Dallas Is Banking On Ethanol, But Is It The Fuel Of The Future Or A Barrel Of Pork?

But with so many new plants coming on line across the nation, will there be a cattle feed glut? "At some point we're going to saturate the distiller's grain market," warns Nathanael Greene, biofuels expert for the National Resources Defense Council. "Then there won't be this energy credit."

Ethanol isn't the only renewable game played in Dallas. Biodiesel is hauling in capital too. In October 2005, Dallas-based Earth Biofuels became the first publicly traded biodiesel company selling shares on the NASDAQ stock exchange. "Texas is one of the best states for producing and selling biodiesel," says Rob Reed of Earth Biofuels. According to the National Biodiesel Board, Texas ranks second nationally in biodiesel production capacity (98.75 million gallons annually) behind Iowa. More than 75 million gallons of biodiesel were produced last year in the United States, and production is expected to more than double this year.

Refined from everything from soybeans, canola and palm oils, waste restaurant grease, and chicken fat and beef tallow, biodiesel is perhaps the sexiest fuel pumping into tanks, at least when measured by the cabal of celebrity mouthpieces Earth Biofuels has assembled. Earlier this year, the company unfurled a potent marketing campaign featuring Oscar-winning actor Morgan Freeman, one-time NASCAR champion Rusty Wallace, actress Julia Roberts and country music singer Willie Nelson. Nelson has even slapped his image on B20 biodiesel fuel pumps (a blend of 20 percent biodiesel and 80 percent petroleum diesel) sold under the BioWillie moniker, which Earth Biofuels markets and distributes exclusively. The company plans to pump the fuel as well as ethanol at its retail outlets nationwide through its newly formed American Earth Fuels Co. subsidiary.

Hereford mayor Bob Josserand is bullish on bull.
Hereford mayor Bob Josserand is bullish on bull.
Dr. Chris Bachmann, an alternative fuels researcher at 
James Madison University in Harrisonburg, Virginia, is 
exploring an even more outlandish fuel source: biodiesel 
from algae that eat emissions spewed from coal-fired 
power plants.
Dr. Chris Bachmann, an alternative fuels researcher at James Madison University in Harrisonburg, Virginia, is exploring an even more outlandish fuel source: biodiesel from algae that eat emissions spewed from coal-fired power plants.

Formed in 2004 as a Jackson, Mississippi-based refiner of waste restaurant grease, Earth Biofuels was acquired in 2005 by Apollo Resources International, a Dallas-based company specializing in natural gas and liquid natural gas production. It has since opened a 10 million-gallon-per-year biodiesel refinery in Durant, Oklahoma, and has invested in a 65 million-gallon-per-year ethanol refinery near New Orleans with plans to invest in another ethanol refinery in North Carolina through its subsidiary Earth Ethanol Inc. But for now, the company's thrust is biodiesel.

"Biodiesel makes sense," says Sterling Burnett, senior fellow for the National Center for Policy Analysis, a Dallas-based think tank. "It's not as expensive to distill [as ethanol], and it gives you more energy per unit of energy [consumed]. There's a debate as to whether you get more energy out of ethanol than it takes to produce it." Burnett says gasoline yields 83 percent more energy than is invested for its production.

But Dr. Dick Auld, chairman of the department of plant and soil sciences at Texas Tech University in Lubbock, is skeptical of such life cycle energy calculus. "If you did an energy budget on petroleum like [was done for ethanol], it'd be disastrous," he says. "Because you're looking at all of the steel pipes, the oil well and the trucks that take it out there."

According to a University of Minnesota study published last summer, soy-based biodiesel generates 93 percent more energy than it takes to produce and releases fewer air pollutants per net energy gain than ethanol, making it a substantially cleaner fuel than petroleum diesel. But like ethanol, biodiesel has drawbacks, primarily high production costs. Biodiesel costs roughly $1 more per gallon than petroleum diesel, and blends such as B20 can cost 10 to 25 cents more per gallon. To be competitive with petroleum, biodiesel must be heavily subsidized: a $1-per-gallon blending subsidy (50 cents for recycled restaurant grease) larded over with various state and local tax incentives.

"We have to face facts," Reed says. "If we want to optimize for cost, what makes sense is to just burn all of the fossil fuels we have. We've got plenty of them...It's a total myth that we're running out of any of the fossil fuels. The question is do we want to do that? If we didn't care about the carbon issue, we wouldn't really have an energy problem."

But biodiesel may have an environmental issue of its own: land. While an acre of corn can produce roughly 300 to 450 gallons of ethanol, an acre of soybeans can produce only an estimated 50 to 60 gallons of biodiesel. Attempting to replace a significant portion of U.S. petroleum diesel consumption with soy-based biofuels could potentially put huge swaths of acreage under the plow, enveloping both forests and wetlands. (The primary biodiesel base in the United States is soy oil while in Europe it is rapeseed oil, and Asia utilizes palm and palm kernel oil.) At optimum production levels, neither ethanol nor biodiesel can come close to making a significant dent in our annual consumption of 140 billion gallons of gasoline and 46.6 billion gallons of diesel fuel. According to the Minnesota study, full-throttle U.S. biofuels production can replace only a small fraction of U.S. motor fuel demand: 12 percent of gasoline and 6 percent of diesel, even with dedicating all U.S. corn and soybean production to fuel.

"Biofuels are not going to be the clichéd silver bullet," Reed says.

What biofuels might be is the clichéd pork barrel—a political hog gussied up in subsidies, mandates and rule-bending all draped in earth-friendly green. The cover story in the October issue of Consumer Reports, "Special Report, The Ethanol Myth," seemed to confirm this. Consumer Reports' analysts put a 2007 Chevrolet Tahoe flexible fuel vehicle—a vehicle that can burn gasoline or a blend of 85 percent ethanol and 15 percent gasoline dubbed E85—through its paces, testing fuel economy, acceleration and emissions.
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