Biofuels mandate has lots of problems, study says

WASHINGTON -- Next-generation biofuels are so expensive and difficult to make that the nation is unlikely to meet the government's usage mandates, according to the National Research Council.

A congressionally requested study from the research council, an arm of the National Academy of Sciences, also warns that the feedstocks needed to produce advanced biofuels could compete with food crops for land — a key criticism of the corn ethanol that biofuels are supposed to replace.

Producing future biofuels also could have unintended environmental consequences in some areas because of fertilizer and water requirements and may not do as much to reduce greenhouse gas emissions as the government has estimated, the study found.

The advanced fuels are supposed to be made from non-food feedstocks such as corn stalks, wheat straw, grasses and trees, all sources of plant cellulose. The Obama administration has been pushing the cellulosic fuels as a way of reducing U.S. dependence on foreign oil while creating thousands of rural jobs.

A 2007 law mandated that refiners use increasing amounts of the next-generation fuels starting in 2010, but production so far as fallen far short of relatively modest targets.

In 2012, the mandate calls for motorists to use 500 million gallons of cellulose-based fuel, but the government estimates that as little as 3.5 million gallons actually will be produced. By 2022, refiners are required to use 16 billion gallons annually.

But those targets can't be met "unless innovative technologies that unexpectedly improve the cellulosic biofuel production process and technologies are scaled up and undergo several commercial-scale demonstrations in the next few years," the study said.

Wallace Tyner, a Purdue University economist and co-chairman of the 15-member panel of experts who conducted the study, ticked off the list of major problems facing the biofuel industry: "It's a technology that's not known except that it's known to be expensive, a feedstock that's expensive, and a lot of uncertainty in many areas, including in government policy."

One of the biggest hurdles is the cost of raw material. Farmers will demand to be paid several times as much as the biorefineries can afford to pay them, the study found.

A biofuel producer, for example, could afford to pay only about $25 a ton for corn stover, which is the cobs, leaves and stalks left after the grain is harvested. But farmers would need to be paid $92 a ton to cover the costs of harvesting, storing and shipping the stover. Perennial grasses would be even more expensive.

While the study raised potential environmental concerns, the economics are the biggest challenge, Schnoor said.

"During the course of the debate and especially listening to the economists, I came to be a little bit more aware of the limitations, a little bit more aware of the difficulties of producing biofuels and advanced biofuels," Schnoor said.

Tom Buis, chief executive of Growth Energy ethanol trade group, said the report can be interpreted "in a number of ways because the conclusions are based on variables that will undoubtedly change with technological advancements and innovation within the industry."