by Marvin Duncan
A U.S.National Research Council report begins with the confident statement, “Biological sciences are likely to make the same impact on the formation of new industries in the next century as the physical and chemical sciences have had on industrial development throughout the century now coming to a close.”
A similar theme resonates in a report by the president ‘s national energy policy development group: “These nondepletable sources of energy are domestically abundant and often have less impact on the environment than conventional sources. They can provide a reliable source of energy at a stable price,and they can generate income for farmers, land owners, and others who harness them.”
Secretary of Agriculture Ann Veneman has voiced strong support for biobased products and bioenergy research and development. Addressing the U.S.Department of Agriculture’s (USDA) 2003 Agricultural Outlook Forum, she identified expanding bioenergy and biobased product use as among her top priorities.
Drivers for New Emphasis on Biobased Products and Bioenergy
Five primary drivers, in my judgment, are spurring development of the biobased economy. First, increased discipline by the members of OPEC and heightened political instability in some oil-rich areas of the world have resulted in markedly higher crude oil prices. U.S. natural gas prices are also going up.
Second, concerns over U.S.energy security have grown since the 11 September 2001 terrorist attacks. Senator Richard Lugar (Indiana)and R. James Woolsey (former CIA Director) writing in Foreign Affairs, assert that our dependence on imported oil keeps U.S.military forces tied to the Persian Gulf, forces foreign policy compromises, and sinks many developing nations into staggering debt.
Third, low farm commodity prices have caused farm interest groups to seek new uses and new market opportunities for agricultural products. U.S. and world crop production has remained quite large, limiting opportunities for commodity price strength.
Fourth, there is a growing sense that global warming is a problem that must be addressed. An important part of the solution can involve increased reliance on biobased products and bioenergy, alternatives to fossil-fuel-based sources that limit the release and buildup of new carbon in the atmosphere.
A final factor affecting interest in biobased products and bioenergy is the current and prospective state of the biological sciences. Plant science is entering a new and productive period, as a result of new knowledge about various plants’ genetic makeup, the increased ability of scientists to link genes with effects, and the ability to transfer genetic material within plant species and across living organisms. This is leading to breeding, producing, and processing plants with specialized attributes for use in products that substitute for fossil-based fuels, industrial chemicals, and pharmaceuticals.
Current Status of Biobased Product and Bioenergy Production
U.S. production of bioenergy has thus far been concentrated on ethanol production for use as an octane enhancer and to assist in meeting certain clean air standards. More recently, biodiesel demand has grown to address air pollution problems in niche markets such as urban areas and pristine recreational settings. The upcoming introduction of ultralow sulfur diesel fuel requirements by the U.S.Environmental Protection
Agency is expected to spur the use of biodiesel as a lubricity agent in diesel fuel at a 1% or 2% mixture.
Biopower, that is, combustion of biomass to generate heat and/or electricity, has been slower to develop in the U.S. although some demonstration projects cofiring biomass (switchgrass or wood, including forest thinnings) with coal or extracting a liquid fuel from solid biomass are currently in operation. Electric power production from biomass is not yet price competitive with coal, nuclear, natural gas, or wind energy.
A rich array of biobased products are currently under development, being tested for performance, and being introduced to the commercial marketplace. These include biobased plastics; lubricants, greases, and hydraulic fluids; solvents; coatings; cleaning products; adhesives; inks; and construction materials.
Although data on use of biobased products are sparse, biobased cleaning agents and inks are in common use. The whole biobased product area represents a rich opportunity for products offering lower cost, superior performance, and improved environmental impact.
Biomass sources for energy provide only about 3% of the primary energy in the U.S. About 25 million homes use wood for primary or supplemental heating, about 10%of total U.S.residential heating. Biomass residues, municipal waste, and land-fill gas account for nearly 1% of the electric power generating capacity. Biomass from process streams and residues provide 56% of the heat and electric power used by the pulp and paper industry and 75% of the heat and electric power used by the solid and engineered wood products industries.
Finally, ethanol, principally produced from corn, accounts for about 2% of liquid fuels in the U.S. Ethanol is used as a blend in more than 15% of the U.S. gasoline supply. Biodiesel, produced from vegetable oils or used yellow grease, has garnered only a minimal market share so far, although its use has begun to increase. Annual liquid biobased fuel use in 2002 included about 2.1 billion gallons of ethanol and about 15 million gallons of biodiesel.
Although U.S.biopower production is a small proportion of U.S.electric power production and consumption, it is greater than the electric power production and consumption from all sources in many countries such as Portugal, Greece, Chile, and the Philippines. In the US, biomass residues, municipal wastes, and landfill gas generate heat and 60 billion kilowatt-hours from 10,000 megawatts of electric power annually (nearly 1% of the generating capacity).
In the past 20 years, 730 bioenergy-powered electric generating facilities have been constructed in the U.S. ; many others produce heat only. 73 ethanol production plants have been built, and 13 new plants are under construction. The U.S. ethanol industry annual production capacity currently is a little more than 2.9 billion gallons, with another 527 million gallons of capacity under construction. About half that capacity is in plants above 65 million gallons of capacity and half in plants below that level. Farmers as cooperatives or limited liability companies organize many of the plants, especially smaller plants. Irrespective of plant size, farmers enjoy price benefits of stronger demand for their commodities used as feedstocks to produce ethanol.
Recent Federal Government Actions Supporting Biomass Development
In 2000, Congress enacted the Biomass Research and Development Act of 2000, bringing new focus to public sector involvement in the conversion of biomass into biobased industrial products, including bioenergy. The legislation called for increased coordination across federal government departments and agencies associated with biomass R&D. The USDA and the DOE were designated as the lead departments in that effort , coordinated by a R&D board made up of senior representatives from a cross section of federal departments. The USDA operates R&D programs internally, for the most part, whereas the DOE primarily functions as a contracting entity, providing funds to other public and private entities.
USDA’s
Role in Biobased Products, Bioenergy, and Biopower Development
The USDA primarily focuses on R&D. The Agricultural Research Service is its in-house research arm, with several labs across the nation. In its programs, advanced technologies are developed, modified, and used to convert animal and plant components – protein, oil/fat, starch, fiber, and processing by-products – to new products and to develop new crops to meet niche market opportunities. The primary focus is to develop industrial and bioenergy products that can meet environmental needs, replace imports and petroleum-based products, and expand market opportunities. The Agricultural Research Service partners with private industry to develop products.
The Cooperative State Research, Education, and Extension Service is the USDA’s principal link to academia, and it participates in a nationwide agricultural research planning and coordination system that includes state land-grant universities and the agricultural industry. It promotes R&D for biobased industrial products and bioenergy through the following programs: Agricultural Materials, National Research Initiative, and Small Business Innovative Research. The programs focus on basic and applied research and product development.
DOE’s Role in Biopower, Biofuels,and Biobased Product Development
The DOE supports a program of R&D of bio-power technologies that have the capacity to make important contributions to the U.S.energy supply by 2010. The DOE works in collaboration with private-sector entities and other federal agencies to conduct its research program. It includes field validation of technologies tested for producing power in a wide range of settings and applications. Its R&D program includes projects that cover near-term, mid-term, and long-term efforts. An integrated approach is employed that encourages commercialization of near-term options and sets the stage for commercialization of more advanced technologies.
The DOE’s biomass program identified ethanol as the most promising near-to mid-term liquid fuel option for transportation. Special attention is focused on developing enzymes that can efficiently and cost-effectively break down cellulose into simple sugars for use in fermentation to produce liquid fuels and feed-stocks for use in biobased product manufacturing. Success in this endeavor will enable the use of agricultural and forest residues in the production of ethanol. In addition, support is provided to an alliance, at state and local levels, focused on overcoming barriers to using biomass feedstocks.
Other Demand-Side Federal Initiatives
On the demand side, the federal government is engaged in a number of activities to support early market growth in demand for bioenergy and biobased products. The 2002 farm bill created a program for preferred procurement of biobased products (not including motor fuels and electricity) under which federal agencies must buy bio-based products. The federal government also supports ethanol demand by providing a 5.2 cents per gallon reduction in federal gas tax for each gallon of gasoline with a 10% ethanol blend; the tax incentive is currently scheduled to phase out at the end of 2007.
A number of federal agencies currently emphasize “green” procurement, such as the National Park Service and the Defense Logistics Agency. Various incentive mechanisms currently are under consideration in the U.S.Congress, including mandating a renewable fuels component in gasoline, a mandatory renewable component in electric power sold to consumers, and a number of plans to reduce federal taxes as a result of biodiesel use.
Developing the Tools and Infrastructure
Broad-based development of a biobased economy will be a technological and economic shift every bit as fundamental as the transition after the mid-1800s from whale oil to petroleum. The capacity of the economy to make that transition, and the pace of the change, will be controlled by the availability of specialized physical and, most importantly, intellectual resources. Forward- thinking faculty in colleges and universities will create those intellectual resources in the form of the graduates they mentor and their research products.
Rural communities, which have often seen their economic vitality sapped by forces beyond their control, are positioned to benefit from the shift to a biobased economy. Not only will farmers and foresters produce the plant-based feedstocks, but much of the initial processing and manufacturing of products may also take place in rural communities, close to where the feedstocks are produced. Biobased electric power generation will be located in rural areas for the same reasons. Some of the result of a transition to a biobased economy will be substantial new investment in plant and equipment, broad- based job formation, and new income generation that can help to revitalize rural communities.
At the high end of both scales may be the production of plants for pharmaceutical products. Moreover, many farmers might choose to invest in processing businesses through farmer cooperatives, enabling them to also capture downstream profit margins.
Two analyses help to illustrate the potential benefits for farmers.The first, an unpublished 1999 analysis by USDA’s Office of Energy Policy and New Uses evaluated the effect on farmers of replacing MTBE with ethanol as an oxygenate in gasoline. The analysis concluded that ethanol production from all crops, at a 1.4 billion gallon level in 1997, would grow to a production level of 3.4 billion gallons (denatured) in 2010. Corn prices were projected to rise by an annual average of 13.3 cents per bushel over the 2000 – 2010 period. Net farm income rose by an annual average of $1.1 billion during the period.
The second, a national analysis of bioenergy crop production, was reported by De La Torre Ugarte and colleagues in 2000. They concluded that up to 42 million acres of cropland could be shifted to switchgrass production at a price of $40 per dry ton. That would make bioenergy crops the fourth largest crop produced in the U.S. in terms of acreage, increasing net farm income by up to $6 billion. The 188 million dry tons of projected biomass output could have generated nearly 7.3% of the U.S.electricity output in 1999.
Conclusion
Increased reliance on biobased products and bioenergy in the U.S. is likely. Private-sector initiatives to meet consumer demand for new products that are more environmentally sustainable will bring new products to market as soon as economically feasible. Exciting new opportunities for farmers, agribusiness firms, manufacturers, and consumers are just around the corner, provided those involved are prepared to invest in the resources required to bring the opportunities to reality. How quickly this occurs is really a question of how effectively the national will is focused on achieving these opportunities.
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Dr.Marvin Duncan works in the Office of Energy Policy and New Uses. Contact him: Duncan@usda.gov
FROM the Journal of Industrial Ecology, a SustainableBusiness.com Content Partner.
This article if from a special issue on Bio-Based Products and the Environment, which is freely available on
the web.
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