The recently heightened attention to US petroleum consumption and the associated environmental and economic impacts has resulted in a resurgent interest in biofuels as an alternative source of energy for transportation. The production and use of biofuels for transportation is not a new idea and in fact has been around as long as we have had cars. The difference today is a combination of factors – economic, environmental, technical, and political – that have combined to create an atmosphere in which biofuels are viewed as having the potential to replace a significant percentage of our transportation energy needs. This paper is an attempt to understand the most significant factors that have contributed to this situation and to use that understanding to provide insight about the impact of future policies and business decisions on the market.

The transportation biofuels market in the US has grown substantially in the last few years with sales reaching almost 4 billion gallons in 2005, up from 2 billion in 2002. Sales are expected to exceed 5 billion in 2007 (see Figure 1) with an additional 6.2 billion gallons capacity under construction over the next several years.

The recent growth in the market in the US is driven almost entirely by the use of ethanol as a blending agent for gasoline to increase octane and as an “oxygenate” for cleaner combustion. Ethanol can be blended into gasoline up to concentrations of 10% without any modification of the vehicle or retail infrastructure required. The use of ethanol in concentrations greater than this, which would currently require either a dedicated alcohol or “flex-fuel” vehicles (FFV)and capable retail fuel dispensers, has been minimal. In this sense, the current demand for biofuels as a true ‘alternative fuel’ is nearly non-existent. It will be one of the key points within this paper to make the distinction between biofuels as a blend vs. biofuels as an alternative fuel.

Testimony Before the Sub-Committee on National Parks, Recreation and Public Lands, United States House of Representatives, May 15, 2004.

The recently heightened attention to US petroleum consumption and the associated environmental and economic impacts has resulted in a resurgent interest in biofuels as an alternative source of energy for transportation. The production and use of biofuels for transportation is not a new idea and in fact has been around as long as we have had cars. The difference today is a combination of factors – economic, environmental, technical, and political – that have combined to create an atmosphere in which biofuels are viewed as having the potential to replace a significant percentage of our transportation energy needs. This paper is an attempt to understand the most significant factors that have contributed to this situation and to use that understanding to provide insight about the impact of future policies and business decisions on the market.

The transportation biofuels market in the US has grown substantially in the last few years with sales reaching almost 4 billion gallons in 2005, up from 2 billion in 2002. Sales are expected to exceed 5 billion in 2007 (see Figure 1) with an additional 6.2 billion gallons capacity under construction over the next several years.

The recent growth in the market in the US is driven almost entirely by the use of ethanol as a blending agent for gasoline to increase octane and as an “oxygenate” for cleaner combustion. Ethanol can be blended into gasoline up to concentrations of 10% without any modification of the vehicle or retail infrastructure required. The use of ethanol in concentrations greater than this, which would currently require either a dedicated alcohol or “flex-fuel” vehicles (FFV)and capable retail fuel dispensers, has been minimal. In this sense, the current demand for biofuels as a true ‘alternative fuel’ is nearly non-existent. It will be one of the key points within this paper to make the distinction between biofuels as a blend vs. biofuels as an alternative fuel.

Testimony before the Subcommittee on National Parks, Recreation and Public Lands, United States House of Representatives, May 15, 2004

Background

Methods

Results

Conclusions

Presented at the National Hydrogen Association Annual Hydrogen Conference (NHA 2005), Washington, DC, March 29 - April 1, 2005

The first step, in any program of self-improvement, is admitting you have a problem. My friends and colleagues, I would like to talk to you today about two big problems. We have a communication problem--communicating with our fellow citizens whose political, economic, and moral support we will need to achieve our transportation energy goals. We have an education problem--educating the professionals with the knowledge required to understand these goals and create the necessary technologies and strategies to achieve them.

This paper concerns the economic and environmental challenges confronting California and the potential role for clean energy systems and hydrogen as an energy carrier in helping to address these challenges. Hydrogen in particular has recently gained great attention as part of a set of solutions to a variety of energy and environmental problems — and based on this potential the current high level of interest is understandable. In our view, however, full realization of the benefits that hydrogen can offer will not be possible without a clear strategy for producing hydrogen from clean and sustainable sources and in a cost-effective manner. One of hydrogen's greatest benefits — having a wide range of potential feedstocks for its production — also complicates the issue of how hydrogen use may be expanded and necessitates careful forethought as key technology paths unfold. We must remember that the additional cost and complexity of building a hydrogen infrastructure is only justified if significant benefits to society are in fact likely to accrue.

This paper has been written for two primary purposes. First, we argue that the time is ripe for an expanded science and technology initiative in California for clean energy development and greater end-use energy efficiency. This initiative should span transportation systems, electrical power generation, and natural gas and other fuel use, and should place the potential for expanded use of hydrogen within this broader context. Second, we specifically discuss potential concepts and strategies that California might employ as it continues to explore the use of hydrogen in transportation and stationary settings. The authors believe that at this stage the question is not if California should continue with efforts to expand hydrogen use, because these efforts are already underway, but how these efforts should be structured given the level of effort that ultimately emerges through various political and corporate strategy processes. However, we feel that it is critical that these efforts take place in the context of a broader "no regrets" clean energy strategy for California.