Liquid Transportation Fuels from Coal and Biomass

TECHNOLOGICAL STATUS, COSTS, AND ENVIRONMENTAL IMPACTS

America’s Energy Future Panel on Alternative Liquid Transportation Fuels

NATIONAL ACADEMY OF SCIENCES NATIONAL ACADEMY OF ENGINEERING NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES

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America’s Energy Future Panel on Alternative Liquid Transportation Fuels

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the panel responsible for the report were chosen for their special competences and with regard for appro- priate balance. Support for this project was provided by the Department of Energy under Grant Number DE-FG02- 07-ER-15923 and by BP America, Dow Chemical Company Foundation, Fred Kavli and the Kavli Foundation, GE Energy, General Motors Corporation, Intel Corporation, and the W.M. Keck Founda- tion. Support was also provided by the Presidents’ Circle Communications Initiative of the National Academies and by the National Academy of Sciences through the following endowed funds created to perpetually support the work of the National Research Council: Thomas Lincoln Casey Fund, Arthur L. Day Fund, W.K. Kellogg Foundation Fund, George and Cynthia Mitchell Endowment for Sustain- ability Science, and Frank Press Fund for Dissemination and Outreach. Any opinions, findings, conclu- sions, or recommendations expressed in this publication are those of the author(s) and do not necessar- ily reflect the views of the organizations that provided support for the project. International Standard Book Number-13: 978-0-309-13712-6 International Standard Book Number-10: 0-309-13712-8 Library of Congress Catalog Card Number 2009937432 Limited copies of this report are available from: Board on Energy and Environmental Systems National Research Council 500 Fifth Street, NW, Keck 934 Washington, DC 20001 (202)334-3344 Additional copies of this report are available from: The National Academies Press 500 Fifth Street, NW, Lockbox 285 Washington, DC 20055 (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area) Internet: http://www.nap.edu Copyright 2009 by the National Academy of Sciences. All rights reserved. Printed on recycled stock Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distin- guished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy mat- ters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal gov- ernment and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of further- ing knowledge and advising the federal government. Functioning in accordance with general poli- cies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. www.national-academies.org

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PANEL ON ALTERNATIVE LIQUID TRANSPORTATION FUELS MICHAEL P. RAMAGE, ExxonMobil Research and Engineering Company (retired), Chair G. DAVID TILMAN, University of Minnesota, St. Paul, Vice Chair DAVID GRAY, Nobilis, Inc. ROBERT D. HALL, Amoco Corporation (retired) EDWARD A. HILER, Texas A&M University (retired) W.S. WINSTON HO, Ohio State University DOUGLAS L. KARLEN, U.S. Department of Agriculture, Agricultural Research Service JAMES R. KATZER, ExxonMobil Research and Engineering Company (retired) MICHAEL R. LADISCH, Purdue University and Mascoma Corporation JOHN A. MIRANOWSKI, Iowa State University MICHAEL OPPENHEIMER, Princeton University RONALD F. PROBSTEIN, Massachusetts Institute of Technology HAROLD H. SCHOBERT, Pennsylvania State University CHRISTOPHER R. SOMERVILLE, Energy BioSciences Institute GREGORY STEPHANOPOULOS, Massachusetts Institute of Technology JAMES L. SWEENEY, Stanford University Liaisons from the Committee on America’s Energy Future CHRISTINE A. EHLIG-ECONOMIDES, Texas A&M University JOHN B. HEYWOOD, Massachusetts Institute of Technology ARISTIDES A.N. PATRINOS, Synthetic Genomics, Inc. Consultants ADRIAN A. FAY, Massachusetts Institute of Technology SAMUEL FLEMING, Claremont Canyon Consultants JASON HILL, University of Minnesota, St. Paul SHELDON KRAMER, Independent Consultant, Grayslake, Illinois THOMAS KREUTZ, Princeton University ERIC LARSON, Princeton University ROBERT WILLIAMS, Princeton University America’s Energy Future Project Director PETER D. BLAIR, Executive Director, Division on Engineering and Physical Sciences America’s Energy Future Project Manager JAMES ZUCCHETTO, Director, Board on Energy and Environmental Systems iv

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Staff EVONNE P.Y. TANG, Study Director KATHERINE BITTNER, Senior Program Assistant (until June 2008) ROBERT COLBURN, Senior Program Assistant (until November 2008) NORMAN GROSSBLATT, Senior Editor LaNITA JONES, Program Associate DOROTHY MILLER, Christine Mirzayan Fellow (until August 2008) JONATHAN YANGER, Senior Program Assistant v

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Foreword E nergy, which has always played a critical role in our country’s national security, economic prosperity, and environmental quality, has over the last two years been pushed to the forefront of national attention as a result of several factors: • World demand for energy has increased steadily, especially in develop- ing nations. China, for example, saw an extended period (prior to the current worldwide economic recession) of double-digit annual increases in economic growth and energy consumption. • About 56 percent of the U.S. demand for oil is now met by depending on imports supplied by foreign sources, up from 40 percent in 1990. • The long-term reliability of traditional sources of energy, especially oil, remains uncertain in the face of political instability and limitations on resources. • Concerns are mounting about global climate change—a result, in large measure, of the fossil-fuel combustion that currently provides most of the world’s energy. • The volatility of energy prices has been unprecedented, climbing in mid- 2008 to record levels and then dropping precipitously—in only a matter of months—in late 2008. • Today, investments in the energy infrastructure and its needed technolo- gies are modest, many alternative energy sources are receiving insuffi- cient attention, and the nation’s energy supply and distribution systems are increasingly vulnerable to natural disasters and acts of terrorism. vii

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viii Foreword All of these factors are affected to a great degree by the policies of govern- ment, both here and abroad, but even with the most enlightened policies the over- all energy enterprise, like a massive ship, will be slow to change course. Its com- plex mix of scientific, technical, economic, social, and political elements means that the necessary transformational change in how we generate, supply, distribute, and use energy will be an immense undertaking, requiring decades to complete. To stimulate and inform a constructive national dialogue about our energy future, the National Academy of Sciences and the National Academy of Engi- neering initiated a major study in 2007, “America’s Energy Future: Technology Opportunities, Risks, and Tradeoffs.” The America’s Energy Future (AEF) project was initiated in anticipation of major legislative interest in energy policy in the U.S. Congress and, as the effort proceeded, it was endorsed by Senate Energy and Natural Resources Committee Chair Jeff Bingaman and former Ranking Member Pete Domenici. The AEF project evaluates current contributions and the likely future impacts, including estimated costs, of existing and new energy technologies. It was planned to serve as a foundation for subsequent policy studies, at the Academies and elsewhere, that will focus on energy research and development priorities, stra- tegic energy technology development, and policy analysis. The AEF project has produced a series of five reports, including this report on alternative liquid fuels for transportation, designed to inform key decisions as the nation begins this year a comprehensive examination of energy policy issues. Numerous studies conducted by diverse organizations have benefited the project, but many of those studies disagree about the potential of specific technologies, particularly those involving alternative sources of energy such as biomass, renew- able resources for generation of electric power, advanced processes for generation from coal, and nuclear power. A key objective of the AEF series of reports is thus to help resolve conflicting analyses and to facilitate the charting of a new direction in the nation’s energy enterprise. The AEF project, outlined in Appendix A, included a study committee and three panels that together have produced an extensive analysis of energy technol- ogy options for consideration in an ongoing national dialogue. A milestone in the project was the March 2008 “National Academies Summit on America’s Energy Future” at which principals of related recent studies provided input to the AEF study committee and helped to inform the panels’ deliberations. A report chroni- cling the event, The National Academies Summit on America’s Energy Future:

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Foreword ix Summary of a Meeting (Washington, D.C.: The National Academies Press), was published in October 2008. The AEF project was generously supported by the W.M. Keck Foundation, Fred Kavli and the Kavli Foundation, Intel Corporation, Dow Chemical Company Foundation, General Motors Corporation, GE Energy, BP America, U.S. Depart- ment of Energy, and our own academies. Ralph J. Cicerone, President Charles M. Vest, President National Academy of Sciences National Academy of Engineering Chair, National Research Council Vice Chair, National Research Council

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Preface T ransportation plays a key role in the economies of industrialized societies, especially in light of increasing globalization. As in most countries, trans- portation in the United States has relied heavily on petroleum-based fuels. The influence of volatile oil prices on the U.S. economy, increasing U.S. depen- dence on imported oil and its effect on U.S. energy security, and recognition of the large contribution of transportation to emissions of greenhouse gases call for development of alternative transportation fuels from domestic sources that have lower greenhouse gas emissions than do petroleum-based fuels. Biofuels and coal- to-liquid fuels are options that can improve the nation’s energy security inasmuch as biomass is a renewable resource and the United States has the world’s largest known coal reserves. However, those options raise important questions about eco- nomic viability, carbon impact, and technology status. To assess the technological status, costs, and environmental effects of alternative liquid transportation fuels produced from coal and biomass, the National Research Council convened the Panel on Alternative Liquid Transportation Fuels. The panel’s work was part of a larger study initiated by the National Academy of Sciences and the National Acad- emy of Engineering—the America’s Energy Future project (Appendix A). In approaching its task (Appendix B), the 16-member panel of experts (Appendix C) began by reviewing the literature and also gathered input from invited speakers (Appendix D) on the production of biofuels and coal-to-liquid fuels. Because of the uncertainties and widely different opinions expressed in the literature, the panel decided to conduct its own analyses of the costs, potential supply, and life-cycle greenhouse gas emissions of alternative fuels produced from biomass, coal, or both. An advantage of conducting its own analyses was that the xi

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xii Preface panel could use a consistent basis and assumptions to compare the costs and envi- ronmental effects of different alternative fuel options. As the panel was writing its report (from November 2007 to November 2008), the commodity prices and capi- tal costs of building energy plants fluctuated widely. The panel therefore included sensitivity analyses of feedstock costs, capital costs, and oil prices to see how they might affect choices of fuels. The panel concluded that alternative liquid fuel technology can be deploy- able and supply a substantial volume of clean fuels for U.S. transportation at a reasonable cost. Transforming the U.S. transportation fuel system from domina- tion by petroleum-based fuels to supply by various domestic sources will take sev- eral decades. Sustained and aggressive efforts are needed to accelerate the further development and penetration of alternative liquid fuel technologies. I thank the panel members and the liaisons from the Committee on America’s Energy Future for dedicating much time to the study. We were on a tight schedule to complete a complex task. Each member devoted time and effort to the study because we recognized not only the importance of achieving energy security for the nation but also, and more importantly, the immediate need for demonstration of the technical feasibility and economic viability of alternative liquid transporta- tion fuels from domestic sources. Michael P. Ramage, Chair Panel on Alternative Liquid Transportation Fuels

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Acknowledgments T his report is a product of the cooperation and contributions of many people. The members of the panel thank the consultants and the following persons who provided input to the panel: John Baker, U.S. Department of Agriculture, Agricultural Research Service Gary M. Banowetz, U.S. Department of Agriculture, Agricultural Research Service Dana Dinnes, U.S. Department of Agriculture, Agricultural Research Service Curt R. Fischer, Massachusetts Institute of Technology Jane M-F. Johnson, U.S. Department of Agriculture, Agricultural Research Service Youngmi Kim, Purdue University Daniel Klein-Marcuschamer, Massachusetts Institute of Technology Alicia Rosburg, Iowa State University Wallace W. Wilhelm (deceased), U.S. Department of Agriculture, Agricultural Research Service The members of the panel also thank all the speakers who provided briefings to the panel. (Appendix D contains a list of presentations to the panel.) This report has been reviewed in draft form by persons chosen for their diverse perspectives and technical expertise in accordance with procedures approved by the National Research Council’s Report Review Committee. The pur- pose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, xiii

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xiv Acknowledgments and responsiveness to the study charge. The review comments and draft manu- script remain confidential to protect the integrity of the deliberative process. We thank the following individuals for their review of this report: Noubar Afeyan, Flagship Ventures Douglas Chapin, MPR Associates, Inc. Joel Darmstadter, Resources for the Future, Inc. Christopher B. Field, Carnegie Institution of Washington Richard Flavell, Ceres, Inc. Kevin B. Fogash, Air Products and Chemicals, Inc. Bruce C. Gates, University of California, Davis Lester Lave, Carnegie Mellon University Bruce A. McCarl, Texas A&M University Jeffrey Peterson, Energy Resources Group Timothy Searchinger, Princeton University Richard Sheppard, Independent Consultant Jeff Siirola, Eastman Chemical Company Kenneth Vogel, U.S. Department of Agriculture, Agricultural Research Service Charles E. Wyman, University of California, Riverside Although the reviewers listed above have provided many constructive com- ments and suggestions, they were not asked to endorse the conclusions or rec- ommendations, nor did they see the final draft of the report before its release. The review of the report was overseen by Elisabeth M. Drake, Massachusetts Institute of Technology, and Robert A. Frosch, Harvard University. Appointed by the National Research Council, they were responsible for making certain that an independent examination of this report was carried out in accordance with institu- tional procedures and that all of the review comments were carefully considered. Responsibility for the final content of the report rests entirely with the authoring panel and the institution.

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Contents SYNOPSIS 1 SUMMARY 7 1 LIQUID FUELS FOR TRANSPORTATION 51 Demand for Liquid Transportation Fuels, 52 Alternative Transportation Fuels, 55 Purpose of This Study, 56 Context of Report, 58 Structure of This Report, 60 References, 61 2 BIOMASS RESOURCES FOR LIQUID TRANSPORTATION FUELS 63 Current Biomass Production for Biofuels, 64 Biomass Resources, 70 Research and Development, 89 Costs of Supplying Biofuel Feedstocks, 92 Environmental Effects, 100 Findings and Recommendations, 103 References, 106 3 BIOCHEMICAL CONVERSION OF BIOMASS 117 Technology Alternatives, 117 Biochemical Conversion of Cellulosic Biomass, 121 Cost and Performance, 132 Technology Forecast, 145 xv

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xvi Contents Findings and Recommendations, 153 References, 157 4 THERMOCHEMICAL CONVERSION OF COAL AND BIOMASS 163 Status and Challenges of Technology Alternatives, 164 Indirect-Liquefaction Technologies, 167 Direct-Liquefaction Technologies, 209 Findings and Recommendations, 215 References, 221 5 DISTRIBUTION 225 Ethanol Transportation, 227 The Market for Biofuels, 235 Findings and Recommendations, 239 References, 240 6 COMPARISON OF OPTIONS AND MARKET PENETRATION 243 Comparison of Costs, Greenhouse Gas Emissions, and Potential Fuel Supply, 244 Market Penetration, 259 Findings and Recommendations, 265 Reference, 267 7 OVERALL FINDINGS AND RECOMMENDATIONS 269 8 KEY CHALLENGES TO COMMERCIAL DEPLOYMENT 277 Challenge 1, 277 Challenge 2, 278 Challenge 3, 279 Challenge 4, 279 Challenge 5, 280 9 OTHER ALTERNATIVE FUEL OPTIONS 281 Compressed Natural Gas, 282 Alternative Diesel, 284 Methanol, 285 Dimethyl Ether, 285 Hydrogen, 286 References, 291

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Contents xvii Appendixes A America’s Energy Future Project 295 B Statement of Task 301 C Panel Members’ Biographical Sketches 303 D Presentations to the Panel 311 E R esearch Supporting a Landscape Vision of Production of 313 Biofuel Feedstock F E stimating the Amount of Corn Stover That Can Be Harvested in a 317 Sustainable Manner G Life-Cycle Inputs for Production of Biomass 321 H B ackground Information on the Economic and Environmental 325 Assessment of Biomass Supply I M odeling of Capital and Operating Costs and Carbon Emissions of 339 Ethanol Plants with Superpro Designer® J Resource Requirements for Production of Microbial Biomass 359 K N onquantified Uncertainties That Could Influence the Costs of 367 Carbon Storage

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