Biobutanol Could Replace Ethanol; Policy Could Push Aside Biodiesel

April 22, 2007 – Vol.12 No.5

BIOBUTANOL COULD REPLACE ETHANOL; POLICY COULD PUSH ASIDE BIODIESEL.

Not unlike other high technologies, renewable and efficient energy technologies are in a state of near constant change. Technology that seems set in stone one day can be blown apart the next by the unforeseen and unanticipated forces of progress or even political power.

While progress can be a good thing - the technology keeps getting better - it also makes investing difficult. There’s no guarantee that the technology you’ve invested in today might be out of date tomorrow.

Public policy, all too often driven in Washington by special interest, has been largely supporting green technologies instead of end results such as energy independence or measurable cuts in carbon emissions. The problem is that current technologies might be obsolete while still being supported by government policies. Policy, too, might be manipulated towards a different end result than originally intended.

Here are two examples of renewable energy industries that could be on shaky ground because of improved technology and public policy geared toward technology: Ethanol and biodiesel.

Now that dozens of new ethanol plants are being built around the US to meet the demand for ethanol as a fuel additive to replace MTBE, as well as to fuel some flex-fuel vehicles, we’re now finding out that biobutanol could be a better replacement for gasoline than ethanol, which is receiving a healthy tax break.

A research partnership of DuPont and BP is now reporting that biobutanol can be economically made from a number of domestic renewable resources and can be used in existing vehicles and infrastructure, but has only slightly less energy density than unleaded gasoline, has sufficient octane, and can blend with gasoline.

Biobutanol also does not phase-separate in the presence of water as does ethanol.

There’s nothing particularly new about biobutanol, but as a technology it doesn’t have a large, policy-forming support group in Washington. However if the oil companies, and perhaps the car companies, see biobutanol as the better fuel, policy might twist in its favor, away from ethanol.

Technology and loosely written public policy may make the biodiesel industry irrelevant, according to the National Biodiesel Board (NBB).

In a ruling by the Internal Revenue Service, it seems that the federal tax incentive for biodiesel producers is now available for petroleum diesel producers who add small percentages of waste vegetable and animal oils to petroleum diesel.

The ruling, based on a provision in the law, the Energy Policy Act of 2005, allows fuel made from a specific process called thermal de-polymerization (TDP) to qualify for the same dollar-per-gallon incentive that was created for biodiesel produced from agricultural resources. The TDP process is a new technology to turn hazardous wastes, plastics, and food wastes like poultry offal and carcasses into a boiler fuel.

But, don’t blame the IRS, blame politicians and lobbyists. According to the NBB, the TDP provision was added at the last minute and wasn’t debated.

The NBB says that the biodiesel industry has been creating a new domestic fuel (albeit sold mostly blended with petroleum diesel) and a new industry that wasn’t there before. But petroleum diesel producers can use imported vegetable oil, as well as other feedstocks, to blend into their petrodiesel fuel, not exactly creating a new domestic fuel supply.

Of greatest concern, however, is that investment in biodiesel might wither away as large petroleum diesel producers find it easier, and perhaps cheaper to make this new TDP process fuel while calling it renewable. The biodiesel industry would suffer.

Visit the National Biodiesel Board at http://www.biodiesel.org/ Dupont at http://www.dupont.com/