WASHINGTON (Reuters) - The United States will likely fail to reach its long-term mandate for making advanced ethanol from trees, grasses and crop waste unless producers innovate significantly, a scientific advisory group said on Tuesday.
The National Research Council’s comments are the latest sign that backers of alternative fuels must wait longer for “next-generation” ethanol. Touted as the motor fuel of the future, it has struggled with high production costs and other setbacks.
“Absent major technological innovation or policy changes, the ... mandated consumption of 16 billion gallons of ethanol-equivalent cellulosic biofuels is unlikely to be met in 2022,” a study by the council said, referring to long-term targets in U.S. law for the biofuel.
The study, which drew challenges from the U.S. agriculture secretary and industry groups, also said cellulosic fuel without subsidies would be feasible only with oil above $190 a barrel, far higher than the current level near $80.
The council, part of the U.S. National Academy of Sciences which offers scientific advice under a congressional charter, said the U.S. mandate for renewable fuels may be an ineffective policy for reducing greenhouse gas emissions.
The report itself may not hurt near-term investment in cellulosic production, but the weak economy will, said Pavel Molchanov, an analyst at financial services company Raymond James and Associates.
“There’s no disputing that in this kind of economy with credit markets tight, it’s definitely not easy for advanced biofuel developers to raise large amounts of capital,” he said.
In June, the Environmental Protection Agency slashed for the second year running its proposed near-term mandate for cellulosic production set by Congress in 2007 under then-President George W. Bush.
The federal government and producers say the fuel is a way to reduce imports of foreign oil and cut emissions of gases blamed for warming the planet. Next-generation ethanol has also been seen as a way to cap the growth of using corn to make fuel, which has been blamed for pushing up food prices.
Companies aiming to make cellulosic ethanol or provide enzymes that break down its feedstocks include DuPont’s Genecor, Abengoa Bioenergy, Qteros and Novozymes A/S.
Despite years of work, there are not yet any commercial-scale plants to make cellulosic ethanol.
The U.S. mandate calls for 15 billion gallons of ethanol made from traditional sources such as corn, 4 billion gallons of advanced biofuels, other than ethanol derived from corn, and 16 billion gallons of cellulosic from sources including wood, grasses or crop waste by 2022.
U.S. producers made more than 13 billion gallons of corn ethanol last year, using about 40 percent of the corn crop in the process. So the long-term goal of 15 billion gallons of traditional ethanol should be achievable, the study said.
It is unclear whether some cellulosic fuels would lower greenhouse gas emissions because of the carbon dioxide that would be produced when new land is cultivated to grow feedstocks, said Wally Tyner, an agriculture economics professor at Purdue University who helped work on the study.
For example, if expanding biofuels involves plowing up perennial vegetation on a piece of land and replacing it with an annual crop, that could disrupt future potential for storing carbon in biomass and soil, the study said.
The study had plenty of critics, from government to industry groups. The Renewable Fuels Association said the work “largely assesses ethanol and other biofuels in a vacuum and fails to appropriately compare the costs and benefits of renewable fuels to the impacts of the marginal petroleum sources they are displacing”.
Virginia Dale, a biofuels fellow at the Oak Ridge National Laboratory in Tennessee who helped produce the study, said it did not use the most recent government data available and used models not specifically designed for biofuels, so cost estimates for producing some biofuels may be exaggerated.
“We didn’t always use the available data, the current data.”
Tom Vilsack, the agriculture secretary, agreed. “The study overlooks many of our recent efforts, including new investments in research and technologies to develop non-food feedstocks,” he said.
Editing by Dale Hudson