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.

Renewable Fuel — Without Biomass

by Richard T. Stuebi

In recent years, there’s been a major push for renewable fuels — to reduce our needs for petroleum, as well as to reduce the carbon footprint associated with burning petroleum-based fuels.

The common thread of all of these renewable fuels has been the use of some sort of carbonaceous feedstock — typically biological organisms, till now agricultural crops like corn and soybean, and moving towards cellulosic wastes and algae — from which to produce a liquid fuel for vehicles. In other words, sunlight begets botanical growth begets fuel.

Now comes word of a company emerging from stealth-mode called Joule Biotechnologies, based in Cambridge MA and funded by Flagship Ventures, which has developed what the company is calling the “Helioculture” process for making fuels directly from the photosynthetic conversion of sunlight and CO2 — without requiring any biomass (nor any water, for that matter).

According to its press release, the company’s “SolarFuel” will satisfy current vehicle specifications. Although still a few years away from commercial production, Joule is projecting yields of more than 20,000 gallons per acre per year at long-run economics competitive with oil at $50/barrel.

Of course, entrepreneurs and inventors love to tout new ideas with great potential — potential that is often never achieved. But this idea at least has considerable intuitive appeal, and is very out-of-the-box relative to much of the innovation being pursued in the transportation fuels arena, which makes Joule definitely worth watching in the coming years.

Richard T. Stuebi is the Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc. Effective September 1, he will also become Managing Director of Early Stage Partners.