Biofuel Beatdown

by Richard T. Stuebi

A few weeks ago, the Wall Street Journal ran an article entitled “U.S. Biofuel Boom Running on Empty”, which presented a blistering across-the-board slam on biofuels. Perhaps more interesting than the WSJ article itself was an email reaction I received from a prominent energy tech venture capitalist with keen visibility into the transportation fuel space (whom I will keep anonymous), who said:

“The article makes the common mistake of using the broad term ‘biofuel’ when they should be focusing down to ‘biodiesel’ and ‘corn-based ethanol’….Renewable diesel and ‘green’ gasoline are still alive and attracting big VC dollars. Engineered microbes, bacteria and algae work to produce drop-in fuels are still going.”

Notwithstanding the bad recent press — a virtually-forecastable reaction to the excessive biofuels hype of the 2005-2007 era — reasonable potential for biofuels still remains. To wit, a new report from the United Nations entitled “Towards Sustainable Production and Use of Resources: Biofuels” makes clear that certain biofuel feedstocks and production approaches are much more environmentally-friendly than others. And, as more of these biofuel production schemes turn away from inputs subject to the vagaries of food market dynamics, the financial volatility facing producers should substantially decline (though price fluctuations in the output fuel markets will always remain).

Biofuels have fallen prone to oversimplification. Because corn-based ethanol and soy-based biodiesel are both environmentally marginally beneficial and economically unattractive at current prices for feedstocks and fuels, many immediately leap to the conclusion that all biofuel technologies are inherently and forever unattractive. Don’t fall prey to that mistake. It’s just not true.

Richard T. Stuebi is a founding principal of the advanced energy initiative at NorTech, where he is on loan from The Cleveland Foundation as its Fellow of Energy and Environmental Advancement. He is also a Managing Director in charge of cleantech investment activities at Early Stage Partners, a Cleveland-based venture capital firm.

1 reply
  1. GreenEngineer
    GreenEngineer says:

    It's a fair statement that corn ethanol and soy biodiesel have been equated with all biofuels in the public mind, to the detriment of other alternatives.However, independent of that fact, most of the other options for large-scale production of biofuels do in fact share a common weakness. That weakness is the logistics problem associated with producing large volumes of high-energy-density product from a low-energy-density feedstock.These issues have been well documented by Robert Rapier, among others :http://tinyurl.com/y8jeof3Don't think that Rapier is anti-biofuel, though. He actually works for a biofuel company. He just has a nuanced understanding of the strengths and weakness of different biofuel options, and the need to design create solutions if biofuels are to be truly competitive replacements for petroleum .http://tinyurl.com/y8jeof3

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