Higher Oil Prices Highlight Renewable Fuels for Energy Security
As 2008 dawned, the world saw crude oil prices break the $100 a barrel barrier for the first time as continuing volatility of world oil and energy markets highlighted the importance of the energy legislation Congress passed at the end of 2007.
Robert White, who was serving as interim head of the Ethanol Promotion and Information Council at the time, said higher oil prices translate into economic hardship for consumers and higher profits for oil companies. “The American public is looking for realistic solutions to our dependence on a dwindling supply of energy of which ethanol plays an important role. Once again, the ethanol industry will rise to the challenge and continue to provide a renewable, efficient, economy boosting product for Americans. Without ethanol, the cost of our oil addiction is far too great.”
In his final State of the Union address to the nation, President George W. Bush once again acknowledged the importance of domestic fuels for energy security and the environment.
To build a future of energy security, we must trust in the creative genius of American researchers and entrepreneurs and empower them to pioneer a new generation of clean energy technology. Our security, our prosperity, and our environment all require reducing our dependence on oil.
Last year, I asked you to pass legislation to reduce oil consumption over the next decade, and you responded. Together we should take the next steps: Let us fund new technologies that can generate coal power while capturing carbon emissions. Let us increase the use of renewable power and emissions-free nuclear power. Let us continue investing in advanced battery technology and renewable fuels to power the cars and trucks of the future. Let us create a new international clean technology fund, which will help developing nations like India and China make greater use of clean energy sources. And let us complete an international agreement that has the potential to slow, stop, and eventually reverse the growth of greenhouse gases.
State of the Ethanol Industry in 2008
Thanks to President Bush’s focus on the nation’s security, prosperity, and environment, the ethanol industry was preparing for yet another year of record growth.
Renewable Fuels Association President and CEO Bob Dinneen addressed a record crowd more than 2,200 attendees at the 13th Annual National Ethanol Conference in Orlando, Florida.
“Today’s US ethanol industry is bringing about revolutionary change. It is reshaping our rural landscape, revitalizing communities and providing the most significant value added markets farmers have ever seen. Even more dramatic is the change that ethanol is bringing to US motor fuel markets. Ethanol is now a ubiquitous component of the US motor fuel supply, blended in more than 50% of the nation’s gasoline and will very soon be in virtually every single gallon of gasoline sold from coast to coast and border to border,” said Dinneen.
“With your continued commitment, I can report to you without exaggeration or hyperbole that the state of the U.S. ethanol industry is sound, that we are prepared to meet the opponents of change with facts, with a resolute spirit, and with renewed dedication to the proposition that together we can change our nation’s energy, economic and environmental destiny.”
Ethanol Report Podcast Debuts
“Fill up, Feel Good” was the first podcast produced for the ethanol industry under the auspices of the Ethanol Promotion and Information Council (EPIC), but as that organization began to mutate, the Renewable Fuels Association started its own podcast called simply The Ethanol Report, which focused more on biofuels policy topics.
In the first “Ethanol Report,” RFA President and CEO Bob Dinneen gushed over the opportunities for ethanol in 2008, while cautiously noting the challenges ahead.
“I think we will continue to see dramatic growth in ethanol production here at home and abroad as well,” said Dinneen. “You’re going to see ethanol used in parts of the country where it really has not been used much before.”
The challenges are going to come in meeting the targets of the recently passed energy bill, especially in commercializing cellulosic ethanol.
“It’s not going to be easy, we’re going to be working awfully hard,” but he says it will ultimately result in tremendous benefits for rural economies and the nation’s consumers.
The presidential elections will be the main focus this year, but Dinneen says ethanol is a bipartisan issue that is supported by all the candidates who are learning more about it as they campaign around the Midwest. “There really is not a single candidate that has failed to express support for increasing the production and use of renewable fuels like ethanol,” Dinneen said. “They all get it.”
Oil Hits New Highs and Lows
In 2008, crude oil prices experienced significant volatility, largely due to the global financial crisis with prices peaking at a record high of $147.27 per barrel on July 11, 2008, driven by strong global demand, particularly from China and India, geopolitical tensions, and speculation in futures markets. By December 2008, prices had collapsed to a low of $30.28 per barrel as the financial crisis deepened, reducing demand and triggering a global recession.
As prices rose at the pump throughout the year ethanol got support from an unlikely source – billionaire oilman T. Boone Pickens, who gave us the timeless quote that ethanol is “an ugly baby but it’s ours and it will move cars.”
Boone told Oil and Gas Investor’s Forum in Houston that he preferred the “less-than-perfect fuel” over imported oil because there is “no question” that America must embrace alternate energy sources to alleviate the $700-billion transfer of wealth out of the country to oil imports.
Pickens says the United States is having an energy crisis and that should be the top campaign issue in the presidential election. “Energy is not a debate; it’s a crisis for this country,” Pickens said. “We cannot continue down the path were on. It’s that desperate.”
Cellulosic Race Continues
With the newly passed Renewable Fuel Standard calling for 21 billion gallons of renewable fuels created from biomass over the next ten years, the need to get cellulosic ethanol to market was pressing.
In his new job as Vice President of Business Development for KL Process Design Group of South Dakota, Tom Slunecka gave a presentation at the 2008 Agri-Marketing Conference in Kansas City on the state of cellulosic ethanol.
KL Process Design Group was the first company to get a small-scale cellulosic ethanol plant on-line using waste-wood material to produce about 1.5 million gallons of ethanol a year. “Our process is a heat and mechanical pre-treatment process. There is a biochemical process, there is a syngas process, and then there are combinations of all the above,” Slunecka said. “There is no silver bullet. We’re gonna need them all to produce the amount of fuel that is needed.”
The company went public and changed its name to KL Energy Corp in 2008, but ultimately ceased operations in 2012 following financial difficulties, a bankruptcy filing, and legal disputes.
The Department of Energy continued to hand out cellulosic grants around the country, with even the Bluegrass State turning to switchgrass for running on the roads instead of running for the roses.
Lexington-based Alltech, an animal health and distilling company, received a $30 million DOE grant to build a $70 million plant through a new subsidiary called Ecofin. “In 15-18 months, we will be using what we call solid state fermentation to go forward cracking cellulose to ethanol,” said Alltech president Dr. Pearse Lyons. “And we will use 30 percent corn stover or switchgrass.”
Lyons was a strong supporter of biofuels. As a native of Ireland, he moved to the United States in 1976 to train ethanol distillers in Kentucky, but when President Jimmy Carter started talking about gasohol, Lyons also found himself talking with farmers about making fuel from corn.
He created Alltech in 1980 to apply his fermentation expertise to provide sustainable solutions for agriculture industry using proprietary yeast technology. He established The Alcohol School in Lexington, KY, in 1980 and also published and co-authored “The Alcohol Textbook,” a key source for the beverage, fuel, and industrial alcohol industries. His first textbook was titled “A step to energy independence” and focused on alternative fuels.
Lyons was enthusiastic about finding alternative cellulosic feedstocks for biofuels. “I would say converting cellulose to feed for our animals, converting cellulose to fuel for our cars is the next Manhattan Project,” he said in a 2007 interview.
Despite Alltech’s best intentions the Ecofin biorefinery was never built, and the project was effectively abandoned. Alltech shifted its focus to other ventures, such as acquiring an algae fermentation facility in Winchester, Kentucky, in 2010.