A smarter approach to biofuels

A field of sorghum–it grows tall and fast!

The US biofuels industry has not covered itself in glory. It has consumed billions of dollars in taxpayer dollars, as much if not more from investors and in return delivered economic and environmental benefits that are murky at best, at least according to its critics.

You’ll hear a different story from the industry, which is desperately trying to retain its support in Congress and the White House. The  importance of the Iowa presidential caucuses virtually assure that no candidate for president can oppose support for corn ethanol, the dominant US biofuel. It was the Bush administration, you may recall, that launched the current push into biofuels, with the enthusiastic support of a corn state US Senator Barack Obama.

The thing is, biofuels need to be part of a low-carbon US economy. About 40 percent of emissions come from transportation–cars, trucks, trains, planes, buses, farm and construction equipment, etc.  These existing fleetss can’t be electrified en masse, anytime soon, if ever. So for decades ahead it’s fossil fuels or biofuels–an easy choice.

That said, it has become increasingly clear that corn ethanol “has proven far more damaging to the environment than politicians promised and much worse than the government admits today,” according to this excellent analysis from Dina Capiello and Matt Apuzzo of the Associated Press.

In their 2013 investigation, they write:

As farmers rushed to find new places to plant corn, they wiped out millions of acres of conservation land, destroyed habitat and polluted water supplies..

And as for the climate benefits of corn ethanol, the AP reporters say:

The government’s predictions of the benefits have proven so inaccurate that independent scientists question whether it will ever achieve its central environmental goal: reducing greenhouse gases. 

Great.

The trouble is that corn needs fertilizer (which is made from natural gas), requires irrigation (at least in some parts of the country) and, in an ideal world, would be used to feed people (or animals, if you insist), but not cars and trucks.

About the best thing you can say about corn ethanol is that it will pave the way (oops, that’s an unfortunate metaphor) for advanced biofuels that are cleaner and greener. Some of these are on the way–a bunch of cellulosic ethanol plants are scheduled to begin commercial operations this year, including the Project Liberty plant from Poet and DSM in Emmetsburg, Iowa, and a DuPont facility in Nevada, Iowa. Both will use corn waste.

Why, though, can’t we make biofuels from crops that are designed and bred for energy? That’s the question that led a young entrepreneur named Anna Rath to start a company called NexSteppe, whose current focus is sorghum. I invited Anna to Fortune’s Brainstorm Green conference in May, where she won the “Great Green Ideas” competition, and wrote about NexSteppe the other day for Guardian Sustainable Business.

Here’s how my story begins:

As scientists around the world research biomass feedstocks — trees, shrubs and grasses that are designed to produce energy — a California startup called NexSteppe is betting that fast-growing, drought-resistant sorghum will emerge as a crop to sustainably fuel cars, trucks and power plants.

Sorghum, a millenia-old cereal grain, today feeds animals and people. It is turned into flour, syrups and beer, and used in gluten-free products. In Asia, sorghum is made into couscous, and across Africa, it’s consumed as a porridge.

Last year, though, NexSteppe introduced two new brands of sorghum seeds, dubbed Palo Alto and Malibu, that were bred expressly to be energy crops. They grow on marginal land and in a variety of climates, and they climb to a height of 20 feet after only four months of growth.

“Sorghum is naturally very heat and drought tolerant,” says Anna Rath, NexSteppe’s founder, president and CEO. “It originated in Africa. It’s a camel of a crop, if you will.”

Although NexSteppe has done almost no marketing outside of Brazil, its biggest market, the company’s sorghum is now being grown by farmers in 15 countries, including China, India, South Africa, Germany, Canada and the US.

Sorghum may not be the ideal feedstock for biofuels. It’s used for food, after all. But it appears to offer major advantages over corn.

More important is the idea behind NexSteppe–that we should breed crops for energy, just as we have very successfully bred crops for food since the invention of agriculture. Government and university scientists are trying to do just that, as the story goes on to say. You can read the rest here.

Codexis aims to stand out from the biofuels crowd

Biofuels development at Codexis headquarters in Redwood City, CA.

In the overcrowded biofuels business, it’s hard to tell the pretenders from the contenders.

Every company claims to possess breakthrough technology that is just about ready for commercialization. Just ask Algenol, Amyris, Bluefire Ethanol, Coskata, Genencor, Gevo, LS9, Mascoma, Novozymes, Range Fuels, Synthetic Genomics (which is funded by ExxonMobil) and Terrabon. In the last couple of years, I’ve taken a look at Poet, (See Poet, seeking patronage), Qteros (Qteros: Turning mud to big money) and Solazyme (Gee whiz, algae!), among others.

Today, I’ll turn my attention to Codexis, which, like its rivals, has a beautiful website, big ideas and very little in the way of commercial production of a biofuel not made from food. That’s the problem here — a sustainable biofuel such as cellulosic ethanol, which is ethanol made from the wood, grasses or the non-edible parts of plants, always seems to be a few years away, despite the hopes of venture capitalists and politicians.

It was back in 2007, after all, Congress mandated that the U.S. use 100 million gallons of cellulosic ethanol yearly by 2010, and 250 million gallons by 2011. Congress, alas, can’t mandate technological progress or persuade algae to grow faster, no matter how much money it throws at the problem, so neither target will be met, not by a long shot. For a skeptical view of the biofuels biz, see Robert Rapier’s blogpost, Cellulosic Ethanol Reality Begins to Set In. A former ConocoPhillips exec and a chemical engineer, Rapier doesn’t think that “large-scale commercialization of cellulosic ethanol will ever be viable.”

Alan Shaw

And yet…many scientists, investors and corporate executives, including some in the oil industry, believe strongly in biofuels, which brings us to Codexis. Shell has invested $350 to $400 million in Codexis, according to the company’s CEO, Alan Shaw, who spoke with me this week in Washington. “It’s the largest privately funded biofuels program in the world,” Shaw told me.

Codexis also has partnerships with Merck and Pfizer, because its enzymes can be engineered to produce pharmaceuticals, and with Alstom, which is using Codexis technology to capture carbon dioxide emissions from coal-fired power plants.

“Our model is to work with Big Brother,” Shaw said.

Codexis (CDXS), which was spun out of a biotech firm called Maxygen in 2002, went public last April. The company reported $107 million in revenues in 2010, with most coming from Shell, which, in effect, is outsourcing its biofuels R&D to Codexis. The company isn’t making money yet and the stock’s down by about 20% since the IPO.

If I’d taken biology and chemistry in college, I might be explain to explain Codexis’s technology in a sophisticated away. Here’s the best I can manage: In brief, the company rearranges the DNA of enzymes–which are proteins that speed up or slow down chemical reactions–in order to make new industrial processes possible and make existing processes faster, cleaner and more efficient than conventional methods.

In Codexis’s biofuels business, that means turning feedstocks like sugar cane bagasse and leaves, wheat straw, woody biomass, or waste from pulp and paper mills into sugars that can then be fermented into ethanol.

Shaw does not believe that using corn or sugar as feedstocks makes long-term sense for the biofuels business. He’s surely right about that. The environmental benefits of corn ethanol are questionable at best, and groups including the American Meat Institute, the American Jewish World Service, the Competitive Enterprise Institute and moveon.org (strange bedfellows!) all oppose further federal subsidies for corn ethanol.

Sugar, meanwhile, costs more than $700 a ton, which makes the economics of turning sugar cane into ethanol very challenging. Prices will only raise as the world’s population grows, Shaw says. Instead of turning sugar into ethanol, why not find ways to take biomass with no food value and turn it into sugar?

That’s Codexis’s approach, of course. In Canada, Codexis is working with Iogen, which has been making cellulosic ethanol from wheat straw in a small demonstration plant since 2004. In Brazil,  Codexis is working with Cosan, the world’s largest sugar and ethanol company, and Royal Dutch Shell, which have formed a joint venture called Raizen. They’ll focus on sugar cane bagasse, leaves and stalks, none of which are edible.

Shaw told me that he expects to see Codexis’s technology used in pilot plants in Canada this year and Brazil next year.

And when will the technology be commercialized?

“You’re talking about hundreds of millions of dollars of investment,” Shaw said. “Large scale, I think we’re looking at 2015.”

In the long run, there ought to be a future for sustainable low-carbon biofuels. Even if the automakers electrify most or all of their cars, clean transportation fuels will be needed to power planes, trains and ships.

What’s more, no industry wants to be dependent on oil forever–not even the oil industry.

Poet, seeking patronage

Jeff Broin knows his way around a corn field. The 44-year-old CEO of Poet, which is the largest ethanol producer in the world, grew up in Minnesota on a family farm. He lives in Sioux Falls, South Dakota, and Poet’s 26 ethanol plants are scattered across the midwest.

Jeff Broin

Jeff Broin

Broin also knows his way around Washington,  which he visits about once a month. Smart move. Without an array of subsidies and mandates from a farmer-friendly Congress, no one would invest in corn ethanol.

Which doesn’t mean that Broin is satisfied with the status quo–to the contrary, he’d like more help from the powers-that-be in your nation’s capital, which is where we met last week. We talked about the subsidies, about the challenge of competing with Big Oil and about Poet’s big plans to make cellulosic ethanol from corn cobs.

“While the corn cob is a very small item, it can have a very big impact,” Broin says. “We have the potential to replace gasoline in this country with ethanol.” [click to continue...]