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 21 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 their environmental impacts.



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Synopsis T he 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 con- sumption is 21 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 liq- uid 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. How- ever, 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 conver- sion 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 techno- logical readiness for producing liquid fuels from coal and biomass, their life-cycle costs, and their environmental impacts. 

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 Liquid Transportation Fuels from Coal and Biomass 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 sup- port 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. 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 dedi- cated 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 sec- tor 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 green- house 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

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Synopsis  affecting the food supply and costs. Processes for biochemical conversion of cel- lulosic 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 technolo- gies 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 chal- lenges of distributing and integrating larger volumes into the fuel system. Research on biochemical pathways for converting biomass to fuels that are more compat- ible 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 2 million bar- rels per day (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, 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 trans- portation at current consumption levels. Thermochemical Conversion Technologies for the indirect liquefaction of coal to transportation fuels (gasifica- tion 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

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 Liquid Transportation Fuels from Coal and Biomass 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. Gasifica- tion 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 emission 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 stor- age 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 inte- grated 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 pur- sued 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 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/d coal plant

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Synopsis  and will probably be sited in regions near coal and biomass supplies, and so build- out 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 mil- lion 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 mar- ket 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 reduc- ing 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 a cost of $70/bbl of gasoline equivalent and thus 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 $140/bbl gasoline equivalent with thermochemical conversion. The costs of cellulosic ethanol and coal-and-biomass-to-liquid fuels with geologic CO2 storage become more attrac- tive if a CO2-equivalent price of $50/tonne is included. 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-

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 Liquid Transportation Fuels from Coal and Biomass TABLE Sy.1 Estimated Costs of Fuel Products With and Without a CO2 Equivalent Price of $50/tonne Cost Without CO2 Cost With CO2 Equivalent Price Equivalent Price of ($/bbl of gasoline $50/tonne ($/bbl of Fuel Product equivalent) gasoline equivalent) Gasoline at crude-oil price of $60/bbl 075 095 Gasoline at crude-oil price of $100/bbl 115 135 Cellulosic ethanol 115 110 Biomass-to-liquid fuels without 140 130 carbon capture and storage Biomass-to-liquid fuels with carbon 150 115 capture and storage Coal-to-liquid fuels without carbon 065 120 capture and storage Coal-to-liquid fuels with carbon 070 090 capture and storage Coal-and-biomass-to-liquid fuels 095 120 without carbon capture and storage Coal-and-biomass-to-liquid fuels with 110 100 carbon capture and storage Note: Numbers are rounded to the nearest $5. 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 infra- structure. 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. Com- mercial demonstrations of coal-to-liquid and coal-and-biomass-to-liquid fuel con- version technologies with integrated geologic CO2 storage should proceed imme- diately 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. Current government and industry programs should be evaluated to determine whether emerging biomass and coal conversion technolo- gies can further reduce U.S. oil consumption and greenhouse gas emissions over the next decade.