5
Alternative Transportation Fuels

The U.S. transportation sector relies almost exclusively on oil. Because domestic sources are unable to supply sufficient oil to satisfy the demands of the transportation and petrochemical industry sectors, the United States currently imports about 56 percent of its petroleum supply. Volatile crude oil prices and tight global supplies, coupled with fears of oil production peaking in the next 10–20 years, further aggravate concerns over oil dependence. The other key issue is greenhouse gas emissions from the transportation sector, which contribute one-third of the country’s total emissions. These issues have motivated the search for alternative domestic sources of liquid fuels that also have significantly lower greenhouse gas emissions.

CONVERSION OF COAL AND BIOMASS TO LIQUID FUELS

Coal and biomass are in abundant supply in the United States, and they can be converted to liquid fuels for use in existing and future vehicles with internal-combustion and hybrid engines. Thus, they could be attractive candidates for providing non-oil-based liquid fuels to the U.S. transportation system. There are important questions, however, about the economic viability, carbon impact, and technology status of these options.

While coal liquefaction is potentially a major source of alternative liquid transportation fuels, the technology is capital intensive. Moreover, on a life-cycle



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5 Alternative Transportation Fuels T he U.S. transportation sector relies almost exclusively on oil. Because domestic sources are unable to supply sufficient oil to satisfy the demands of the transportation and petrochemical industry sectors, the United States currently imports about 56 percent of its petroleum supply. Volatile crude oil prices and tight global supplies, coupled with fears of oil production peaking in the next 10–20 years, further aggravate concerns over oil dependence. The other key issue is greenhouse gas emissions from the transportation sector, which con- tribute one-third of the country’s total emissions. These issues have motivated the search for alternative domestic sources of liquid fuels that also have significantly lower greenhouse gas emissions. CONVERSION OF COAL AND BIOMASS TO LIQUID FUELS Coal and biomass are in abundant supply in the United States, and they can be converted to liquid fuels for use in existing and future vehicles with internal- combustion and hybrid engines. Thus, they could be attractive candidates for providing non-oil-based liquid fuels to the U.S. transportation system. There are important questions, however, about the economic viability, carbon impact, and technology status of these options. While coal liquefaction is potentially a major source of alternative liquid transportation fuels, the technology is capital intensive. Moreover, on a life-cycle 211

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212 America’s Energy Future basis,1 coal liquefaction yields about twice the greenhouse gas emissions pro- duced by petroleum-based gasoline when the carbon dioxide (CO2) is vented to the atmosphere. Capturing this CO2 and geologically storing it underground—a process frequently referred to as carbon capture and storage, or CCS—is therefore a requirement for production of coal-based liquid fuels in a carbon-constrained world. However, the viability of CCS, its costs, and its safety could pose a barrier to commercialization. Biomass is a renewable resource that, if properly produced and converted, can yield biofuels with lower greenhouse gas emissions than petroleum-based gasoline yields. However, biomass production on fertile land already cleared might displace food, feed, or fiber production; moreover, if ecosystems were cleared to produce biomass for biofuels, the accompanying releases of greenhouse gases could negate for decades to centuries any greenhouse gas benefits from the biofu- els (Fargione et al., 2008). Thus, there are questions about using biomass for fuel without seriously competing with other crops and without causing adverse envi- ronmental impacts. This chapter assesses the potential for using coal and biomass to produce liq- uid fuels in the United States; provides consistent analyses of technologies for the production of alternative liquid transportation fuels; and discusses the potential for use of coal and biomass to substantially reduce U.S. dependence on conven- tional crude oil and also reduce greenhouse gas emissions in the transportation sector. Quantities in this chapter are expressed in the standard units commonly used by biomass producers. Greenhouse gas emissions, however, are expressed in tonnes of CO2 equivalent, as in other chapters in this report. Details of the analyses and numerical estimates presented in this chapter can be found in the America’s Energy Future panel report Liquid Transportation Fuels from Coal and Biomass: Technological Status, Costs, and Environmental Impacts (NAS-NAE- NRC, 2009). 1Life-cycle analyses include the “well-to-wheel,” “mine-to-wheel,” or “field-to-wheel” esti- mates of total greenhouse gas emissions—for example, from the time that the resource for the fuel is obtained from the oil well (in the case of petroleum-based gasoline) or from the coal mine (in the case of coal-to-liquid fuel) to the time that the fuel is combusted. In the case of biomass, the life-cycle analysis starts during the growth of biomass in the field and continues to the time that the fuel is combusted. Greenhouse gas emissions as a result of indirect land-use change, however, are not included in the estimates of greenhouse gas life-cycle emissions presented in this report.

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213 Alternative Transportation Fuels FEEDSTOCK SUPPLY Biomass Supply and Cost While it is important that both the development of feedstocks for biofuels and the expansion of biofuel use in the transportation sector be achieved in a socially, economically, and environmentally sustainable manner, the social, economic, and environmental effects of domestic biofuels production have so far been mixed. In 2007, the United States consumed about 6.8 billion gallons of ethanol, made mostly from corn grain, and 491 million gallons of biodiesel, made mostly from soybean (EIA, 2008b), for a combined total of less than 3 percent of the U.S. transportation-fuel consumption. Diverting corn, soybean, or other food crops to biofuel production induces competition among food, feed, and fuel uses. More- over, both for corn grain ethanol and soybean biodiesel, the use of fossil fuels and other inputs are substantial, and greenhouse gas reductions compared to petroleum-based gasoline emissions are small at best (Farrell et al., 2006; Hill et al., 2006). Thus, the committee judges that corn grain ethanol and soybean biodiesel are merely intermediates in the transition from oil to cellulosic biofuels or other biomass-based liquid hydrocarbon transportation fuels (for example, biobutanol and algal biofuels). Assuming that technologies for conversion will be commercially viable, liquid fuels made from lignocellulosic biomass2 can offer major greenhouse gas reductions relative to petroleum-based fuels, as long as the biomass feedstock is a residual product of some forestry and farming operations or is grown on marginal lands that are not used for food and feed crop production. Therefore, the commit- tee focused on the lignocellulosic resources available for producing biofuels, and it assessed the costs of different feedstocks of this type—corn stover, wheat and seed-grass straws, hay, dedicated fuel crops, woody biomass, animal manure, and municipal solid waste—delivered to a biorefinery for conversion. Societal needs were considered by examining recent analyses of trade-offs between land use for biofuel production and land use for growing food, feed, and fiber, as well as for ecosystem services. 2Lignocellulosic biomass refers to biomass made of cellulose, hemicellulose, and lignin. Cellu- lose is a complex carbohydrate that forms the cell walls of most plants. Hemicellulose is a matrix of polysaccharides present, along with cellulose, in almost all plant cell walls.

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214 America’s Energy Future The committee estimated the amounts of cellulosic biomass that could be produced sustainably in the United States and result in fuels with significantly lower greenhouse gas emissions than petroleum produces. For the purpose of this study, the committee considered biomass to be produced in a sustainable manner if it met the following criteria: (1) croplands would not be diverted for biofuels (so that land would not be cleared elsewhere to grow the crops thus displaced); and (2) the growing and harvesting of cellulosic biomass would incur minimal adverse environmental impacts—such as erosion, excessive water use, and nutrient runoff—or even reduce them. The committee estimated (1) that about 400 million dry tons (365 million dry tonnes) per year of biomass could potentially be made available for the pro- duction of liquid transportation fuels using technologies and management prac- tices of 2008 and (2) that the cellulosic biomass supply could increase to about 550 million dry tons (500 million dry tonnes) each year by 2020 (Table 5.1). A key assumption in the committee’s analysis was that 18 million acres of land cur- rently enrolled in the Conservation Reserve Program (CRP) would be used to grow perennial grasses or other perennial crops for biofuel production, and that the acreage would increase to 24 million acres by 2020 as knowledge increased with time. Other key assumptions were that (1) harvesting methods would be developed for efficient collection of forestry or agricultural residues; (2) improved TABLE 5.1 Estimated Amount of Lignocellulosic Feedstock That Could Be Produced Annually for Biofuel Using Technologies Available in 2008 and in 2020 Million Tons With Technologies With Technologies Feedstock Type Available in 2008 Available by 2020 Corn stover 76 112 Wheat and grass straw 15 18 Hay 15 18 104a Dedicated fuel crops 164 Woody biomass 110 124 Animal manure 6 12 Municipal solid waste 90 100 Total 416 548 aCRP land has not been used for dedicated fuel crop production as of 2008. As an illustration, the committee assumed that two-thirds of the CRP land would be used for dedicated fuel production.

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215 Alternative Transportation Fuels TABLE 5.2 Estimate of Biomass Suppliers’ Willingness-to-Accept Price (in 2007 Dollars) per Dry Ton of Delivered Cellulosic Material Willingness-to-Accept Price (dollars per ton) Biomass Estimated in 2008 Projected in 2020 Corn stover 110 86 Switchgrass 151 118 Miscanthus 123 101 Prairie grasses 127 101 Woody biomass 85 72 Wheat straw 70 55 management practices and harvesting technology would raise agricultural crop yield; (3) yield increases would continue at the historic rates seen for corn, wheat, and hay; and (4) all cellulosic biomass estimated to be available for energy pro- duction would be used to make liquid fuels. The last assumption allowed the com- mittee to estimate the potential amount of such fuel that could be produced. Although the committee estimated that 550 million dry tons of cellulosic feedstock could be harvested or produced sustainably in 2020, those estimates are not predictions of what would be available for fuel production in 2020. The actual supply of biomass could be greater if existing croplands were used more efficiently (Heggenstaller et al., 2008) or if genetic improvements to dedicated fuel crops resulted in higher yields. But the supply could be lower if producers decided not to harvest agricultural residues or grow dedicated fuel crops on their CRP land. The committee also estimated the costs of biomass delivered to a conver- sion plant (Table 5.2). In this analysis, the price that the farmer or supplier would be willing to accept was assumed to include land-rental cost; other forgone net returns from not selling or using the cellulosic material for feed or bedding; and all other costs incurred in sustainably producing, harvesting, storing, and trans- porting the biomass to the processing plant. The cost or feedstock price is the long-run equilibrium price that would induce suppliers to deliver biomass to the conversion plant. Because an established market for cellulosic biomass does not exist, the analysis relied on estimates obtained from the literature. The committee’s estimates are higher than those of other published reports because transportation and land-rental costs are included. The geographic distribution of biomass supply is an important factor in the

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216 America’s Energy Future 200 162 160 129 Number of Sites 120 82 80 40 17 0 800-2200 2200-4000 4000-7000 >7000 Biomass Availability Within 40-Mile Radius (Dry Tons per Day) FIGURE 5.1 The number of sites in the United States that can supply the indicated daily amounts of biomass from within a 40-mile radius of each site. development of the U.S. biofuels industry. For illustrative purposes, the committee estimated the quantities that could, for example, be available within a 40-mile radius (about a 50-mile driving distance) of fuels-conversion plants across the United States (Figure 5.1). With the exception of transport of woody material (pri- marily pulpwood), 40–50 miles has historically been the maximum distance con- sidered economically feasible for biomass transport. An estimated 290 sites could supply from 1,500 up to 10,000 dry tons per day (from 0.5 million to 3.7 million dry tons per year) of biomass to conversion plants within a 40-mile radius. Nota- bly, the wide geographic variation in potential biomass availability for processing plants affects their sizes. This variation suggests the potential to optimize each individual conversion plant to decrease costs and maximize environmental benefits and supply within a given region. Increasing the distance of delivery could result in larger conversion plants with lower fuel costs. To help realize the committee’s projected sustainable biomass supply, incen- tives could be provided to farmers and developers for using a systems approach to address biofuel production; soil, water, and air quality; carbon sequestration; wild-

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217 Alternative Transportation Fuels life habitat; and rural development in a comprehensive manner. Such incentives might encourage farmers, foresters, biomass aggregators, and biorefinery opera- tors to work together to enhance technology development and ensure that best management practices were used for every combination of landscape and potential feedstock. Findings: Biomass Supply and Cost An estimated annual supply of 400 million dry tons of cellulosic biomass could be produced sustainably with technologies and management practices already available in 2008. The amount of biomass deliverable to conversion facilities could probably be increased to about 550 million dry tons by 2020. The committee judges that this quantity of biomass can be produced from dedicated energy crops, agricultural and forestry residues, and municipal solid wastes with minimal effects on U.S. food, feed, and fiber production and minimal adverse environmental effects. Biomass availability could limit the size of a conversion facility and thereby influence the cost of fuel products from any facility that uses biomass irre- spective of the conversion approach. Biomass is bulky and difficult to trans- port. The density of biomass growth will vary considerably from region to region in the United States, and the biomass supply available within 40 miles of a conversion plant will vary from less than 1,000 tons per day to 10,000 tons per day. Longer transportation distances could increase supply but would increase transportation costs and could magnify other logistical issues. The development of technologies that increase the density of biomass in the field, such as field-scale pyrolysis, could facilitate transportation of biomass to larger-scale regional conversion facilities. Improvements in agricultural practices and in plant species and cultivars will be required to increase the sustainable production of cellulosic biomass and to achieve the full potential of biomass-based fuels. A sustained research and devel- opment (R&D) effort to increase productivity, improve stress tolerance, manage diseases and weeds, and improve the efficiency of nutrient use will help to improve biomass yields. Focused R&D programs supported by the federal government could provide the technical bases for improving agricultural practices and biomass growth to achieve the desired increase in sustainable production of cellulosic bio- mass. Attention could be directed toward plant breeding, agronomy, ecology, weed

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218 America’s Energy Future and pest science, disease management, hydrology, soil physics, agricultural engi- neering, economics, regional planning, field-to-wheel biofuel systems analysis, and related public policy. Incentives and best agricultural practices will probably be needed to encourage sustainable production of biomass for production of biofuels. Producers need to grow biofuel feedstocks on degraded agricultural land to avoid direct and indirect competition with the food supply; they also need to minimize land-use practices that result in substantial net greenhouse gas emissions. For example, continuation of CRP payments for CRP lands when they are used to produce perennial grass and wood crops for biomass feedstock in an environmentally sustainable manner might be an incentive. A framework could be developed, with input from agrono- mists, ecologists, soil scientists, environmental scientists, and producers, to assess the effects of cellulosic-feedstock production on various environmental character- istics and natural resources. Such a framework would provide guidance to farmers on sustainable production of cellulosic feedstock and contribute to improvements in energy security and in the environmental sustainability of agriculture. Coal Supply Deployment of coal-to-liquid fuel technologies would require large quantities of coal and thus an expansion of the coal-mining industry. For example, because a plant producing 50,000 barrels per day (bbl/d) of liquid transportation fuels uses approximately 7 million tons of coal per annum, 100 such plants—producing 5 million bbl/d of liquid transportation fuels—would require about 700 million tons of coal per year, or a 70 percent increase in the nation’s coal consumption. That would require major increases in coal-mining and transportation infrastruc- ture, both in bringing coal from the mines to the plants and in bringing fuel from the plants to the market. These issues would represent major challenges, but they could be overcome. Thus, a key question is whether sufficient coal is available in the United States to support such increased consumption while also supplying other coal users, such as coal-fired electric power plants. In evaluating domestic coal resources, the National Research Council concluded: Despite significant uncertainties in existing reserve estimates, it is clear that there is suffi- cient coal at current rates of production to meet anticipated needs through 2030. Further into the future, there is probably sufficient coal to meet the nation’s needs for more than 100 years at current rates of consumption. [However, a] combination of increased rates of production with more detailed reserve analyses that take into account location, quality,

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219 Alternative Transportation Fuels recoverability, and transportation issues may substantially reduce the number of years of supply. Future policy will continue to be developed in the absence of accurate estimates until more detailed reserve analyses—which take into account the full suite of geographi- cal, geological, economic, legal, and environmental characteristics—are completed. (NRC, 2007) Recently, the Energy Information Administration estimated the proven U.S. coal reserves to be about 260 billion tons (EIA, 2009). A key conclusion of these two studies is that coal reserves in the United States are probably sufficient to meet the nation’s needs for more than 100 years at current rates of consumption— and possibly even with increased rates of consumption. The primary issue is likely not to be reserves per se, however, but rather the increased mining of coal and the opening of many new mines. Increased mining would have numerous potential environmental impacts—and, possibly, heightened public opposition— which would need to be addressed in acceptable ways. Meanwhile, the cost of coal, which currently is low relative to the cost of biomass, would undoubtedly increase. Finding: Coal Supply Despite the vast coal resource in the United States, it is not a forgone conclusion that adequate coal will be mined and available to meet the needs of a growing coal-to-fuels industry and the needs of the power industry. The potential for a rapid expansion of the U.S. coal-supply industry would have to be analyzed by the U.S. coal industry, the U.S. Environmental Protection Agency, the U.S. Department of Energy, and the U.S. Department of Transportation so that the critical barriers to growth, environmental effects, and their effects on coal costs could be delin- eated. The analysis could include several scenarios, one of which would assume that the United States will move rapidly toward increasing use of coal-based liquid fuels for transportation to improve energy security. An improved understanding of the immediate and long-term environmental effects of increased mining, transpor- tation, and use of coal would be an important goal of the analysis. CONVERSION TECHNOLOGIES Two key technologies, biochemical conversion and indirect liquefaction, are used for the conversion of biomass and coal into fuels, as illustrated in Figure 5.2.

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220 America’s Energy Future INDIRECT LIQUEFACTION BIOCHEMICAL CONVERSION BIOMASS FEEDSTOCK Plant Sugar/Starch Lignocellulose Coal, Biomass, or Combined Coal and Biomass Liquefaction Pretreatment PRETREATMENT Processing, Drying SACCHARIFICATION GASIFICATION CO2 Glucoamylase Cellulolytic Enzymes Syngas FERMENTATION FISCHER-TROPSCH (FT) METHANOL SYNTHESIS CO2 DISTILLATION UPGRADING METHANOL TO GASOLINE (MTG) ETHANOL BIOBUTANOL GASOLINE Example of DIESEL GASOLINE second-generation cellulosic biofuel FIGURE 5.2 Steps involved in the biochemical conversion of biomass and the thermo- chemical conversion (indirect route only) of coal, biomass, or combined coal and bio- mass into liquid transportation fuels. Biochemical conversion typically uses enzymes to transform starch (from grains) or lignocelluloses into sugars (saccharification), which are then converted into ethanol by microorganisms (fermentation). Thermochemical conversion includes indirect liquefaction, which uses heat and steam to convert biomass or coal into carbon monoxide and hydrogen (synthesis gas). The synthesis gas can then be cat- alytically converted into liquid fuels such as diesel and gasoline. The CO2 from the fermentation process in biochemical conversion or from the offgas streams of the thermochemical processes can be captured and geologically stored. Direct liquefac- tion of coal (not shown in Figure 5.2), which involves adding hydrogen to slur- ried coal at high temperatures and pressures in the presence of suitable catalysts, represents another route from coal to liquid fuels, but it is less developed than is indirect liquefaction. Biochemical Conversion The biochemical conversion of starch (from grains) to ethanol, as depicted on the left side of Figure 5.2, has been commercially deployed. But while this pro-

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221 Alternative Transportation Fuels cess is important for stimulating public awareness and enhancing the industrial infrastructure for fuel ethanol, the committee considers grain-based ethanol to be a transition to cellulosic ethanol and other so-called advanced biofuels, because grain-based ethanol does not meet the sustainability criteria discussed above. The biomass supplies likely to be available by 2020 could technically be converted into ethanol by biochemical conversion, thereby displacing a significant proportion of petroleum-based gasoline and reducing greenhouse gas emissions, but the conver- sion technology has to be demonstrated first and developed into a commercially deployable state. Over the next decade or two, cellulosic ethanol could be the main prod- uct of the biochemical conversion of biomass into fuels. Further research and development could also lead to commercial technologies that convert sugars into other biofuels such as butanol and alkanes, which have higher energy densities and could be distributed by means of the existing infrastructure. Although the committee focused on cellulosic ethanol as the most deployable technology over the next 10 years, it sees a long-term transition to conversion of cellulosic biomass to higher-energy alcohols or hydrocarbons—so-called advanced biofuels—as hav- ing significant long-term potential. The challenge in biochemical conversion of biomass into fuels is to first break down the resistant structure of a plant’s cell wall and then to break down the cellulose into five-carbon and six-carbon sugars fermentable by microorgan- isms; the effectiveness with which this sugar is generated is critical to economic biofuel production. The process for producing cellulosic ethanol, as shown in Figure 5.2, includes (1) preparation of the feedstock to achieve size reduction by grinding or other means; (2) pretreatment of the feedstock with steam, liquid hot water, or an acid or base to release cellulose from the lignin shield; (3) saccharifi- cation, by which cellulase hydrolyzes cellulose polymers into cellobiose (a disac- charide) and glucose (a monosaccharide), and hemicellulase breaks down hemicel- lulose into monosaccharides; (4) fermentation of the sugars into ethanol; and (5) distillation to separate the ethanol. The CO2 generated by the conversion process and the combustion of the fuel is mostly offset by the CO2 uptake during the growth of the biomass. The unconverted materials are burned in a boiler to gener- ate steam for the distillation; some surplus electricity can thus be generated. As of the end of 2008, no commercial-scale cellulosic ethanol plants were in operation. However, the U.S. Department of Energy (DOE) announced in Febru- ary 2007 that it would invest up to $385 million for six biorefinery projects (two of them based on gasification) over 4 years to help bring cellulosic ethanol to

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260 America’s Energy Future powered vehicles, dedicated NGVs have lower exhaust emissions of carbon mon- oxide, nonmethane organic gases, nitrogen oxides, and carbon dioxide. Natural-gas engines are more fuel efficient than gasoline engines are, and CNG in the past has had a low price (about 80 percent that of gasoline on a gasoline-equivalent gallon basis). Also, transport and distribution are relatively inexpensive because infrastructures already exist for delivery both to households and to industries (Yborra, 2006). Despite these advantages, however, NGVs still face many hurdles. The two main hurdles are insufficient numbers of refueling stations and inconvenient onboard CNG tanks, which take up most of the trunk space. An NGV market can be analyzed using the vehicle-to-refueling-station index, or VRI, defined as the ratio of number of NGVs (in thousands) to the number of natural gas refueling stations. According to Yeh (2007), “Using techniques includ- ing consumer preference surveys and travel time/distance simulations, it has been found out that the sustainable growth of alternative fuel vehicles (AFVs) during the transition from initial market development to a mature market requires [that] the number of alternative-fuel refueling stations be a minimum of 10 to 20 percent of the number available for conventional gasoline stations.” A thriving NGV mar- ket tends to have an index of 1; this gives rise to a problem: new stations are not being opened because of the lack of users, but few people use NGVs because of the lack of refueling stations. A key disadvantage of NGVs is their limited range. While the average gaso- line or diesel vehicle can go 400 miles on a tank full of fuel, the range of an NGV is only 100–150 miles, depending on the natural gas compression. Given this fact, together with the shortage of refueling stations, the current prevalent choice is to use a bi-fuel NGV that can run both on natural gas and on gasoline. The prob- lems associated with bi-fuel engines include slightly less acceleration and about 10 percent power loss compared with a dedicated NGV, given that bi-fuel engines are not optimized to work on natural gas. Further, warranties on new gasoline vehicles are strongly reduced if they are converted into bi-fuel NGVs. But perhaps the most important barrier to NGVs could be the public perception that com- pressed natural gas is a dangerous “explosive” to have on board one’s vehicle and that self-service refueling with a high-pressure gas may be too risky to offer to the general public. About 22 percent of all new transit-bus orders are for natural-gas-powered vehicles. Therefore buses, together with corporate-fleet cars that stay in town,

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261 Alternative Transportation Fuels have been the main markets for NGVs. Both of these uses have occurred mainly in response to the Clean-Fuel Fleet Program set up by the U.S. Environmental Protec- tion Agency to reduce air pollution. Synthetic Diesel Fuel The GTL process for producing synthetic diesel fuel is similar to the indirect lique- faction of coal. Instead of syngas production via the gasification of coal, however, syngas is produced by the steam reforming of natural gas. The synthesis gas can then be converted to an olefinic distillate, called synthol light oil, and wax using a catalytic modification of the FT process discussed earlier. The olefinic distil- late and wax are hydrocracked to produce high-quality diesel, as well as naph- tha and other streams that form the basis of specialty products such as synthetic lubricants. Although it is technically difficult, the naphtha can also be upgraded to gaso- line. Naphtha is an ideal feedstock for manufacture of chemical building blocks (for example, ethylene), and GTL diesel provides high-quality automotive fuel or blending stock (Johnson-Matthey, 2006) like coal-to-liquids technology. GTL is an option for producing diesel from “stranded” natural gas, such as that which exists in the Middle East and Russia. However, a couple of GTL plants would produce enough naphtha to swamp the chemical market for this material. Hypothetically, there are several advantages to converting natural gas into GTL diesel rather than into CNG. All diesel vehicles can run on GTL diesel, which gives gas producers access to new market opportunities. Vehicle driving range for diesel is much higher than for compressed natural gas because of diesel’s higher energy density. Engine efficiency and performance are not compromised by the adjustment to GTL diesel fuel. GTL diesel can be shipped in normal tankers and unloaded at ordinary ports (The Economist, 2006). Currently, there are several commercial GTL plants. Sasol in Nigeria and Qatar, as well as Shell in Malaysia and Qatar, produce GTL diesel fuel; a number of companies, including World GTL and Conoco Phillips, have plans to build GTL plants in the next several years. Because the economics of GTL plants are very closely tied to the natural gas price, viability depends in large part on inexpensive stranded gas. GTL diesel is viewed mainly as an alternative to liquified natural gas for monetizing large natural gas accumulations such as the one in Qatar. The high cost to produce GTL diesel makes its development in the United States unlikely unless an abundant and inexpensive source of natural gas is found (for example, natural gas hydrates).

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262 America’s Energy Future Methanol Methanol, an alcohol, is a liquid fuel that can be used in internal-combustion engines to power vehicles. During the late 1980s, it was seen as a route to diver- sifying the fuels for the U.S. transportation system; natural gas from remote fields around the world would be converted into methanol and transported to the United States. This strategy was seen by energy planners as a way to convert what was, at that time, cheap remote natural gas (on the order of $1 per thousand cubic feet) into a marketable product. Currently, however, while methanol is pro- duced primarily from natural gas, it is used principally as a commodity chemical. Methanol has a higher octane rating than gasoline does and is therefore a suitable neat fuel for internal-combustion engines (for example, in racing cars). In practical terms, the penetration of methanol into a transportation system for LDVs that are fueled primarily by gasoline would require flexible-fuel vehicles that could run on a mixture of gasoline and methanol. Further, the use of a mixture of 85 percent methanol (M85) and gasoline would avoid the cold-start problem caused by methanol’s low volatility. However, methanol has about half the energy density of gasoline, which affects the driving range that a vehicle can achieve on a full tank of the fuel. Other drawbacks of methanol include its corrosive, hydrophilic, and toxic nature and its harmfulness to human health in particular if ingested, absorbed through the skin, or inhaled. Methanol could thus potentially create environmen- tal, safety, health, and liability issues for fuel station owners. In addition, introduc- ing a new fuel such as methanol on a large scale would require the construction of a new distribution system and the use of flexible-fuel vehicles that could run on a mixture of gasoline and methanol. One means of avoiding these infrastructural barriers would be to convert the methanol to gasoline using the MTG process. Dimethyl Ether Dimethyl ether (DME) is a liquid fuel with properties similar to that of liquefied petroleum gas (LPG). It produces lower CO and CO2 emissions when burned, compared to gasoline and diesel, because of its modest carbon-to-hydrogen ratio. Because DME contains oxygen, it also requires a lower air-to-fuel ratio than do gasoline and diesel. DME has a thermal efficiency higher than that of diesel fuel (Kim et al., 2008), which could enable a higher-efficiency engine design. The presence of oxygen in the structure of DME also minimizes soot formation (Arcoumanis et al., 2008). Other exhaust emissions, such as unburned hydrocar-

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263 Alternative Transportation Fuels bons, nitrogen oxides, and particulate matter, are also reduced. In fact, because DME meets and surpasses the California Air Resources Board emissions standards for automotive fuel, it is considered an ultraclean fuel. At present, the preferred route and more cost-effective method for producing DME are through the dehydrogenation of methanol from synthesis gas, which is a mixture of CO and H2. The basic steps for producing DME are as follows: 1. Syngas production either by steam reforming of natural gas or by the partial oxidation of coal, oil residue, or biomass. 2. Methanol synthesis using copper-based or zinc oxide catalysts. 3. Methanol dehydrogenation to DME using a zeolite-based catalyst. The produced DME fuel is not suitable for spark-ignition engines because of its high cetane number, but it can run a diesel engine with little modification. DME has properties similar to those of GTL diesel, including good cold-flow properties, low sulfate content, and low combustion noise (Yao et al., 2006; Arcoumanis et al., 2008; Kim et al., 2008). The principal advantage of using DME as an automotive fuel is that it is clean burning and easy to handle and store. But as with other potential alternative fuels, the primary challenge facing the use of DME is the lack of an infrastructure for distribution. Other disadvantages include low viscosity, poor lubricity, a pro- pensity to swell rubber and cause leaks, and lower heating value compared with conventional diesel. Hydrogen Hydrogen, like electricity, is an energy carrier that can be generated from a wide variety of sources, including nuclear energy, renewable energy, and fossil fuels. Hydrogen also can be made from water via the process of electrolysis, although this appears to be more expensive than reforming natural gas. Used in vehicles, both hydrogen and electricity make efficient use of energy compared with liquid- fuel options on a well-to-wheel basis. As generally envisioned, hydrogen would generate electricity in a fuel cell, and the vehicle would be powered by an electric motor.9 Developments in battery technology that might make plug-in hybrid- 9Hydrogen also can be burned in an internal-combustion engine (ICE), but the overall ef- ficiency is much lower than with a combination of fuel cells and a motor. It would be difficult to

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264 America’s Energy Future electric and all-electric vehicles feasible will be discussed in several forthcoming National Research Council reports. Hydrogen fuel-cell vehicle (HFCV) technology has progressed rapidly over the last several years, and large numbers of such vehicles could be introduced by 2015. Current HFCVs are very expensive because they are largely hand built. For example, in 2008, Honda released a small number of HFCVs named FCX Clarity which cost several hundred thousands of dollars to produce (Fackler, 2008). How- ever, technological improvements and economies of scale brought about by mass production should greatly reduce costs. This section provides a synopsis of the National Research Council report Transitions to Alternative Transportation Technologies—A Focus on Hydrogen (NRC, 2008), which concluded that the maximum practical number of HFCVs that could be operating in 2020 would be about 2 million, among 280 million LDVs in the United States. By about 2023, as costs of the vehicles and hydrogen drop, HFCVs could become competitive on a life-cycle basis. Their number could grow rapidly thereafter to about 25 million by 2030, and by 2050 they could account for more than 80 percent of new vehicles entering the U.S. LDV market. Those numbers are not predictions but rather a scenario-based estimate of the maximum penetration rate assuming that technical goals are met, that consumers readily accept HFCVs, and that policy instruments are in place to drive the intro- duction of hydrogen fuel and HFCVs through the market transition period. The scenario would require that automobile manufacturers increase pro- duction of HFCVs even while they cost much more than conventional vehicles do and that investments be made to build and operate hydrogen fueling stations even while the market for hydrogen is very small. Substantial government actions and assistance would be needed to support such a transition to HFCVs by 2020 even with continued technical progress in fuel-cell and hydrogen-production technologies. A large per-vehicle subsidy would be needed in the early years of the transi- tion, but the number of vehicles per year would be low (Box 5.1) (NRC, 2008). Subsidies per vehicle would decline with fuel-cell costs, which are expected to drop rapidly with improved technology and economies of scale. By about 2025, an HFCV would cost only slightly more than an equivalent gasoline vehicle. Annual expenditures to support the commercial introduction of HFCVs would store enough hydrogen on board to give an all-hydrogen ICE vehicle an acceptable range. The BMW hydrogen ICE also can use gasoline.

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265 Alternative Transportation Fuels BOX 5.1 Projected Costs of Implementing Hydrogen Fuel-Cell Vehicles According to a scenario developed in NRC (2008), By 2023 (break-even year): • The government would have spent about $55 billion, including —$40 billion for the incremental cost of HFCVs, —$8 billion for the initial deployment of hydrogen-supply infrastructure, and —$5 billion for research and development. • About 5.6 million HFCVs would be operating. By 2050: • More than 200 million HFCVs would be operating, and there would be —180,000 hydrogen stations, —210 central hydrogen-production plants, and —80,000 miles of pipeline. • Industry would have profitably spent about $400 billion on hydrogen infrastructure. increase from about $3 billion in 2015 to $8 billion in 2023, at which point more than 1 million HFCVs could be joining the U.S. fleet annually. The cost of hydro- gen also would drop rapidly, and because the HFCV would be more efficient it would cost less per mile to drive than would a gasoline vehicle in about 2020. Combining vehicle and driving costs suggests that the HFCV would have lower life-cycle costs starting in about 2023. After that, there would be a net payoff to the country, which cumulatively would balance the prior subsidies by about 2028. Substantial and sustained R&D programs will be required to reduce the costs and improve the durability of fuel cells, develop new onboard hydrogen-storage technologies, and reduce hydrogen production costs. Needed R&D investments are shown in Box 5.1. These programs would have to continue after 2023 to reduce costs and to further improve performance, but the committee did not esti- mate the necessary funding. The 2008 National Research Council study determined the consequent

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266 America’s Energy Future 200,000 Million Gallons Gasoline per Year 150,000 100,000 Reference 50,000 Case 1 (H2 Success) 0 2000 2010 2020 2030 2040 2050 Year FIGURE 5.9 Oil consumption with maximum practical penetration of HFCVs compared with reference case. Source: NRC, 2008. 180,000 160,000 Million Gallons Gasoline per Year 140,000 120,000 100,000 80,000 60,000 Reference 40,000 Case 4 (Portfolio) 20,000 0 2000 2010 2020 2030 2040 2050 Year FIGURE 5.10 Oil consumption for combined HFCVs, high-efficiency conventional vehi- cles, and biofuels compared with reference case. Source: NRC, 2008.

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267 Alternative Transportation Fuels reductions in U.S. oil consumption and greenhouse gas emissions that could be expected in this scenario. HFCVs can yield large and sustained reductions in U.S. oil consumption and greenhouse gas emissions, but several decades will be needed to realize those potential long-term benefits. Figure 5.9 (on facing page) compares the oil consumption that would be required in this scenario with a reference case based on Energy Information Administration high oil-price projections, which include the recent increases in corporate average fuel economy standards. By 2050, HFCVs could reduce oil consumption by two-thirds. Greenhouse gas emis- sions would follow a similar trajectory if hydrogen produced from coal in large central stations were accompanied by carbon separation and sequestration. The study then compared those reductions with the potential impact of alternative vehicle technologies (including conventional hybrid-electric vehicles) and biofuels oil consumption and greenhouse gas emissions. Over the next two decades, those approaches could deliver much greater reductions in U.S. oil use and greenhouse gas emissions than could HFCVs, but hydrogen offers greater longer-term potential. Thus, the greatest benefits will come from a portfolio of research and development in technologies that would allow the United States to nearly eliminate oil use in LDVs by 2050 (see Figure 5.10 on facing page). Achiev- ing that goal would require substantial new energy-security and environmental- policy actions in addition to technological developments. Broad policies aimed at reducing oil use and greenhouse gas emissions will be useful, but they are unlikely to be adequate to facilitate the rapid introduction of HFCVs. REFERENCES Agrawal, R., N.R. Singh, F.H. Ribeiro, and W.N. Delgass. 2007. Sustainable fuel for the transportation sector. Proceedings of the National Academy of Sciences USA 104: 4828-4833. Arcoumanis, C., C. Bae, R. Crookes, and E. Kinoshita. 2008. The potential of di-methyl ether (DME) as an alternative fuel for compression-ignition engines: A review. Fuel 87:1014-1030. Chase, R. 2006. DuPont, BP join to make butanol: They say it outperforms ethanol as a fuel additive. USA Today, June 26. DOE (U.S. Department of Energy). 2007. DOE selects six cellulosic ethanol plants for up to $385 million in federal funding. Available at http://www.energy.gov/print/4827.htm. Accessed October 16, 2008.

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