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7 Overall Findings and Recommendations A lternative liquid transportation fuels from coal and cellulosic biomass have the potential to play an important role in helping the United States to address a variety of issues—including energy security, supply diversifi- cation, and greenhouse gas emissions—with technologies that could be commer- cially deployable by 2020. Several options are available for increasing domestic fuel supply while using either thermochemical conversion of coal, biomass, or both or using biochemical conversion of biomass. Different options have different potential supplies and greenhouse gas effects; the choice will most likely depend on U.S. carbon policy. • Biomass supply—The panel projects the amount of cellulosic biomass that can technically be produced and harvested sustainably for bio- chemical or thermochemical conversion (or other energy uses) to be 550 million dry tons per year by 2020. • Coal-to-liquid fuels by thermochemical conversion—At an estimated cost of about $70/bbl of gasoline equivalent (that is, less than $60/bbl of oil equivalent), gasoline and diesel can be produced from the abun- dant U.S. coal reserves to have life-cycle carbon dioxide (CO2) emission similar to that of petroleum-based gasoline in 2020 or sooner if existing thermochemical technology is combined with carbon capture and stor- age (CCS). CCS, however, would have to be demonstrated on a com- mercial scale and implemented by then. The supply will be limited by the amount of coal that can mined to meet the needs of a growing coal- to-liquid fuels industry. 

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0 Liquid Transportation Fuels from Coal and Biomass • Biomass-to-liquid fuels by thermochemical conversion—The estimated 550 million tons of dry biomass can be converted by thermochemical conversion to up to about 30 billion gallons of synthetic gasoline and diesel at an estimated cost of about $140/bbl of gasoline equivalent. The CO2 life-cycle emission will be close to zero without CCS. • Biomass-to-liquid fuels by biochemical conversion—The estimated 550 million tons of dry biomass can be converted by biochemical conversion to up to about 45 billion gallons of ethanol (equivalent on an energy basis to about 30 billion gallons of gasoline), at about $115/bbl of gas- oline equivalent. The CO2 life-cycle emission will be close to zero. • Coal-and-biomass-to-liquid fuels by thermochemical conversion—The estimated 550 million tons of biomass can be combined with coal at a ratio of 40:60 (on an energy basis) to produce up to 60 billion gallons of liquid fuels per year on a gasoline-equivalent basis by thermochemi- cal conversion at an average estimated cost of about $95/bbl gasoline equivalent without CCS and $110/bbl of gasoline equivalent with CCS. The CO2 life-cycle emissions of the fuels produced without CCS would be comparable with those of petroleum-based fuels without CCS and zero or slightly negative with CCS. Although alternative liquid fuel technology can be deployable and supply a substantial volume of clean fuels for U.S. transportation at a reasonable cost, it will take more than a decade for the fuels to reach full market penetration. The supply of 30–60 billion gallons of clean fuels per year will require the design, permitting, and construction of hundreds of conversion plants and associated fuel transportation and delivery infrastructure. Recommendation 7.1 Detailed scenarios of market penetration rates of biofuels, coal-to-liquid fuels, and associated biomass and coal supply options should be developed to clarify hurdles and challenges to achieving substantial effects on U.S. oil use and CO2 emissions. The analysis will provide policy makers and business leaders with the information needed to establish enduring policies and investment plans for accelerating the development and penetration of alternative-fuels technologies. In thermochemical conversion of coal or combined coal and biomass to pro- duce transportation fuels, CCS is critical for reducing CO2 emission. The $10–15

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Overall Findings and Recommendations  estimated cost of CCS used in this study’s analyses represents preliminary engi- neering costs. Ultimate requirements for design, monitoring, carbon-accounting procedures, liability, and associated regulatory frameworks, are yet to be devel- oped, and there is potential for unanticipated delay in initiating demonstration projects and, later, in licensing individual commercial-scale projects. Uncertainty about the regulatory environment arising from concerns of the general public and policy makers have the potential to raise storage costs. Hence, the full cost of CCS is difficult to determine without some commercial-scale experience with geologic CO2 storage. Large-scale demonstration and establishment of procedures for long- term monitoring of CCS have to be pursued aggressively in the next few years if thermochemical conversion of biomass and coal with CCS is to be ready for com- mercial deployment by 2020. Recommendation 7.2 The federal government should continue to partner with industry and independent researchers in an aggressive program to determine the operational procedures, monitoring, safety, and effectiveness of commercial-scale technology for geologic storage of CO2. Three to five commercial-scale demonstrations (each with about 1 million tonnes CO2 per year and operated for several years) should be set up within the next 3–5 years in areas of several geologic types. The demonstrations should focus on site choice, permitting, monitoring, operation, closure, and legal procedures needed to support the broad-scale appli- cation of geologic storage of CO2. The development of needed engineering data and determination of the full costs of geologic storage of CO2—including engi- neering, monitoring, and other costs based on data developed from continuing demonstration projects—should have high priority. Recommendation 7.3 The government-sponsored geologic CO2 storage projects need to address issues related to the concerns of the general public and policy-makers about geologic CO2 storage through rigorous scientific and policy analyses. As the work on geo- logical storage progresses, any factors that might result in public concerns and uncertainty in the regulatory environment should be evaluated and built into the project decision-making process because they could raise storage cost and slow projects.

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 Liquid Transportation Fuels from Coal and Biomass The amount of cellulosic biomass that could potentially be produced sustain- ably with today’s technologies and management practices is estimated to be about 400 million dry tons per year. Production could potentially be increased to about 550 million dry tons by 2020. The panel believes that that quantity of biomass can be produced from dedicated energy crops, agricultural and forestry residues, and municipal solid wastes without affecting U.S. food and fiber production or having adverse environmental effects. The supply of cellulosic biomass is limited by the amount that can be grown and harvested in a sustainable manner on mar- ginal lands or agriculturally degraded lands. Improved agricultural practices and improved 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 development (R&D) effort in increasing productiv- ity, improving stress tolerance, managing diseases and weeds, and improving the efficiency of nutrient use would help to improve biomass yields. To use biomass as a resource for energy in a sustainable manner requires that the effects of bio- mass production or harvesting on a range of factors—soil, water, and air quality; food, feed, and fiber production; carbon sequestration; wildlife habitat and bio- diversity; rural development—and other issues and the resulting supply of energy be assessed in a holistic way so that multiple public and private concerns are addressed simultaneously. Incentives and best agricultural practices will probably be needed to encourage sustainable production of biomass for biofuel production. Producers need to grow biofuel feedstocks on degraded agricultural land to avoid direct and indirect competition with the food supply, and they need to minimize land-use practices that result in substantial net greenhouse gas emissions. Recommendation 7.4 The federal government should support focused research and development pro- grams to provide the technical bases of improving agricultural practices and bio- mass growth to achieve the desired increase in sustainable production of cellulosic biomass. Focused attention should be directed toward plant breeding, agronomy, ecology, weed and pest science, disease management, hydrology, soil physics, agri- cultural engineering, economics, regional planning, field-to-wheel biofuel systems analysis, and related public policy. Cellulosic ethanol is in the early stages of commercial development; a few commercial plants are expected to begin operations in the next several years.

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Overall Findings and Recommendations  Over the next decade, process improvements in this generation of technology are expected to come from evolutionary developments and knowledge gained through commercial experience and increases in scale of operation. Incremental improve- ments in biochemical conversion technologies can be expected to reduce nonfeed- stock process costs by about 25 percent by 2020 and 40 percent by 2035. Because of lack of commercial experience, costs might be higher than estimated during initial commercialization but decrease thereafter as experience is gained. Future improvements in cellulosic technology that entail invention of biocatalysts and biological processes could produce fuels that supplement ethanol production in the next 15 years. In addition to ethanol, advanced biofuels (for example, lipids, higher alcohols, hydrocarbons, or other products that are easier to separate than ethanol) should be investigated because they could have higher energy content, would be less hygroscopic than ethanol, and therefore could fit more smoothly into the current petroleum infrastructure than ethanol. Recommendation 7.5 The federal government should ensure that there is adequate research support to focus advances in bioengineering and the expanding biotechnologies on developing advanced biofuels. The research should focus on advanced biosciences—genomics, molecular biology, and genetics—and biotechnologies that could convert biomass directly to produce lipids, higher alcohols, and hydrocarbons fuels that can be directly integrated into the existing transportation infrastructure. The translation of those technologies into large-scale commercial practice poses many challenges that need to be resolved by R&D and demonstration if major effects on produc- tion of alternative liquid fuels from renewable resources are to be realized. Without CO2 sequestration, technologies for the indirect liquefaction of coal to transportation fuels are commercially deployable today and can produce gasoline and diesel at an estimated cost of about $65/bbl of gasoline equivalent, but life-cycle CO2 emission will be more than twice that of petroleum-based fuels. The coal-to-liquid plant configuration produces a concentrated stream of CO2 that has to be removed before the fuel-synthesis step even in nonsequestration plants. Requiring carbon storage would have a relatively small effect on cost and efficiency. Thus, with CCS, indirect liquefaction processes can have essentially the same CO2 life-cycle emission as petroleum-based liquid fuels, or less, and still pro- duce fuels at an estimated cost of about $70/bbl of gasoline equivalent.

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 Liquid Transportation Fuels from Coal and Biomass Cogasification of biomass and coal to produce liquid fuels would have simi- lar CO2 life-cycle emissions as processing of the same amount of biomass and coal separately for liquid fuels. Cogasification, however, allows a larger scale of opera- tion than would be possible with biomass only and reduces costs per unit capacity. However, penalties associated with the preprocessing of the biomass and the tech- nical problems in feeding biomass to high-pressure gasification systems have to be taken into account. Successful feeding of raw biomass to high-pressure gasification systems could pose a challenge because biomass, unlike coal, is soft and fibrous and therefore difficult to reduce to the sizes necessary for efficient gasification. CCS has yet to be demonstrated and implemented for this alternative. To have thermochemical conversion of coal or coal and biomass to liquid fuels ready for deployment by 2020, the development of coal or coal and biomass gasification technology combined with fuel synthesis and CCS technology would have to be accelerated and proceed simultaneously so that the technologies can be implemented as a package. As a first step, a few coal-to-liquid plants and coal- and-biomass-to-liquid plants could serve as sources of CO2 for a small number of CCS demonstration projects. However, so-called capture-ready plants that vent CO2 would create liquid fuels with higher CO2 emission per unit usable energy than petroleum-based fuels; their commercialization should not be encouraged unless those plants are integrated with CCS at their start-up. It is critical for con- struction of demonstration plants integrated with CCS to start as soon as possible so that commercial-plant and CCS design data can be collected. Thermochemical and biochemical conversion approaches for the production of clean fuels both entail practical and technical challenges. The supply of bio- mass could limit plant size and influence the cost of fuel products from any plant that uses it as a feedstock irrespective of the conversion approach. The supply of available biomass will probably be limited to within 40 miles of the conversion plant because biomass is bulky, expensive, and difficult to transport. The den- sity of biomass (quantity per acre) will vary considerably from region to region across the country, ranging from a supply of less than 1,000 tons/day to 10,000 tons/day. Technologies that increase the density of biomass in the field to decrease transportation cost and logistic issues should be developed. The density associated with such technologies as field-scale pyrolysis could facilitate its transportation to larger-scale regional conversion facilities. Thermochemical conversion plants require larger capital investment than do biochemical conversion plants, so the former benefit to a greater extent than the latter from economies of scale.

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Overall Findings and Recommendations  Finding 7.1 A potential optimal strategy for producing biofuels in the United States could be to locate thermochemical conversion plants that use coal and biomass as a com- bined feedstock in regions where biomass is abundant and locate biochemical conversion plants in regions where biomass is less concentrated. Thermochemical plants require larger capital investment per barrel of product than do biochemical conversion plants and thus benefit to a greater extent from economies of scale. This strategy could maximize the use of cellulosic biomass and minimize the costs of fuel products. Recommendation 7.6 The U.S. Department of Energy and the U.S. Department of Agriculture should determine the spatial distribution of potential U.S. biomass supply to provide bet- ter information on the potential size, location, and costs of conversion plants. The information would allow determination of the optimal size of conversion plants for particular locations in relation to the road network and the costs and green- house gas effects of feedstock transport. The information should also be combined with the logistics of coal delivery to such plants to develop an optimal strategy for using U.S. biomass and coal resources for producing sustainable biofuels. Because ethanol cannot be transported in pipelines used for petroleum trans- port, an expanded infrastructure will be required to replace gasoline with a larger proportion of ethanol produced via biochemical conversion. Ethanol is currently transported by rail or barges and not by pipelines, because it is corrosive in the existing infrastructure and can damage seals, gaskets, and other equipment and induce stress-corrosion cracking in high-stress areas. If ethanol is to be used in fuel at concentrations higher than 20 percent (for example, E85, which is a blend of 85 percent ethanol and 15 percent gasoline), the number of refueling stations will have to be increased to support alternative-fuel vehicles. The transport and distri- bution of synthetic diesel and gasoline produced via thermochemical conversion will be less challenging because they are compatible with the existing infrastruc- ture for petroleum-based fuels.

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 Liquid Transportation Fuels from Coal and Biomass Recommendation 7.7 The U.S. Department of Energy and the biofuels industry should conduct a comprehensive joint study to identify the infrastructure system requirements of, research and development needs in, and challenges facing the expanding biofuels industry. Consideration should be given to the long-term potential of truck or barge delivery versus the potential of pipeline delivery that is needed to accommo- date increasing volumes of ethanol. The timing and role of advanced biofuels that are compatible with the existing gasoline infrastructure should be factored into the analysis. Finding 7.2 The deployment of alternative liquid transportation fuels aimed at diversifying the energy portfolio, improving energy security, and reducing the environmental foot- print by 2035 would require aggressive large-scale demonstration in the next few years and strategic planning to optimize the use of coal and biomass to produce fuels and to integrate them into the transportation system. Given the magnitude of U.S. liquid-fuel consumption (14 million barrels of crude oil per day in the trans- portation sector) and the scale of current petroleum imports (about 56 percent of the petroleum used in the United States is imported), a business-as-usual approach is insufficient to address the need to find alternative liquid transportation fuels, particularly because development and demonstration of technology, construction of plants, and implementation of infrastructure require 10–20 years per cycle. Recommendation 7.8 The U.S. Department of Energy should partner with industry in the aggres- sive development and demonstration of cellulosic-biofuel and thermochemical- conversion technologies with carbon capture and storage to advance technology and to address challenges identified in the commercial demonstration programs. The current government and industry programs should be evaluated to determine their adequacy to meet the commercialization timeline required to reduce U.S. oil use and CO2 emissions over the next decade.