By George Friedman
At a Brazilian ethanol conference June 4-5, Brazilian government-funded researchers said they have perfected a method of producing cellulosic ethanol that drastically reduces the cost of processing. At this point, the assertion — and many other similarly optimistic claims made at the conference — is unconfirmed. But should it prove true, the world could well be peeking over the horizon at a massive geopolitical, not to mention economic, shift.
Discussion of all things ethanol has been all the rage in U.S. policy circles ever since oil prices rose above $50 a barrel. And why not? Ethanol already is commonly fabricated in Brazil and the United States — which account for 35 percent and 37 percent of global production, respectively — from agricultural products. The stuff is made and consumed domestically, bolsters a politically powerful lobby and reduces U.S. exposure to — and dependence on — Middle Eastern energy supplies.
But despite all the hype and the Bush administration’s fascination with ethanol, there are three critical obstacles to making it a mainstay of the global (or even “simply” the U.S.) energy mix.
First, ethanol currently is produced only on an industrial scale from the food product portion of sugarcane (in Brazil) or corn (in the United States). These edible portions constitute a small percentage of the total plant mass, though, which means a large-scale ethanol sector would require massive amounts of agricultural land dedicated to it and would drive up food prices. For example, rising U.S. demand for corn-based ethanol has affected North American corn prices, contributing to the “tortilla” crisis in Mexico.
This means that if the world is truly going to make a go of mass-producing ethanol, it needs to find a way to use more than the edible portions of corn or cane. The potential solution to this problem is cellulosic ethanol, which uses enzymes to break down the whole corn or cane plant.
But cellulosic ethanol generates the other two obstacles.
The first is processing cost. Ethanol production essentially ferments the sugar in the plant, which is why traditional ethanol production deals only with the edible portions, where the natural sugars are concentrated. Cellulosic ethanol production has to first break up the cellulose. (Cellulose is polymerized sugar.) Though the price of doing that has dropped by a factor of 10 in the past decade, it is still around $2.25 a gallon.
The last — and most critical — is the issue of gathering the feedstock. Currently the United States has no built-in infrastructure for gathering the 90-plus percent of the corn plant that is not used in the food chain. For cellulosic ethanol to work, this chaff needs to be gathered to centralized locations for processing, and moving such bulk is an energy-intensive task to say the least. Until now, this obstacle has been the true deal killer. Making cellulosic ethanol work in the lab is easy — making it economically viable on an industrial level brings in supply chain complications that have kept its mass application firmly on the drawing board.
Traditional corn-based ethanol is simpler in this respect not just because of chemical characteristics, but because there is already a transport chain for bringing corn to market. Cellulosic ethanol will likely have an easier time getting moving in Brazil, because it already has an infrastructure in place; farmers regularly collect the sugarcane chaff, or bargasse, and burn it to generate electricity.
Ultimately, the trick will be to make enough progress in making the enzymatic process cheaper and more efficient so that it overrides the sheer cost of collecting the plant waste and building an infrastructure of trucks, trains and barges to collect and transport the stuff.