WASHINGTON – It took millions of years for the remains of microscopic plants and animals that once covered the floors of ancient oceans to become buried deep underground to form a carbon-rich stew known as petroleum.
Now, in the next big play to manage climate change, engineers are moving to speed and re-engineer that process, taking agriculture and food waste and turning it into low-carbon fuels for trucks, ships and planes.
After years stuck in the doldrums of the American energy industry, biofuels are getting new attention from both established oil companies and a wave of startups that are quickly expanding capacity to produce so-called advanced biofuels as states move to enact low-carbon fuel standards and industries become increasingly cognizant of their carbon footprints.
It’s still a relatively small industry compared to corn-based ethanol, a first-generation biofuel with more than 14.7 billion gallons of production last year. While ethanol production has stagnated over the last five years, advanced biofuels — defined as reducing greenhouse gas emissions by 50 percent of more under U.S. law — have grown almost 60 percent to more than 3.3 billion gallons last year, according to the Environmental Protection Agency.
At a propane conference in Washington last week, executives accustomed to talking about the Asian car market and backyard grills discussed the urgent need to develop their own version of a biofuel that could substitute for propane, a component of natural gas.
“The reality is we have to do this to be in the conversation,” said Bill Van Hoy, executive director of the Texas Propane Gas Association.
With petroleum fuels face rising competition from electric vehicles, the prospect of selling lower-carbon alternatives to diesel and jet fuel offers an enticing prospect for oil companies. Both Royal Dutch Shell and BP have a long list of advanced biofuel investments around the globe, from sugar cane-based ethanol operations in Brazil to a plant in India that turns wood chips into diesel or jet fuel. Marathon Petroleum, the Ohio-based spin off of Marathon Oil, is converting an oil refinery in North Dakota to a bio refinery.
The San Antonio refiner Valero Energy already operates the largest renewable diesel plant in North America, using waste products including used cooking oil and leftover fat from meat processing. The company says it is planning to more than double the capacity of that facility in Louisiana while developing another in Port Arthur, with plans to sell 1.1 billion gallons a year into California, Europe and Canada, where low carbon fuel incentives are in place.
Up and away
The strategy behind oil companies’ interest in biofuels lies in holding onto what they can of the transportation sector. While cars and delivery trucks will likely be electrified en masse in the decades ahead, the energy source of choice for airplanes, cargo ships and long-distance trucks should remain liquid fuels, products in which oil companies have more than a century of experience, said Matthew Tipper, vice president of new fuels at Shell.
“There’s an adjacency [for oil companies making biofuels] that’s really quite powerful,” he said. “We already have access to the customers and the infrastructure and blending terminals and the technologies themselves… the chemistry is familiar to us.”
Airlines such as Delta and manufacturers such as Boeing are already rushing to find new sources of biojet fuel, as they seek to lower their planes’ carbon footprint without the option of heavy lithium-ion batteries, which are impractical for flight. The urgency comes as customers increasingly show discomfort with the large amounts of greenhouse gases produced by jets, leading many to pay extra for so-called carbon offsets on their flights, supporting airlines’ environmental efforts and hopefully avoiding haranguing by environmentalists on social media, a phenomenon termed “flight shaming.”
And the benefits might not purely be environmental. Scientists are working on an energy-efficient biofuel that would get more miles per gallon than traditional jet fuel, said Blake Simmons, director of biological systems and engineering at Lawrence Berkeley National Laboratory in California.
“It’s not just about meeting carbon policies of whatever country they’re landing,” he said. “If you can get a higher return per seat, that has really peaked [airlines’] curiosity.”
Refineries and their customers might not have a choice much longer.
California and Oregon already have low carbon fuel standards in place to reduce emissions from gasoline and diesel, as do Europe and some provinces in Canada. More state legislatures are considering following suit, including New York and Washington state.
Running an engine on renewable diesel, for instance, not only produces less greenhouse gases in the moment. Biofuels are also largely made from plants, which absorb carbon dioxide from the atmosphere.
“The dream,” Simmons said, “is the carbon you emit goes into the atmosphere and into the next generation of plants, so you create a cycle.”
But even with the recent rush of projects, the global fuel industry remains far behind where it needs to be, according to the International Energy Agency. If governments are to prevent the earth’s temperature from rising beyond 2 degrees Celsius — causing deadly heatwaves, crop failures and inundating coast lines around the globe — biofuels production needs to reach 10 percent of the global fuel supply by 2030, about triple the current rate.
In order to achieve that goal, energy companies will likely have to move beyond relatively simple-to-process waste streams such as used cooking or soybean oil — of which there are limited quantities — to tree trimmings from forestry crews or leftover leaves and stalks from crops such as corn and sorghum or even household trash.
Marathon Petroleum already has a deal in place with the California startup Fulcrum BioEnergy, to process up to 11 million gallons a year of a low-carbon synthetic crude made from trash. And Ensyn, a Canadian firm, is developing a biofuels plant at a shuttered wood mill in Georgia, using wood scraps from nearby logging operations.
“You want hundreds of billions of gallons of this stuff, and you don’t have a sufficient supply of [used cooking oil] to make a significant reduction in carbon emissions,” said Michael McAdams, president of the Advanced Biofuels Association. “These [new] waste streams are a hundred-fold bigger.”
So how big can the biofuels industry get?
The consensus among financial analysts is the next decade will be one of tremendous growth for biofuels as government mandates drive demand. But their higher costs mean their role as a source of energy for transportation will be secondary to oil and eventually electricity, which could reduce greenhouse gas emissions to near zero.
“It’s a growth area, but the energy market is too big to be displaced by biofuels,” said Kevin Lindemer, an analyst with research firm IHS Markit. “Biofuels are one path to reducing carbon, among many others.”
But for oil companies looking to find their way in a world where not only governments, but also companies are looking to decarbonize, biofuels offer an opportunity. On a recent trip to Norway, Tipper, the Shell executive, noted that for all the country’s progress in electrifying its economy — buoyed by Norway’s huge hydro-power resources — many industries there still relied on petroleum-based liquid fuels.
“The [oil] industry has adapted to reality. Electrification is coming,” he said. “It makes sense to focus on those industries that are more difficult to electrify.”
Source: Houston Chronicle