($80 billion), for bioplastics ($6 billion) and for biomass power and heat ($65 billion) by 2020.

You can download and listen to the press conference Release of report on The Future of Industrial Biorefineries.

The highlight of the final day of the World Congress was a debate between Princeton Visiting Scholar Tim Searchinger and MSU Professor Bruce Dale, moderated by Univ. of Minnesota’s John Sheehan. Sheehan sought to explore both the strongest and weakest parts of the arguments for and against including an indirect land use penalty in the carbon lifecycle of biofuels and bioenergy. For him, the central question in the debate is whether or not the world is running out of land to use — for all purposes, not just agriculture — meaning that any new use, such as biofuels, inevitably causes a shift of use somewhere else.

For Searchinger, the central point is that the traditional lifecycle of biofuels and biomass energy accounts a credit for using carbon stored in crops and trees. Bioenergy, he argues, should only get credit for new sources of carbon that it creates or for using carbon that would have decayed and entered the atmosphere anyway, but never for carbon that is already stored.

Dale took an optimistic view that a switch to bioenergy — and away from petroleum — would spur the creation of additional carbon stores. This could be accomplished through increased productivity and yield on the same amount of land, for instance, and through regrowing of crops and biomass sources so that the credit given to bioenergy is repaid quickly.

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From Pacific Rim Summit: Specialty Crops, Renewable Feedstocks & Sustainability

This panel on the second day of the Summit consisted of Richard Gustafson from the University of Washington, Gillian Madill, an independent consultant representing views of the environmental NGO community and John Sheehan, from the Institute on the Environment at the University of Minnesota.

While Mr. Gustafson and Mr. Sheehan gave informative talks on lifecycle assessment modeling and sustainability issues, Ms. Madill lit up the room with her talk titled, “Environmental Concerns with Energy Biotechnologies.” Ms. Madill started the conversation with the assertion that the environmental community and the biofuels community have the same goal, to supply energy in a new way that preserves the environment and our earth. Renewable energy and technology are tools to get to that end.

The environmental community has several valid concerns over widespread biofuels production. They see biofuels as a transition technology on our way to an energy future less dependent on liquid fuels, some would say zero liquid fuels. Zero because of the belief that no biofuels are carbon neutral. The question asked by environmental groups is, Why incentivize an unsustainable industry? Some concerns raised by Ms. Madill on behalf of the environmental community include deforestation of sensitive lands such as rain forests, environmental degradation, incorporation and containment of genetically engineered crops and organisms and intellectual property protection.

The biofuels industry plans to be a sustainable industry, but it is a new industry on the verge of commercialization with a formidable competitor. Ms. Madill’s point was that the environmental community and industry, while striving for some common goals, are currently at odds.

As I expressed to Ms. Madill, at the heart of this debate is the fact that most of the controversy centers around land use and protecting sensitive ecosystems. If biofuels went away tomorrow, other industries would compete for those same sensitive areas. After all, solar and wind farms require significant acreage as well, not to mention building schools or highways or the new grocery store that just opened in your neighborhood. Any industry that has a footprint will at some point, one can only assume in a future low carbon world, be mandated to quantify their lifecycle assessment, including land use and potentially indirect international land use, as biofuels are today.

My suggestion would be to partner to serve the common goal, protection of our vital and sensitive areas and resources which are important and treasured by all.

All Your Eggs in One Basket

Biofuels Digest reported this week that DoE Secretary Chu told attendees of an alternative energy conference, “If it were up to me, I would put every cent into electric cars.”

The following day, Biofuels Digest reported its own lifecycle analysis of E85 from corn and the Tesla electric car. According to the report, “cars running on E85 corn-based ethanol at the proposed new Corporate Average Fuel Economy (CAFE) standards will generate 30 percent lower CO2 emissions over an average car lifetime than a Tesla all-electric sports car using coal-fired power. E85 saves an average of 6 tons of CO2 emissions over the average life of a vehicle, when utilizing corn ethanol, and up to 36 tons of CO2 when running on cellulosic ethanol derived from waste biomass.”

Further, “The Digest also found that cars running on E85 corn-based ethanol at the proposed new Corporate Average Fuel Economy (CAFE) standards will generate 10 percent lower CO2 emissions over an average car lifetime than a Chevy Volt running solely on electric power. A Volt using a 50/50 mix of gasoline and electric power would generate 13 percent more CO2 than an E85 car running on corn ethanol.”

The comparisons are of course dependent on the opening assumptions, as are most analyses. And I doubt it will be helpful for industries that ostensibly aspire to reducing carbon emissions to begin tearing each other down. However, I would like to buy Sec. Chu a new t-shirt:

I Heart Electric Cars

I Heart Electric Cars

Corn Growers Try to Understand Indirect Land Use Change

The National Corn Growers Association’s recent “Land Use: Carbon Impacts of Corn Based Ethanol 2009” conference highlighted the confusion the issue of indirect land use change has engendered for farmers. Chuck Zimmerman of AgWired summed it up in a report from the conference:

Do you understand things like indirect land use when it comes to regulations via departments like the EPA due to the RFS? Me either. And I’ve sat in on conferences and discussions and interviews on the subject for a while now. That’s because an issue like indirect land use involves predicting the future based on certain assumptions that may or may not be valid, especially if they’re based on out of date data and information.”

Conference chairman Jamey Cline, NCGA Director Biofuels and Business Development, indicated to Zimmerman

that these issues are extremely important to agribusiness and corn growers in particular because if the CARB regs hold up, by 2012 they will effectively shut off that market to ethanol. Additionally, one presenter said that due to the proposed climate change bill and RFS, approximately 27.1 million acres would be taken out of production across the Unites States. That would have a huge impact on our economy, especially in rural areas.”

Jeanne Bernick of Farm Journal also reported from the conference:

Even the leading ag economists of our day are scratching their heads on this issue (read Land Use Change Tricky to Measure). They claim it is simply impossible to verify why land use changes occur.

“‘We are trying to measure the unmeasurable,’ says Bruce Babcock, ag economist with Iowa State University’s Center for Agriculture and Rural Development (CARD). ‘We would never really be able to verify why those acres changed production plans. Annual agricultural land use is flux, and largely variable.’

“Interpretation: No one really knows what influences land use change. Farmers make planting decisions in the U.S. and around the world based on a multitude of factors (weather, markets, weed and insect pressure), not just one factor like increased biofuels production in the U.S.”

Mike Wilson of Wallace’s Farmer astutely noted several questions raised by the conference:

Why are we setting U.S. policy based on something that may or may not take place in other countries? As speaker and Texas A&M ag economist Bruce McCarl says, ‘If we want to get out of this indirect land use debate, we simply need to have Brazil institute some greenhouse gas emissions penalty for when it develops its land.’

“What role does politics play in this? Clearly politics is the 800-pound gorilla in the room. President Obama has his people in place and a mandate from voters; he wants to get something passed regardless of the flawed logic that is now floating around in EPA’s regulatory proposal.

“Is this an Obama-driven apology to the rest of the world for eight years of George Bush unilateralism?

“Is this punishment for not agreeing to the Kyoto Protocol so many years ago?”

During the August Congressional recess, Sen. Chuck Grassley (R-Iowa) invited EPA officials Gina McCarthy, who is Assistant Administrator for the Office of Air and Radiation, and Margo Oge, who heads the Office of Transportation and Air Quality, to tour Iowa State University’s BioCentury Research Farm near Boone and the Renewable Energy Group’s 30-million gallon biodiesel plant at Newton.

Dan Looker, Business Editor of Agriculture.com, reported:

Dermot Hayes, an economist with ISU’s Center for Agriculture and Rural Development, shared research by a graduate student, Jerome Dumortier, that shows the effects of technology as crop prices rise due to demand for biofuels. Farmers are more likely to spend more on biotechnology that speeds up yield gains, Hayes said. If this effect is just 1% more than the trendline in yields [1.6% is used in EPA calculations] over 10 years, it brings the gain [carbon debt] from ethanol from 166 years to just over 30. If it’s just 2% higher, the gain from producing ethanol instead of using gasoline is immediate. In essence, there is no indirect land use effect.

After the recess, at a Senate Agriculture, Nutrition, and Forestry Committee Hearing on Sept. 3, Senators heard from Bill Couser, a fourth-generation farmer from Nevada, Iowa:

As a seed corn grower for Monsanto I have witnessed firsthand the wonderful improvements in corn and soybean genetics over the last few years. The simple fact is that yields are not only increasing, they are increasing at an increasing rate. Coupled with improved farming practices, I have no trouble believing Monsanto’s national average projection of 300 bushels per acre corn by 2030. Iowa will likely hit that mark much sooner. And we will do it with fewer inputs and less impact on soil and water than today.”

New Biofuels Manifesto

University of Minnesota Professor David Tilman, Princeton University Visiting Scholar Tim Searchinger, Dartmouth Professor Lee Lynd and others involved in the debate over the environmental and social impacts of biofuels have published in Science magazine what amounts to a new manifesto on how biofuels can be done right.

The authors list five biofuel feedstocks that are the best in terms of sustainability — “lower life-cycle greenhouse-gas emissions than traditional fossil fuels and with little or no competition with food products.”

The authors conclude:

Three steps should be taken: meaningful science-based environmental safeguards should be adopted, a robust biofuels industry should be enabled, and those who have invested in first-generation biofuels should have a viable path forward.

The EPA’s proposed rule on the Renewable Fuel Standard was intended to outline a viable path forward for first-generation biofuels. The Best Case Natural Gas Dry Mill, the Biomass Dry Mill, and the Biomass Dry Mill with Combined Heat and Power scenarios outlined in the “EPA Lifecycle Analysis of Greenhouse Gas Emissions from Renewable Fuels” all produce reductions in greenhouse gases that come close to or exceed the 20 percent standard in the RFS. The EPA’s definition of the Best Case is: “Best case plants produce wet distillers grain co-product and include the following technologies: combined heat and power (CHP), fractionation, membrane separation and raw starch hydrolysis.”

The question will be whether anyone invests in these technologies or in additional biofuel production at all, given the current economic and social climate in which biofuel companies are operating. One possible factor in choosing the best biofuels ought to be how soon they can become a reality and whether they can be improved from there.

Indirect Land Use Paradigm Change

A recent analysis by Iowa State University Biofuels Economist Robert Wisner argues that requirements for biofuel production are on a collision course with greenhouse gas reduction goals. He notes that the Energy Independence and Security Act’s requirement for gradual increases in production of biofuels “was designed to provide time for technology development and industry growth.” However, he says, California’s and the EPA’s requirement for immediate reductions in greenhouse gas emissions may block the industry’s growth.

Wisner notes some of the large uncertainties in producing accurate, science-based measurements of indirect land use change emissions:

Longer-term technological changes that bring increased crop yields per acre, changes in livestock and poultry feed conversion efficiency that reduce feed needs per animal, the amount of crop residue left on soils, and other factors will affect indirect land use emissions.

When the EISA was first debated and passed, the prevailing theory was that an annual increase in corn production would be sufficient to meet the new demand created by the annual increase in biofuel production. See for instance, U.S. Corn Growers: Producing Food and Fuel from the National Corn Growers Association.

The new models being employed by California and the EPA, however, take as an assumption that the increase in biofuel demand represents a shock to the system that happens all at once. See, for instance, The Land Use Effects of Corn-Based Ethanol, by Thomas Darlington. The models change a key assumption about the effects of the Renewable Fuel Standard, coloring the conclusion drawn. Both assumptions should be open for testing as hypotheses.

EPA Gathers Input on RFS

The EPA today held a public hearing on the RFS2 Rule and will be holding a Workshop on Lifecycle Greenhouse Gas Analysis for the Proposed Revisions to the National Renewable Fuels Standard Program tomorrow. These fora are intended to solicit feedback from stakeholders in the rulemaking and provide information on how the EPA developed its lifecycle model.

BIO submitted testimony to the EPA asking that the agency maintain flexibility in the rule to reconsider the greenhouse gas reductions associated with biofuels as the science of life cycle assessment, particularly methods of accounting indirect land use change, matures.

At a U.S. House Agriculture Subcommittee hearing on May 6, several experts discussed the considerable uncertainties that remain in the current models for ILUC that the EPA has employed.

Joe Glauber, chief economist of the USDA, listed some of the sources of uncertainty, including crop yields and production growth over time, economic and non-economic limits to land use change, and assumptions plugged into the models at the start. Glauber also noted that predicted U.S. plantings of principal crops for 2009 remain well below historical trends and that increases in corn and soybean acres are offset by declines in wheat and cotton acres.

As Glauber points out, conversion of forests is one of the key factors in the life cycle greenhouse gas estimates of the EPA’s analysis and many of the published studies on ILUC. Yet, there is considerable uncertainty over whether forest would be the primary source of new cropland.

Bruce Babcock, director of the Center for Agricultural and Rural Development at Iowa State University, pointed out that there is little evidence that U.S. biofuel production has caused deforestation either in the United States or in Brazil. Rather than conversion of forest or pastureland, “U.S. cropland has increased primarily through a reduction in CRP acres and through increased double cropping of soybeans after wheat.” Similarly, expansion of soybean production in Brazil has been accommodated by increased stocking rates on pastureland. It is increases in cattle production in Brazil that have led to deforestation for pastureland in the Amazon.

Babcock concluded, “The precision with which models can estimate emissions associated with market-induced land use changes is low.”

The fact is that the model employed by the EPA attaches heavy penalties for greenhouse gas emissions to production of biofuels based on assumptions that worldwide agriculture is a zero-sum game in which use of crops for one purpose leaves a shortfall in crop availability elsewhere that can only be made up by converting forest to agriculture. When the conclusions of the model are driven by the assumptions, they should be seen as logically invalid.