Bumpy ride for biofuels
Jan 18th 2008
Behind Detroit's sudden embrace of ethanol
TWO technological trends, both unimaginable a year ago, dominated last week’s motor show in Detroit, the premier showcase for carmakers worldwide. One was the U-turn in the past decade’s headlong pursuit of horsepower and size. The other, less apparent but possibly more significant, was the industry’s wholehearted embrace of biofuels.
While carmakers wait for better batteries, petrol-electric hybrids remain stuck in the slow lane—and risk being overtaken by other technologies. The third iteration of the Toyota Prius, with lithium-ion batteries that can be recharged from a socket at home as well as from the brakes and engine on the road, has been delayed again. Lithium-ion cells pack a far greater punch than today’s nickel-metal-hydride batteries, but they continue to display explosive tendencies.
This summer, Honda will start leasing its clever fuel-cell car, the FCX Clarity. But judging from the limited numbers being made available and the steep $600-a-month leasing fee, the Clarity must be considered more a market-research exercise than an actual roll-out.
In the meantime, with the global economy slowing fast and oil continuing to nudge $100 a barrel, carmakers worldwide are having to retool their wares in a hurry so as to appeal more to people’s pockets than their fantasies.
In the process, diesel is becoming less of a dirty word—a relic of Detroit’s hastily converted petrol engines that were pressed into service as passenger diesels in the aftermath of the 1973 oil shock. The noisy, smelly, lumbering brutes were ditched in the early 1980s when soaring oil prices returned to earth. But the unpleasant memory has lingered on.
Not so in Europe, where pump prices remained high, and diesel’s 30% better fuel economy and greater torque won a loyal following. Thanks to innovations by Fiat, Bosch, Volkswagen and others, the modern turbo-charged diesel bears little resemblance to the smoky old clunkers Americans remember.
Today, one out of two new cars in Europe is a diesel. In America, diesels account for less than 3% of cars and light trucks on the road. But that could quickly change, thanks to improvements in emission control and America’s recent switch to low-sulphur diesel.
Ironically, despite their reputation of being dirty, diesel engines actually produce one-third less greenhouse gases than their petrol equivalents. The price they pay, however, is more soot (known in the trade as “particulates”) and nitrogen oxide in the exhaust pipe. Until recently, that prevented diesels from being sold in California, one of the world’s most profitable but persnickety car markets. But a change in the European Union’s emission standards has forced European carmakers to produce diesels that are now even cleaner than California requires.
A month ago, Mercedes-Benz started selling a diesel version of its popular E-320 model in America—the first diesel to meet the stringent emission standards of all 50 states. Last week in Detroit, all the leading European, Japanese and Korean car companies had clean diesels on display. Expect them to start rolling into America later this year.
Still, the home team remains leery. While there is no shortage of state-of-the-art diesel technology in America, it mostly appears in engines for big rigs, buses, tractors and locomotives. Making clean, lightweight diesels for passenger cars is an altogether different matter.
Hence the move among American carmakers to concentrate instead on more familiar stop-gap technologies. The current favourite is the “flex-fuel” vehicle that can run on either E85 (85% ethanol and 15% petrol) or straight petrol.
You can see why. The Energy Policy Act of 2005 requires that 7.5 billion gallons of renewable biofuel be blended into petrol by 2012. To make that happen, the federal government has been subsidising refiners of E85 with tax credits to the tune of 51 cents a gallon. Meanwhile, to keep the corn-growers well fed, the government has been levying a tariff of 54 cents a gallon on imported ethanol.
But, wait, that’s not all. Car companies in America get a fuel-economy credit for every flex-fuel vehicle they sell. The government rates the fuel economy of flex-fuel vehicles at about 165% the miles per gallon (mpg) they would get on straight petrol. In reality, vehicles running on E85 get 25-30% fewer mpg than their petrol equivalents.
As it costs only $200 to turn a conventional car or light truck into a flex-fuel vehicle, the industry can save itself billions in potential fines that would otherwise accrue for failing to meet the government’s CAFE (corporate average fuel economy) requirements. CAFE is the sales-weighted average mpg figure for all the cars or light trucks a manufacturer sells in any given model year.
The current CAFE of 27.5 mpg for cars and 21.6 mpg for light trucks is set to rise to a combined 35 mpg by 2020. Subsidised corn-based ethanol is therefore a nifty way of meeting America’s mandatory fuel-economy requirements without having to invest billions in new technology. Between them, General Motors, Ford and Chrysler now offer over three dozen models that can run on E85 as well as petrol.
Not that many actually do. There are only 1,200 gas stations in the whole of America that offer E85 (out of 175,000 nationwide). Most are in the Midwest, close to where the corn is grown and processed. California has fewer than ten. New Jersey none.
Perhaps just as well. A recent report from the Royal Society, Britain’s academy of science, warned that biofuels like ethanol are no panacea. Their carbon savings vary hugely depending on where the crop is grown, and how it is harvested and processed. The learned body noted that biofuels like E85 may spur economic development and help reduce oil imports, but they do little to combat climate change.
In a similar vein, the EU is now backing away from its earlier edict that 10% of the community’s motor fuel should come from plants. Having seen the run up in food prices (not to mention the tortilla riots in Mexico) following the American government’s moves to boost corn for fuel at the expense of food, the Europeans are suddenly having second thoughts.
By some reckonings, corn-derived ethanol requires 30% more energy to produce than it contains; others believe it more than breaks even. At best, however, it could provide no more than about 1% of America’s road fuel—say, 15 billion out of 140 billion gallons a year. Add the fact that it has little or no effect on reducing greenhouse gases, and the case for something better becomes appealing.
For American motorists, that something better is cellulosic ethanol—an alcohol made from straw, leaves, stalks, cane or, best of all, switchgrass, a hardy perennial that grows prolifically almost anywhere. Unlike most other forms of biomass, switchgrass uses the more efficient “C4” fixation process to bind carbon dioxide from the air to form its ethanol-producing sugars.
Being a perennial, farmers don’t have to reseed switchgrass after harvesting it. In “well-to-wheels” studies, ethanol made from switchgrass delivers 540% more energy than it consumes during growth, harvesting and manufacture. As a bonus, switchgrass ethanol emits significantly fewer greenhouse gases than corn-based ethanol.
Snags? Plenty. The first biorefinery for switchgrass ethanol has yet to be built. Six prototype plants are on the drawing board. But it will be years before motorists can buy it at the pump. And no one knows what it will cost by then. In the meantime, give thanks to Otto Diesel and pray that the lithium-ion battery can be tamed.