Editor's Note: This is the second of a four-part series on renewable fuel issues written by Economics Editor John Otte from his trip to the USDA Outlook Conference recently.
Corn ethanol and biodiesel will continue to account for a significant share of biofuels for years to come.
"We're working to build this future," says Patricia Woertz, chairman and CEO Archer Daniels Midland Company. "We're investing $2.5 billion dollars in new facilities, including two new dry-mill plants to boost our ethanol capacity, two new U.S. biodiesel plants here plus one in Brazil."
Policymakers want more biofuels than current feedstocks alone can supply, particularly if we are to achieve the goals of energy security and environmental improvement. They foresee cellulosic ethanol, corn ethanol, biodiesel, plus other alternatives, all playing a part.
"We share this vision," says Woertz. "We know that the future is not in a single feedstock or even a single product. It is in diversity of supply. The bioenergy industry must create technological breakthroughs, including those that allow for fuel from cellulosic or waste sources to play a role in this diverse future."
Speed new technologies
ADM is already doing cellulosic research on current feedstocks. The process involves thermochemically treating corn hulls—or cellulose from corn waste—to allow part of the fiber to be fermented to alcohol.
"We believe this process would boost our production of ethanol by 15% without requiring an additional ear of corn," says Woertz. "Cellulosic applications such as this, on existing feedstocks, may be as little as 2 years away. Other technologies, involving other feedstocks, may arrive in 5 to 7 years.
"We believe that advanced levels of federal research and development will be needed to speed new solutions to market," she says. "Funding for this research should be technology neutral, feedstock neutral and look for the best solutions from all options.
Biofuels may need additional land beyond that in production today. Woertz sees opportunity for some land in the CRP to come into production, without sacrificing land conservation goals. "Those are goals we clearly share, and that we support," she says.
Orchestrate rational growth
"We think a practical, efficient pathway to greater ethanol use may be to move incrementally—from a 10% to perhaps a 15% or 20% blend in the fuel supply," says Woertz. "Incremental growth can make it easier and more convenient for drivers to fill their tanks with fuel that includes ethanol."
If higher renewable fuel standards are implemented, they should be phased in to allow the new technologies, yield improvements and additional acreage that will be necessary to meet them.
Woertz thinks current incentives for ethanol are working well to encourage the development of the industry and promote the growth of a stable supply chain.
"Policy initiatives should look to provide the consistency that encourages the substantial investment needed to make new, evolving industries viable," she adds. "But ultimately, the bioenergy industry must stand on its own in the marketplace."
More food and more fuel
Woertz sees bioenergy spurring extraordinary innovation, the kind of innovation that leads to significant improvements in product quality, in cost to consumers and in the quality of life.
"New technologies, plus yield improvements, point to the opportunity to produce more food and more fuel—and not just in this country, but throughout the world," she says. "That future is well worth pursuing and well worth adapting to short term bumps that may be experienced along the way."