Transitioning to Sustainability Through Research and Development on Ecosystem Services and Biofuels: Workshop Summary (2008)

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3 Biofuels R&D INTRODUCTION The United States biofuel industry is growing dramatically with over 90 mil- lion acres of corn planted in 2007; a 15 percent increase from 2006, with a large share being used to produce corn based ethanol. There are currently at least 127 corn based ethanol refineries with many more scheduled to come on line over the next few years. At the same time, major R&D efforts are underway to develop commercial scale technologies for producing cellulosic biofuels. While nearly half of U.S. gasoline is blended with at least some ethanol, less than 5 percent of the domestic fuel demand is currently met by ethanol. This growth in the production of biofuels feedstocks and in the construction of refineries has been stimulated in large part by federal policies, most impor- tantly a 51 cent per gallon subsidy. Support for expanding biofuels production and use has been driven by the need for the U.S. to become more energy independent and to improve long term energy security. It is also driven by the desire to stimu- late rural economies and support US farm interests. At the same time, biofuels are seen as a possible way to reduce emissions of greenhouse gases and thus to address the issue of global climate change. The current administration has made biofuels a centerpiece of its energy policy. In the 2007 State of the Union Address, President Bush committed to expanding U.S. biofuel production and use by seven times current levels—35 billion gallons per year in 10 years. This would lead to a 15 percent reduction in the amount of gasoline which would otherwise be consumed in 2017. This pro- posed standard for renewable and alternative fuels was called for as part of the “Twenty in Ten” plan, a goal for this country to reduce our gasoline usage by 20 19 

20 TRANSITIONING TO SUSTAINABILITY percent in ten years. At the time of the Forum, other ambitious energy goals were being debated. These quantitative goals are an important force driving not only research and development expenditures, but also the market for biofuels. One goal of the Federal Forum was to share information about current R&D in biofuels, which was accomplished in part through descriptions of state-of-the- art examples by different agencies, but also through group discussions. In addi- tion to learning about existing and proposed federal activities, Forum attendees were encouraged to identify linkages and gaps in biofuels R&D, and to begin the discussion of how to take advantage of possible synergies. BIOFUELS: SUSTAINABILITY CHALLENGES AND OPPORTUNITIES Dan Kammen, Director of the Renewable and Appropriate Energy Labora- tory at the University of California at Berkeley, opened the biofuels session by describing some of the emerging issues associated with biofuels and the implica- tions of biofuels production and use for sustainability. He focused on the need to consider biofuels as part of a broad energy policy, to take a holistic view; to recognize that corn based ethanol is not likely to be a viable long term solution to increasing energy independence but a short term transitional fuel. He empha- sized the need to use a portfolio approach to meeting America’s long term energy needs recognizing that increasing supplies of conventional and non-conventional energy and significantly improving energy efficiency must be part of the overall strategy. Kammen talked about a number of different approaches that could be used to assess the costs and benefits of biofuels and to guide future energy policies and energy investments. He noted that one tool is the current federal renewable fuel standard. However, he suggested that a low carbon fuel standard or a sustain- able fuels standard based on expanded life cycle assessment tools is likely to be a better means of assessing alternative energy choices. He discussed the need to address the effects of biofuels production on land use changes as well as a broad range of environmental effects beyond any potential reduction in greenhouse gas emissions such as water quality and quantity, air pollution, soil erosion and sedi- mentation, and biodiversity loss. In addition, Kammen highlighted some of the social and economic effects both domestically and internationally. For example, the shift of corn-based biofuels has led to increases in prices of food such as corn- based products and meat and diary products. Diversion of land from soybeans to corn has shifted production to other countries where production practices may be damaging to the environment. Kammen suggested that any assessment of biofuels must take a holistic view, looking at all benefits and costs. For example, we need   The Energy Independence and Security Act (EISA) was passed in December 2007, setting a goal of 36 billion gallons of biofuel by 2022. 

BIOFUELS R&D 21 to study the direct and indirect land use effects. To fully understand such effects, we need metrics (indicators) to assess these factors. While much attention has been focused on growing feedstocks, less attention has been paid to the production, distribution, and use. Current refinery processes are not particularly efficient and can have serious and wide ranging negative environmental effects. For example, some processing facilities are fueled by coal. These facilities can operate much more sustainably if they are be fueled by alternative energy sources such as wood wastes or other agricultural wastes. As Kammen discussed, corn-based ethanol is currently at the center of the US biofuel industry, but it is not considered the best long term biofuel. The estimated net energy benefits of corn-based ethanol are minimal and the associ- ated environmental costs are high. Cellulosic-based fuels seem more promising but facilities do not yet exist for large-scale commercial production. Many of the potential cellulosic feedstocks are not expected to require large amounts of new agricultural land and will not affect prices for food and fiber. Some sources could even use zero agricultural land, including algae, off-season crops, or prairie grasses. The wide variety of potential biomass feedstocks was a recurring theme throughout the forum and is discussed more below. Kammen discussed an important benchmark for consideration—How much land would be needed to meet the U.S. energy demand with biofuels? Standard corn grain ethanol requires a great deal of agricultural land, and to meet the entire U.S. demand for liquid fuels would require more than the country’s entire land area. Even with improvements in yields and processing efficiency, corn-based ethanol would still require a substantial share of the country’s cropland. Kammen emphasized the need to supplement increases in biofuel production with increases in vehicle efficiency, in many cases using existing technologies. For example, existing technologies could increase vehicle efficiency by 2.5 times reducing transportation fuel needs by more than half. Recognizing trade-offs and options is an important part of any energy strategy. For example, if the entire U.S. corn crop were used to make ethanol, it would displace less gasoline than would raising fleet fuel economy by five miles per gallon. In light of this, discussants suggested that improved fuel efficiency must be part of any long term energy strategy. FEDERAL POLICIES AND RESEARCH PRIORITIES RELATED TO BIOFUELS John Mizroch, the Principal Deputy Assistant Secretary in the Office of En- ergy Efficiency and Renewable Energy at the Department of Energy, discussed the current federal landscape for biofuels. He discussed the new federal mandate for biofuels, DOE’s R&D biofuels’ priorities and the federal Biomass R&D Board. He also noted the importance of recognizing the international dimension of biofuel production. 

22 TRANSITIONING TO SUSTAINABILITY The administration’s “Twenty in Ten” initiative has set of goal of reducing U.S. gasoline consumption by 20 percent in 10 years, increasing ethanol produc- tion to 35 billion gallons by 2017, and by 2030 increase production to 60 billion gallons a year. In order to meet these goals, DOE’s R&D programs focus on increasing the range of feedstocks available for fuels and reducing the costs of converting feedstocks to fuels. Recognizing that cellulosic feedstocks will likely be the primary source of ethanol in the future, DOE has committed about $1 bil- lion to cellulosic ethanol production and R&D, which it expects to be matched by private sector funding. DOE expects to support the construction of 16 cellulosic ethanol plants with a least six built at commercial scales. Much of the federal research on biofuels is coordinated through the Biomass R&D Board chaired by DOE and USDA, which also includes members from the Department of Interior, DOT, and the EPA. The USGS and EPA fund specific R&D programs looking at some of the sustainability aspects of biofuel production and use. For example, the USGS is assessing the impacts of biofuel production on biota, water and land including the effects of returning fallow lands to agri- cultural production on water quality, native plants, migratory birds, and wildlife. Complementary work is being done by the EPA looking at the effects of the entire biofuel system on natural and manmade systems. Alternative fuels are an international issue, though much of the discussion in the United States tends to focus on the domestic aspects. The world is becoming rapidly urbanized with increasing demands for energy and increased requirements for petroleum and other liquid fuels. Much of this demand is driven by the dra- matic increase in car ownership in countries such as China. Many countries are beginning to develop or expand their own biofuels production capacity. STATE-OF-THE-ART EXAMPLES OF SUSTAINABLITY R&D The following forum participants described examples of the biofuels R&D being supported by federal agencies: • Jeff Steiner, US Department of Agriculture (USDA), REAP: Renewable Energy Assessment Project • Richard Alexander, US Geological Survey (USGS), USGS Research on Biofuels Sustainability • Randy Bruins, Environmental Protection Agency (EPA), Future Mid- western Landscapes • Marcia Patton-Mallory, US Forest Service (USFS), Bioenergy from Forests-Moving Science to Practice Issues of Sustainability • William Chernicoff, US Department of Transportation (USDOT), Inte- grated Mapping of Biofuels Feedstock Production and Transportation for Systems Visualization and Optimization 

BIOFUELS R&D 23 • Jacques Beaudry-Losique, Department of Energy (DOE), Sustainability and Biofuels Production: A DOE Perspective Summary descriptions of the projects presented are included in Appendix D of this workshop report. The efforts are dominated by the programs in DOE and USDA but other agencies also have R&D programs focused on sustainability and biofuels. Some of the common issues addressed in agency R&D efforts included: evaluations of alternative feedstocks, the effects of production on ecosystem services, transportation requirements, and developing methodologies to assess the economic, environmental, social, and technical aspects associated with fuel choices. An increasing variety of feedstocks are now being considered for biofuel production. Corn-based ethanol has received the most attention because it com- mands the majority of the current biofuels market and additional opportunities to improve cropping practices and conversion efficiencies. However, many other sources of biomass can be used. These options range from agricultural crops (in- cluding sorghum, soybeans, and sugar) to agricultural residues (e.g., corn stover or wheat straw) to energy crops (such as switchgrass) to forest residues (e.g., tree thinnings, logging scraps, sawdust) to wastes (including recycled grease, garbage, and manure), to algae. These are not mutually exclusive categories. For example, Marcia Patton-Mallory (USFS) described a feedstock that is both a forest residue and a waste—the wood that builds up on the forest floor because natural forest fires are often suppressed. This wood buildup raises the likelihood and severity of future forest fires. If it can be collected and used as fuel, it is basically a win-win situation. Since finding ways to dispose of waste is also a sustainability challenge, turning waste into an energy source is an attractive option. At the same time, corn production can continue to provide a feedstock for ethanol and the wastes, corn stover, can provide a feedstock for cellulosic ethanol. While there are currently no commercial scale cellulosic plants, some 16 cellulosic ethanol production facilities are expected to be operable in the U.S. by 2010. Jacques Beaudry-Losique (DOE) described DOE’s new research activities focused on the commercialization of cellulosic ethanol. He described some of the advantages of cellulosic biomass over corn as an ethanol feedstock. He noted that cellulosic feedstocks do not compete with food crops and require less fertilizer. Furthermore, cellulosic-based ethanol releases substantially lower carbon dioxide (CO2) than corn-based ethanol. There are additional forest resources that are available or underutilized that could be used to create biofuels. Marcia-Patton Mallory (USFS) talked about the potential role of forest resources as a source of bioenergy. She noted that almost 50 percent of US renewable energy supplies are from biomass, mostly used for heat and power. Many of these forest resources are wastes and need to be cleared as part of a sustainable forest management strategy reducing the potential for for- est fires and creating healthier forests. Dr. Patton Mallory emphasized the need 

24 TRANSITIONING TO SUSTAINABILITY for an integrated or holistic approach to looking at a variety of bioenergy feed- stocks and for evaluating the sustainability implications of different approaches. Several participants stressed the need to understand the effects of growing various feedstocks on water, land, air, and soil. Randy Bruins (EPA) discussed a new study being conducted by the EPA which examines how changes in land use and the development of biofuel production facilities will potentially influence ecosystem services. The project is expected to create a decision tool kit which can assist producers and policy makers in understanding the implications of biofuel investments on critical ecosystem services including air and water quality, local hydrology, natural areas, and wildlife. Corn stover is a crucial natural fertilizer that helps maintain the soil’s organic carbon content as well as other nutrients such as nitrogen, phosphorous, and po- tassium. Jeff Steiner (USDA) focused on potential changes in soil quality from the use of corn stover as a biofuel feedstock He noted that the stover is usually left on the soil to maintain soil productivity and reduce erosion. If the stover is harvested, soil quality will suffer reducing subsequent crop yields. Determining the amount of stover that must be retained on the soil and that which can be used as a fuel is a big research challenge. Growing feedstocks for biofuels requires a lot of water input, but the water output also significantly affects the surrounding aquatic ecosystems. Richard Alexander (USGS) focused on the relationship between water and biofuels. When considering the role of water in an ecosystem, both quantity and quality are important properties. Runoff from agricultural land delivers nutrients from fertilizers into streams which in turn impact downstream areas. For example, ag- riculture is the main source of nitrogen and phosphorous in the Mississippi River Basin and in the Gulf of Mexico waters. This excessive buildup of nutrients has contributed to the high dissolved oxygen levels killing many aquatic organisms. Steve Parker (National Academies) similarly highlighted the important role of water in his description of a recent study by the NRC’s Water Science and Technology Board on Water Implications of Biofuels Production in the United States (NRC, 2007). He discussed the effects of the expanding biofuels indus- try on water, including both crop production needs—also mentioned by Mr. Alexander—and ethanol processing, which is water-intensive. He described ir- rigating corn crops as the dominant “worst case” in water resource use for crop production. Secondary, but not insignificant, are the water requirements and impacts from the production facilities themselves. Transportation of fuels between where they are produced and used is an important ingredient in the calculus of their sustainability. If biofuel production is significantly increased, how will we meet the extra transportation need? It is important to consider the method and the distance of transport. The method is a key question for ethanol, for example, which typically must travel by truck, waterway, or rail. Ethanol is miscible with water and thus subject to mixing with 

BIOFUELS R&D 25 pipeline impurities which do not mix with petroleum or natural gas fuels, and thus cannot easily be transported through existing petroleum pipelines. In addition to transport method, distance is also a key consideration. Wil- liam Chernicoff (DOT) pointed out that the further a fuel has to be transported, the higher its final cost, and the less sustainable it is. Emphasizing the important role his organization plays in energy sustainability, he added that two-thirds of energy in the United States currently moves through the DOT’s transportation system. Furthermore, there may not be sufficient capacity in the locations where it is needed. If the additional biofuel load on the existing transportation system increases overall traffic congestion, this resulting loss of efficiency increases the waste of all fuels and again decreases the sustainability of a fuel. Optimizing biofuel feedstocks to a regional climate and soil condition and then using that fuel locally would minimize the costs of transport required and often improve sustainability. Moreover, maintaining a diverse portfolio of fuel sources could make the market more robust, insulating it from potentially devas- tating effects of occasional crop failures, for example. The importance of such a holistic, big-picture perspective of the problem was echoed by many participants in a variety of contexts throughout the forum. Many participants discussed using a holistic approach to examine biofuels and sustainability. A holistic approach also requires considering the lifecycle of a fuel. This includes the broad ecosystem perspective discussed above, which means taking into account a feedstock’s effects on all of the resources of an eco- system. A lifecycle analysis adds a temporal component, considering the energy and resource requirements and impact on the environment for every step that occurs in production and use of a fuel. For example, this might include planting, growing, harvesting, and processing a raw feedstock, then delivery to and use by the consumer, then return of the byproducts to the environment. BIOFUELS AND SUSTAINABILITY R&D: GAPS AND OPPORTUNITIES FOR INTEGRATION, COORDINATION, AND PARTNERSHIPS John Carberry (DuPont), Mike Bertolucci (Interface Research Corporation, retired), Emmy Simmons (USAID, retired) and James Fisher (USDA) led the roundtable discussions by suggesting that participants consider the following issues, detailed in Box 1. Biofuels and Sustainability R&D: Summary of Roundtable Panel Discussions As each Roundtable group presented the summary of its discussion, several themes emerged. A number of participants emphasized the need for a systems approach to assess biofuels and taking a holistic perspective on the costs and 

26 TRANSITIONING TO SUSTAINABILITY BOX 1 Gaps and Opportunities for Collaboration in Biofuels R&D Related to Sustainability • What are the drawbacks of various biofuels, including possible unintended and potentially harmful consequences? What are the potential barriers to ex- panded use of biofuels as a replacement for gasoline? • How can socioeconomic and political factors be integrated with our bio- logical and physical knowledge on biofuels? Biofuel production has tended to be viewed as a physical problem of production, efficiency, and delivery. But it’s actu- ally much bigger and more complex than that. It’s also a business requiring a clear understanding of the market for biofuels. Biofuels are also an international issue, affecting both industrialized and developing countries. The markets overseas may have different pressures and needs. For example, Europe has a higher demand for biodiesel, while domestically the focus is on ethanol. • How does the demand for biofuel feedstocks affect other markets? For example, the volume of U.S. food aid has dropped by half in the last 5 years, even though the budget has stayed the same? This is a direct result of fuel markets: (1) transport fuels are much more expensive, and (2) grain foods are pricier now because of the increased demand for energy crops. • How can government, industry, and academia work together so that faster progress can be made? • What is the potential for GMOs to increase the supply of biofuel feedstocks and what are the technical and public acceptances barriers? • What key opportunities in biofuels R&D could make the greatest contribu- tion to increasing the availability of alternative transportation fuels? Are there R&D areas that are overlooked or underfunded? benefits of various energy supply options. They suggested the importance of not only looking at the production of biofuel feedstocks but also at refineries, distribution systems, markets, and consumers. To date, most of the attention has focused on the production side of the equation with little attention to distribu- tions systems—integrating biofuels into larger transportation system, markets, and customers. There is currently no infrastructure in place to make large scale substitutions of biofuels for conventional gasoline. Participants also noted that there are only a limited number of flex fuel vehicles and few outlets selling E-85 or other alternative fuels. Furthermore, there seems to be little understanding of consumer behavior, specifically under what conditions consumers may be willing to buy flex fueled vehicles or to retrofit existing vehicles in order to use higher blends of ethanol and gasoline. A holistic approach also requires considering 

BIOFUELS R&D 27 the whole lifecycle of a fuel. This includes the broad ecosystem perspective discussed above, which considers a feedstock’s effects on all of the resources of an ecosystem. A lifecycle analysis adds a temporal component, considering the energy and resource requirement and impact on the environment of every step that occurs in production and use of a fuel. For example, this might include planting, growing, harvesting, and processing a raw feedstock, then delivery to and use by the consumer, then return of the byproducts to the environment. Each potential feedstock and fuel needs to be judged on this basis A number of participants suggested that it would be useful to develop a framework for assessing biofuels and other alternative fuels in the context of other societal concerns in order to understand the associated risks and benefits and examine the full range of environmental and economic effects. Others empha- sized the importance of maintaining a diverse portfolio of fuel sources to reduce the potentially devastating effects of crop failures. Discussants emphasized the need to take a broad view, looking at a full range of energy choices that are likely to change over time. They stressed the need to maintain flexibility and not get locked into promising but unproven approaches. The development of alternative fuels can be seen as an evolutionary process. It is gradually developing, but we need to identify and remove barriers to facilitate this. Diversified supplies are needed to tackle this large problem. There is no one “silver bullet” that will meet all needs in every region, so we need to pursue a variety of feedstocks. Many participants stressed the importance of using place based research to assess ecosystem effects as well as to measure direct and indirect costs. The sustainability of biofuel production depends in large measure on the local ge- ography, current climate patterns as well as the potential impact of climate soil productivity, farming techniques, transportation systems, distances from refinery facilities, distances from ultimate customers, costs, and availability of other fuels. In some places bioenergy crops will require large increases in chemical fertilizers and water use with important impacts on local water resources and ecosystems. At the same time there may be impacts outside of the local area. The impacts of increased nutrient loading on the Gulf of Mexico are a prime example with a dramatic expansion of the “dead zone.” Several participants expressed the need for expanded communications be- tween scientists, policy makers, farmers, businesses, and investors. We have indi- vidual knowledge that we don’t have collectively. Sharing knowledge is critical to keeping expectations in check and meeting long term goals for expanded energy supplies and meeting the transition to sustainability. Forum participants were also concerned with more fully understanding the political, economic, and social implications of biofuels both domestically and internationally. Who benefits from the current expansion of corn-based biofuel? What changes are likely to occur in the U.S. and internationally? Is production likely to expand into lands already part of the Conservation Reserve Program? 

28 TRANSITIONING TO SUSTAINABILITY Are the beneficiaries primarily large scale corporate farms or small farms? What is the effect of expanded demand for agricultural land on the viability of small farm? What are the international trade implications of expanding biofuels? Most participants do not view corn-based biofuels as a long term energy solution, therefore, what will be the implications for local producers, rural communities, and investors of a shift to cellulosic ethanol of other alternative fuels?