WASHINGTON ? Imagine filling up the car on a fuel that isn't made from oil but doesn't have the drawbacks of corn ethanol, including its lower energy content and ability to damage older cars or gas pumps.
Such fuels could be made from the same sources as ethanol, including corn and corn cobs as well as straw, trees and other abundant types of biomass. But these fuels would be synthetic versions of today's gasoline, diesel and jet fuel. Unlike ethanol, a renewable version of gasoline could be used in any amount in today's engines, filling stations and pipelines.
The prospect of these fuels is coming up in a debate over the direction of the government's biofuel policy as Congress is slashing spending to reduce the budget deficit.
On one side is a collection of small companies, some backed by the oil industry, that are developing the non-ethanol biofuels. Those companies say that the government's subsidies for ethanol are unfairly favoring what they see as an inferior fuel.
On the other side is the ethanol industry, which is eager to expand its potential market and wants the government to guarantee loans for ethanol pipelines, subsidize installation of ethanol pumps at service stations and require automakers to equip cars and trucks to run on ethanol.
"There's a lot of great innovation taking place that is just on the cusp of commercialization. If policy does not consider that going forward, those innovative technologies may never get off the drawing boards," said Lee Edwards, CEO of Virent Energy Systems Inc., a Wisconsin-based company backed by Royal Dutch Shell. The company is starting to make gasoline from a mixture of sugar and water using a process similar to that used in a conventional oil refinery.
Products like Virent's are known as "drop-in" fuels because they can be put into the nation's existing fueling infrastructure and even produced at existing refineries.
Some in the ethanol industry "are trying to monopolize the fuels market for themselves," said Michael McAdams, a lobbyist for the Advanced Biofuels Association, which represents Virent and other companies.
'We're existing today'
The ethanol industry argues that those fuels are far from commercialization and that equipping service stations and cars to use more ethanol will reduce the country's dependence on fossil fuels more quickly. The ethanol industry is fast running out of a market for its fuel because of limits on how much ethanol can be blended into conventional gasoline.
"If the drop-in fuels crowd and industry wants to get out there and get started and compete, we're not opposed to that. I find it odd that they're opposed to our efforts to put money into the infrastructure," said Tom Buis, CEO of Growth Energy, an ethanol trade group.
Growth Energy's founders include Poet LLC, a leading producer of corn ethanol that also wants to be one of the first companies to commercialize the production of ethanol from a substance that doesn't double as a food source. Poet plans to make ethanol from corn cobs.
"We're not tomorrow's fuel. We're existing today," Buis said of ethanol.
What's needed is more government assistance for all biofuel sectors, said Matt Hartwig, a spokesman for another ethanol trade group, the Renewable Fuels Association. "We ought not to be fighting about dividing up the existing pie. We need to figure out ways to make that pie bigger."
But increasing biofuel subsidies will be difficult to do as Congress struggles with reducing the budget deficit. Lawmakers are also expressing frustration with the slow pace of development of alternatives to corn ethanol, a product that is drawing more and more criticism because of its effect on prices for feed grains and some foods.
Nearly 14 billion gallons of ethanol will be made from corn this year and a few million more from wood chips or other biomass sources. Except for biodiesel or a product called renewable diesel that's made from animal fats, drop-in fuels are still well in the future, especially any made from biomass. The Energy Information Administration doesn't forecast the country using more than a billion gallons a year in biomass-based drop-in fuels until after 2020.
The ethanol industry has an ally in Agriculture Secretary Tom Vilsack, who has argued for shifting ethanol subsidies into installation of pumps and other infrastructure.
But drop-in fuels have some well-placed supporters of their own. Energy Secretary Steven Chu, a Nobel laureate in physics, has said flatly that he doesn't consider ethanol the best biofuel, and the chairman of the Senate energy committee, New Mexico Democrat Jeff Bingaman, expressed concerns at a hearing last month that funding ethanol infrastructure could stifle the development of drop-in fuels.
Making drop-in fuels or ethanol from biomass feedstocks such as cobs, wheat straw, grasses and other types of plant cellulose is far more expensive than distilling ethanol from corn.
Any of the next-generation technologies have steep capital costs, however.
"There is room for all of these technologies. We need to give them all a chance," said Robert C. Brown, director of Iowa State University's Bioeconomy Institute. "We need to be real careful about betting on just one of these technologies."
The cost issue aside, drop-in fuels also are attractive to some officials at the Energy Department because they can potentially replace all of the products made from a barrel of oil. Ethanol displaces only gasoline.
That's important because replacing only gasoline upsets the economics of refineries and encourages oil companies to reduce capacity, which in turn could lead to rising prices for products such as diesel and jet fuel, said Paul Bryan, who directs the department's biomass program.
"If we don't start making things from biomass that replace those things, we're going to make life untenable for the petroleum refiners," Bryan said.
Turning feedstocks into fuel
Companies are working on a variety of drop-in products, but with the exception of algae the feedstocks are often the same ones now being used for ethanol.
Amyris Inc., a California company, is installing fermenters at a Tate and Lyle corn processing plant in Decatur, Ill., to turn corn sugar into a chemical called farnesene. The chemical can be used to make a renewable form of diesel, but initially it will be sold to make lubricants.
In Brazil, Amyris will make farnesene from cane sugar, the same feedstock now used there for making fuel ethanol. Eventually, the company's plan is to use the sugars found in plant cellulose.
"You give me sugar and I'll give you a hydrocarbon," said Joel Velasco, senior vice president of the company.
Virent is using beet sugar to make gasoline, but its goal is to eventually convert the sugars found in crop residue and other sources of plant cellulose into gasoline, said Edwards, a former executive with the oil giant BP.
The conversion facilities could be added either to existing refineries or to corn processing mills, he said.
Other companies are working on turning algae into diesel or jet fuel, which has a huge potential market with both the military and the airline industry.
Yet another potential drop-in fuel is butanol, which is an alcohol like ethanol but without the same drawbacks. Gevo Inc. of Englewood, Colo., bought a corn ethanol plant in Luverne, Minn., with plans to retrofit it to produce 18 million gallons of butanol a year from grain. Converting a larger, 100-million-gallon-a-year ethanol plant to produce butanol would cost about $40 million, said Jack Huttner, a Gevo executive.
DuPont, parent of Pioneer Hi-Bred, is working with BP to test a butanol production process in the United Kingdom with a view to commercializingthe fuel in the United States.
