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Synopsis
The U.S. transportation sector consumes about 14 million barrels of oil per day, 9
million of which are used in light-duty vehicles. Total U.S. oil consumption is 20 million
barrels per day, 12 million of which are imported. The nation can reduce its dependence
on imported oil, increase its energy security, and potentially reduce greenhouse-gas
emissions by producing alternative liquid transportation fuels from domestically available
resources to replace gasoline and diesel. Two abundant domestic resources with potential
for producing liquid fuels are biomass and coal. Although abundant supplies of biomass
and coal can be produced, each resource has its own set of limitations and challenges.
Unlike liquid fuels from biomass, liquid fuels from coal cannot, even with the use of
carbon capture and storage, offer any greenhouse-gas benefit relative to gasoline.
However, liquid fuels from coal are probably less expensive than those from biomass
unless the costs of greenhouse-gas emissions are included. A robust set of conversion
technologies needs to be developed or demonstrated immediately and driven to
commercial readiness to enable the use of the abundant biomass and coal in the
development of suitable liquid transportation fuels. This report of the America’s Energy
Future Panel on Alternative Liquid Transportation Fuels addresses technological
readiness for producing liquid fuels from coal and biomass, their life-cycle costs, and
environmental impacts.
COAL AND BIOMASS SUPPLY
The United States has at least 20 years’ worth of coal reserves in active mines and
probably sufficient resources to meet the nation’s needs for well over 100 years at current
rates of consumption. In contrast, biomass can be produced continuously over a long term
if managed sustainably, but the amount that can be produced in a given period is limited
by the natural resources required to support biomass production. Given that production of
corn requires large amounts of fertilizer and that corn grain is also an important source of
food and feed, the panel regards corn-grain ethanol as a transition to cellulosic biofuels or
other biomass-based liquid hydrocarbon fuels, such as biobutanol and algal biodiesel.
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Cellulosic biomass—obtained from dedicated fuel crops, agricultural and forestry
residues, and municipal solid wastes—could potentially be sustainably produced at about
400 million dry tons per year with today’s technology and agricultural practices and with
minimal adverse impacts on U.S. food and fiber production or on the environment. A key
assumption underlying that estimate is that dedicated fuel crops will be grown on idle
agricultural land in the U.S. Department of Agriculture’s Conservation Reserve Program.
By 2020, the amount of sustainably produced biomass could reach 550 million dry tons
per year.
Ensuring a sustainable biomass supply requires that the resource base be assessed
systematically to address multiple environmental, public, and private sector concerns
simultaneously. Producers will probably need additional incentives to grow biofeedstocks
so as to avoid direct and indirect competition with the food supply and also to avoid land-
use practices that add substantially to net greenhouse-gas emissions. Appropriate
incentives can encourage sustainable approaches to the production of lignocellulosic
biomass.
CONVERSION TECHNOLOGIES
Biochemical Conversion
Technology for biochemical conversion of the starch in grains to ethanol has been
deployed commercially. Although grain-based ethanol has been important for initiating
public awareness and the development of industrial infrastructure for fuel ethanol,
cellulosic ethanol and other advanced cellulosic biofuels have much greater potential for
reducing U.S. oil use and greenhouse-gas emissions without affecting the food supply
and costs. Processes for biochemical conversion of cellulosic biomass to ethanol are in
the early stages of commercial development, and process improvements are expected
over the next decade from evolutionary improvements through commercial experience
and from economies of scale as production becomes more widespread and expands to an
optimal size. The panel estimated that incremental improvements in biochemical
conversion technologies can be expected to reduce nonfeedstock process costs by about
25 percent by 2020 and by 40 percent by 2035. An expanded distribution infrastructure
will be required because ethanol cannot be transported in the pipelines used to transport
petroleum. Studies should be conducted to identify the infrastructure needed to
accommodate increasing volumes of ethanol and to identify and address the challenges of
distributing and integrating larger volumes into the fuel system. Research on biochemical
pathways for converting biomass to fuels that are more compatible with the current
distribution infrastructure could lead to the development of relevant technologies over the
next 10-15 years.
If all necessary conversion and distribution infrastructure is in place, 550 million
dry tons of biomass can in theory be used to produce up to 30 billion gallons of gasoline-
equivalent fuels. However, potential supply does not translate to actual fuel supply. When
the production of corn-grain ethanol was commercialized, U.S. production capacity grew
by 25 percent each year over a 6-year period. Assuming that the rate of building
cellulosic-ethanol plants exceeds that of corn-grain-ethanol plants by 100 percent,
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alternative fuels could be added to the U.S. fuel portfolio at a rate of up to 0.5 million
barrels of gasoline equivalent per day by 2020 (1 bbl of oil yields about 0.85 bbl of
gasoline and diesel). By 2035, up to 1.7 million barrels per day could be produced in this
manner, leading to about a 20 percent reduction in oil used for light-duty transportation at
current consumption levels.
Thermochemical Conversion
Technologies for the indirect liquefaction of coal to transportation fuels
(gasification with Fischer-Tropsch or a methanol-to-gasoline process) without geologic
carbon dioxide (CO2) storage are commercially deployable today, but CO2 life-cycle
emission will be more than twice that of petroleum-based fuels. Requiring geologic CO2
storage with these processes would have a relatively small effect on engineering costs
and efficiency. However, the viability of geologic CO2 storage has yet to be adequately
demonstrated on a large scale in the United States, and unanticipated costs could occur.
Liquid fuels produced from thermochemical plants that use only biomass
feedstock are more expensive than fuels produced from coal but can have CO2 life-cycle
emission that is close to zero without geologic CO2 storage or is highly negative with
effective geologic CO2 storage. To make such fuels competitive, the economic incentive
for reducing CO2 emission has to be sufficiently high. Gasification of biomass and coal
together to produce liquid fuels allows operation on a larger scale than would be possible
with biomass only and reduces capital costs per unit of capacity. When biomass and coal
undergo thermochemical conversion together, overall CO2 life-cycle emission is lower
than that from coal because the CO2 emission from the coal is countered by the CO2
uptake by biomass during its growth. If 550 million tons of biomass are combined with
coal (60 percent coal and 40 percent biomass on an energy basis), production of 4 million
barrels per day (60 billion gallons per year) of gasoline equivalent is technically feasible.
That amount of fuel represents about 45 percent of the current volume of liquid fuels
used annually for light-duty vehicles in the transportation sector. Conversion of combined
coal and biomass to liquid fuels at that ratio without geologic CO2 storage yields CO2
life-cycle emission similar to that of gasoline; with geologic CO2 storage, it yields close
to zero CO2 life-cycle emission. A program of aggressive support for establishment of
first-mover commercial coal-to-liquid transportation-fuel plants and coal-and-biomass-to-
liquid transportation-fuel plants with integrated geologic CO2 storage will have to be
undertaken immediately if commercial plants are to be deployed by 2020 to address U.S.
energy security concerns and to provide fuels whose levels of greenhouse-gas emissions
are similar to or less than that of petroleum-based fuels.
For thermochemical conversion of coal or combined coal and biomass, the
viability of geologic CO2 storage is critical for commercial implementation. Large-scale
demonstration and establishment of regulatory procedures have to be pursued
aggressively in the next few years if thermochemical conversion of biomass and coal
with geologic CO2 storage is to be ready for commercial deployment in 2020 or sooner.
The federal government should continue to partner with industry and independent
researchers to determine the costs, safety, and effectiveness of geologic CO2 storage on a
commercial scale. If such demonstrations are initiated immediately and geologic CO2
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storage is proved viable and safe by 2015, the first commercial plants could be
operational in 2020. Combined coal-and-biomass-to-liquid plants will have one-fifth the
output of a nominal 50,000-bbl/day coal plant and will probably be sited in regions near
coal and biomass supplies, and so buildout rates will be lower than those for the
cellulosic-ethanol plants discussed above. The panel estimates that at a growth rate of 20
percent until 2035, 2.5 million barrels of gasoline equivalent would be produced per day
in combined coal and biomass plants. Production at that level would consume about 300
million dry tons of biomass—less than the projected biomass availability—and about 250
million tons of coal per year.
Because of the vast coal resources in the United States, the actual supply of coal-
to-liquid fuel will be limited not by feedstock availability but rather by market
penetration. At a build rate of two to three plants per year, up to 3 million barrels of
gasoline equivalent could be produced per day by 2035. Production at that level would
consume about 580 million tons of coal per year. However, issues related to an increase
in coal mining by 50 percent need to be considered. At a build rate of three plants starting
up per year, five to six plants would be under construction at any time.
COSTS, BARRIERS, AND DEPLOYMENT
Production of alternative liquid transportation fuels from coal and biomass with
technology commercially deployable by 2020 can play an important role in reducing U.S.
oil consumption and greenhouse-gas emissions. The various options have different
greenhouse-gas impacts, and the choices will most likely depend on U.S. carbon policy.
The panel used a consistent set of assumptions to estimate the costs of cellulosic ethanol,
coal-to-liquid fuels with and without geologic CO2 storage, and coal-and-biomass-to-
liquid fuels with and without geologic CO2 storage (see Table Sy-1). Although the
estimates do not represent predictions of prices, they allow comparisons of fuel costs
relative to each other. Coal-to-liquid fuels with geologic CO2 storage can be produced at
costs that are competitive with a $75/bbl gasoline equivalent. The costs of fuels produced
from biomass without geologic CO2 storage are competitive with a $115/bbl gasoline
equivalent with biochemical conversion and a $150/bbl gasoline equivalent with
thermochemical conversion. The costs of cellulosic ethanol and coal-and-biomass-to-
liquid fuels with geologic CO2 storage become more attractive if a CO2 equivalent price
of $50/tonne is included.
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TABLE Sy-1 Estimated Costs of Fuel Products with and without a CO2 Equivalent Price
of $50/tonnea
Fuel Product Cost without CO2 Cost with CO2 Equivalent
Equivalent price ($/bbl of price of $50/tonne
gasoline equivalent) ($/bbl of gasoline
equivalent)
Gasoline at crude-oil price 075 095
of $60/bbl
Gasoline at crude-oil price 115 135
of $100/bbl
Cellulosic ethanol 115 105
Biomass-to-liquid fuels 140 130
without carbon capture and
storage
Biomass-to-liquid fuels 150 115
with carbon capture and
storage
Coal-to-liquid fuels without 065 110
carbon capture and storage
Coal-to-liquid fuels with 070 090
carbon capture and storage
Coal-and-biomass-to-liquid 095 120
fuels without carbon
capture and storage
Coal-and-biomass-to-liquid 110 100
fuels with carbon capture
and storage
a
Numbers are rounded to the nearest $5.
Attaining supplies of 1.7 million barrels of biofuels per day, 2.5 million barrels of
coal-and-biomass-to-liquid fuels per day, or 3 million barrels of coal-to-liquid fuels per
day will require the permitting and construction of tens to hundreds of conversion plants
and the associated fuel transport and delivery infrastructure. It will take more than a
decade for these alternative fuels to penetrate the U.S. market. In addition, investments in
alternative fuels have to be protected against crude-oil price fluctuations.
Integrated geologic CO2 storage is key to producing liquid fuels from coal with
greenhouse-gas life-cycle emissions comparable to those of gasoline. Commercial
demonstrations of coal-to-liquid and coal-and-biomass-to-liquid fuel conversion
technologies with integrated geologic CO2 storage should proceed immediately if the
goal is to deploy commercial plants by 2020. Detailed scenarios for market penetration of
U.S. biofuels and coal-to-liquid fuels should be developed to clarify the hurdles and
challenges facing full feedstock use and to establish the enduring policies required.
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Current government and industry programs should be evaluated to determine whether
emerging biomass and coal conversion technologies can further reduce U.S. oil
consumption and greenhouse-gas emissions over the next decade.
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