General Motors Has Got The Right Idea Here!

Can GM project produce ethanol at less than $1 a gallon?

General Motors has decided that despite all the headlines about hybrids, battery power and fuel cells, ethanol provides the best way to curb carbon dioxide (CO2) emissions in the short term.

The trouble is the claims for ethanol are disputed. Critics say it doesn't provide a clear advantage over gasoline, with some claiming the whole process of making ethanol actually emits more CO2, raises the price of some basic foods, and leads to the clearance of forests and jungles which were supposed to be natural ways of absorbing CO2.

But hang on, says GM, and other ethanol cheerleaders like Ford. That may be true of current methods of producing the stuff, but a more scientific method of producing so-called "cellulosic" alcohol answers those criticisms, and then some.

At the Detroit Car Show last month GM CEO Rick Wagoner nailed his colors to the mast.

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"Nothing else we can do (to cut gasoline use) gets even close to that kind of impact, that soon. Nothing. What's more, ethanol offers a cleaner alternative to petroleum. It's adaptable to our current refueling infrastructure and it requires little change in consumer behavior," Wagoner told a press conference at the show.

Wagoner said hybrids and fuel cells will have little impact on overall use of petrol over the next 15 years, but ethanol can, saying that half of GM's vehicles will be able to run on flex-fuel ethanol or gasoline engines by 2012.

"If all the flex-fuel vehicles that GM, Ford and Chrysler have on the road right now plus those that we've already committed to produce over the next 12 years through 2020 were to run on E-85 ethanol, we could displace 29 billion gallons of gasoline annually or 18 per cent of the projected petroleum usage at that time," Wagoner said.

Wagoner went on to say that if all U.S. manufacturers, presumably including the Asian transplants, built flex-fuel vehicles, petroleum use could by cut by 32 per cent.

Myth and fact
Before Wagoner made his ethanol speech at the Detroit show, the top of the stage where he was to appear had a digital message strip. It was in the form of "Myth" -- a familiar brazen, lie was broached, followed by "Fact" -- GM put the record straight for us.

Trouble was, GM seemed to have got the process reversed.

For instance:

Myth -- "energy used to make ethanol wipes out its environmental benefits."

Fact -- "ethanol reduces CO2 and creates more energy."

Some critics say the environmental benefits of ethanol are submerged by the use of water, and fertilizer. Production of corn for alcohol fuel displaces corn used for the dinner table, and has led to severe price rises in corn based staples in places like Mexico. Ramping up the growth area of corn will lead to more forest and wild land being consumed at the expense of the environment and wildlife. A tank of ethanol only gives you about 75 per cent of the mileage you'd expect from gasoline.

A report last month from the British Parliamentary environmental audit committee said European governments, and by implication the U.S. government, should not have pursued targets to increase the use of biofuels like ethanol without putting in place "robust" measures to prevent environmental damage.

The committee recognized that some biofuels are sustainable and could be used to reduce emissions from transport, but the absence of robust sustainability standards and mechanisms to prevent damaging land use could lead to environmental damage in the UK and the loss of crucial rainforests around the world.

Biodiversity loss
"Without this reassessment, biofuels could lead to a range of environmental impacts including water pollution and biodiversity loss. In addition, the absence of international mechanisms to protect rainforests means that biofuels will add further to the already significant pressures to cut them down to make way for palm oil plantations," the committee said.

The report found that biofuels are generally an expensive and ineffective way to cut greenhouse gas emissions when compared to other policies.

The European Union has pledged that biofuels such as bioethanol and biodiesel will make up 10 per cent of transport fuel by 2020.

But in his speech in Detroit, Wagoner pulled a rabbit out of GM's hat, in the form of a new ally, Coskata Inc, and appropriately from Warren, Illinois, which may confound ethanol critics.

Coskata has developed a process to produce next generation ethanol, so-called cellulosic ethanol, at less than one dollar a gallon.

Munching microbes
Coskata's process uses agricultural waste like corn storks, waste grass and wood, household and municipal waste, discarded plastic, and old tires. Microbes then munch away on the stuff to produce ethanol. Not only that, the process uses less than one gallon of water per gallon of ethanol, compared with three to four gallons with the current process.

"For every unit of energy that the Coskata process uses, it creates up to 7.7 times that amount of energy, a ratio well above current ethanol production," Wagoner said.

"The Coskata process reduces greenhouse gas emissions (well to wheel) by up to 84 per cent compared to gasoline," said Wagoner.

Coskata will have a pilot plant up and running later this year. By 2011 it should have a plant capable of producing 50 to 100 million gallons of ethanol a year.

GM's claims wrong-footed prominent ethanol critics like the Cato Institute's Jerry Taylor, who says ethanol is a boondoggle which doesn't get close to achieving what it says on the can, and actually consumes more CO2 than petrol. Taylor says ethanol would not exist as a commercial product without huge government subsidy.

"I can't tell whether the $1 a gallon production cost estimate forwarded by GM and Coskata represents total production cost or marginal production cost," said Taylor.

The Global Subsidies Initiative (GSI), based in Geneva, Switzerland, also had some questions about GM's cellulosic claims.

Be generous
"Let's be generous and assume that pure ethanol imposes a fuel-economy penalty of only 25 per cent, meaning 1/3 more gallons are needed than the gallons of gasoline replaced, we are looking at a minimum of 71 billion gallons a year in 2020 -- approximately a ten-fold increase of current production levels. There is no way that all that volume could be met by U.S. corn, wheat, sorghum or sugar or all of the above without devoting the bulk of America's arable land to these crops," said GSI researcher Tara Laan.

"So GM must be either assuming that the country will drop the 54 cent a gallon import tariff (on ethanol) and start importing significant quantities, or to have a large number of cellulosic ethanol plants in place by then, or some combination of the two. Given the state of cellulosic technology and the long lead times that would be required to site the plants, obtain the requisite permits, line-up suppliers and build them, counting on domestic supplies of cellulosic ethanol to supply the 50 to 55 billion gallons a year that would have to come from some other feedstock other than corn starch would be a long shot," Laan said.

Quite a feat
Laan also questions other GM/Coskata claims, including the cost of less than $1 a gallon.

"I assume he is talking about variable costs. But even then, that would be quite a feat. It is hard to imagine covering capital costs and variable costs at $1 gallon. As for the water claims, it is just possible to (use one gallon compared with regular ethanol's 3 to 4) do so if one spends enough money on water recycling and recovery. But that throws into doubt the $1 gallon claim," Laan said.

The Coskata process creates up to 7.7 times the amount of energy for every unit of energy used?

"I presume that he (Wagoner) is referring to non-renewable energy. If he is not counting energy embodied in the feedstock, or any biomass used for heat or power, on the input, then his claims appear credible," Laan said.

The 84 per cent reduction in CO2 compared with gasoline is within the range claimed for 2nd generation biofuel, said Laan, but these claims are contested.

Cato's Taylor said he wasn't sure about the GM/Coskata claims, but if they were true it would be great news for taxpayers.

"But if so, there is no need for the taxpayer to subsidize these business operations," he said.

Last word
In the interest of fairness, let's give the last word to Coskata.

"Our technology and proprietary process have been validated by some of the world's most renowned research labs, universities and energy companies," said Bill Roe, CEO of Coskata. "Coskata is poised to revolutionize the ethanol industry with the backing of GM and our partners. Together, we can make ethanol a viable transportation fuel with production costs of under $1 per gallon."

Report From Detroit News Auto Insider