$90 a Barrel Oil Is the Floor for Cellulosic Ethanol, Says Study

By Michael Kanellos

The good news: Oil doesn't have to rise that much more for cellulosic ethanol to become economically viable.

The bad news: You people in the labs have a lot of work ahead of you.

Sandia National Labs will soon release a report on cellulosic ethanol and what sort of barriers need to be knocked down so that cellulosic can become at least a 75 billion gallon a year business, according to the Wall Street Journal's Environmental Capital blog. The study states that cellulosic can't become competitive with oil unless oil stays above $90 a barrel.

While that sounds high, it isn't stratospheric. Oil is at $70 now and many economists predict a persistent rise in price as economies improve in China, India and the U.S. (The U.S. consumed 137.8 billion gallons of petroleum in 2008 and overall demand for petroleum and substitutes will likely increase.) 75 billion gallons of cellulosic could cut petroleum-associated emissions by 25 percent.

To get there, however, will require scientific breakthroughs. "Producers have to get better at squeezing more juice out of the same amount of biomass, and they have to make sure they’ll have all those plants available in the first place," Keith Johnson of the WSJ wrote. And, of course, most cellulosic ethanol companies are still in the press release n' prototype stage.

The full report should be an interesting read.

Comments

[Jasper M:]

. . . And that's Not going to happen.
Any spikes into that level, for as far out as I can foresee, will be brief excursions based on geo-political supply disruptions, which will be far to brief for amortize the cost of this particular foolishness.

This is actually really good news for the world's poor, as all that land can now go back to Feeding people. Gradually, I imagine, as the Algore's of the world do not yield to reality easily. But it the writing is on the wall.

Aug 12 04:18 PM

[A Barrel Full:]

Of course a gasoline tax of $2 a gallon would mean that oil was effectively always over $90 a barrel.

Compared to corn, cellulosic ethanol poses less raw material problems. However, if it ever becomes a major part of the energy mix, that is going to change. Imagine a situation where poor countries start cutting down their forests to produce ethanol. It would be worse than coal.

Aug 13 01:35 AM

[Ferdinand E...:]

I don't believe that a 'sustainable' oil price of $90/b will be here for a while - at least I hope it wont, and so should you. I also wonder if the time has arrived to for the massive quantities of cellulosic ethanol that are going to be needed.

Aug 13 09:10 AM

[toobad41:]

Cellulosic ethanol is still old, limited, technology. What we need is a replacement for fossil fuel. It is a fact that all alternative fuels are not new and not ubiquitious. In my mind, what will happen is this...oil will soon reach a point where it is very hard to get. Slowly we will revert back to how civilization was just before the introduction of oil. For most people owning several cars will be a memory and a few wealthy people will drive electric cars. Mass transportation will become the norm. People will move back to the cities where goods and services can be readily obtained. Others will stay on farms or communes trying to raise a few crops for a living. Coal and nuclear will rule for the next 200 years and then total collapse of all civilizations. Most of us won't be around for that happening but it will.

Aug 13 10:10 AM

[keithfeather:]

Factor out the $ in the discussion. Energy is the only thing consumed. Historically in the US liquid fuel is valued at 3.8 times coal ( the cheapest energy source ) on an equivalent btu basis. The premise in the article calls for 10 times relationship, at the current low coal prices. It takes energy, primarily electrical, to make and do everything, from building the tractors to harvest, plant, process, build the plant, etc. If the cost of coal or electrical production from coal rises, the break even price for cellulosic ethanol increases at the same ratio. If cap and trade increases the cost to produce electrical power from coal by 40%, the breakeven point for cellulosic ethanol increases by 40% to $126. Best of luck catching this elusive mirage.

Aug 13 10:35 AM

[Dr. No:]

I think the study's premise was to replace 90bn gallons and not 75bn. I also think the technology currently available allows competitive CE at $75/bbl. Maybe the numbers just got mixed up.

Aug 13 02:12 PM

[Dr. No:]

Oh, and I forgot, the Sandia study actually makes the point that the US CAN produce its 90bn domestically.

Aug 13 02:13 PM

[SubsidyEye:]

"The U.S. consumed 137.8 billion gallons of petroleum in 2008 and overall demand for petroleum and substitutes will likely increase".

No. The U.S. consumed 137.8 billion gallons of GASOLINE in 2008. Its consumption of petroleum was more on the order of 300 billion gallons.

"75 billion gallon a year business"?! For the whole world, maybe. Someday. But not in the United States, not in most of our lifetimes.

Sep 22 12:24 PM