Biofuels: The Role of Capital Investment

My interest in biofuels and their potential for our energy future was substantially increased by my work on sustainable energy with former Vice President Curt Peterson at West Virginia University.  I was reminded of the importance of the role of capital investment from traditional oil companies in biofuel development by the comments last week of Curtis Frasier, the Executive Vice President for the Americas at Shell Gas and Power.  Mr. Frasier was speaking at the Economic Club of Phoenix as he described the significant investment of Shell in Brazilian biofuel generated from sugar cane and its cellulosic residual.

Investment in biofuels from companies like Shell is already producing significant improvements in the technology associated with Brazilian biofuels (see Nature article).  Of course, other oil companies like Exxon are also involved in biofuel production; in the case of Exxon, the most notable example has been its investment in biofuel from algae.

There are many reasons for interest in biofuels.  Among them is their renewability.  They also do not release additional carbon into the atmosphere as do traditional fossil fuels, and they do not pose risks of oil spills that come from the oil extraction process.  Biofuels can be produced from a wide variety of products, including, of course, corn, but they can also be produced from sugar cane and more cellulosic materials such as straw and grasses.

Biofuels have, however, developed a bad reputation in the U.S. as a result of a federal policy of subsidies and state requirements for their use in a mixture of traditional vehicle fuel.  They are also criticized for their contribution to increased prices for food, for their role in substituting energy production for food production, and for their potential for damage to the environment from the agricultural processes and the production processes associated with them.

Yet, increasing evidence suggests that biofuels can play a very significant and constructive role as a part of our energy mix and as one of its components that offer a sustainable substitute to fossil fuels.  What is needed is research that addresses a number of the issues that limit biofuels’ utility.  Among them is the capital investment required for the devolopment of  new enzymes along with the technology for more efficiently using enzymes to break down cellulose from wheat straw and bagasse, the residual, fibrous matter that remains after sugar cane is crushed.

Another needed advancement is in the area of molecule development.  Ethanol, the product produced as a fuel from sugar, is a molecule that is distinctive from the one we find in gasoline.  Ethanol is limited in its use in blending to relatively small (e.g., 10%) amounts with traditional fuels, in part, because of the structure of the molecule.  The good news is that research into second generation molecules that more closely resemble gasoline is going on.  Deepak Dugar described some of the associated issues with this line of research in the December 2011 issue of Nature.

Biofuels represent a very significant opportunity for us.  Their long-term potential will depend on additional research, the very important role of investment capital from companies like Exxon and Shell, and policies that are supportive of biofuels.


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