Biofuels Could Have a Profound Effect

Special Issue Volume A Number 1

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Grant Heffelfinger, Ph.D., is Senior Manager, Molecular and Computational Biosciences; biofuels program lead, Biological and Energy Sciences Center at Sandia National Laboratories He is also Sandia's biofuels program manager.

Steve Traver of New Mexico Tech is a legislative fellow at the New Mexico congressional delegation and is responsible for analyzing the potential of new technology for economic development. He currently is assessing biofuel production concepts in the Southwest, especially with third generation feedstocks.

Troy Lapsys is Chief Executive Officer of Incitor, Inc., with more than 15 years of experience leading high-technology businesses, ranging from enterprise software to VoIP operations.

Pamela Contag,: The way I'd like to start out this panel is for each of my colleagues to say a little bit about themselves and why they're here.

Grant Heffelfinger, Sandia National Laboratories: Sandia is one of six institutions involved in the Department of Energy's Joint BioEnergy Institute. We're also home of DOE's Combustion Research Facility. We do some of the research that Pamela made reference to in fundamental science and combustion processes and engine design. We're also a very strong proponent of algae biofuels.

Troy Lapsys, CEO and cofounder of Incitor: We are a supplier to different biofuels producers in that we produce synthetic enzymes for the conversion of different raw materials into final fuels. Most of our work to date has been with the Department of Defense. We're doing a couple of things with algae to biofuels, as well as with cellulosic material to biofuels.

Steve Traver, New Mexico Tech: I'm assigned on a more or less permanent basis to Washington, where I'm a technical advisor to our delegation. The U.S. is in a race, we believe, with the rest of the world to be the leaders in the next generation of liquid transportation fuels. Most of the geopolitical impact from energy is associated with liquid fuels, not the generation of electricity. We believe that when the biofuels business achieves catastrophic success, the impact, geopolitically, on the way the world runs will be profound. And even though the issue du jour in Washington is not energy at the moment, I can tell you that the forward thinkers, including almost every member of Congress, are going to come back to this in the near future. I want all of our audience, particularly as experts in energy, to be ready to write them and tell them what's up. It may seem that they are not listening or that they don't have a lot of time to listen, but believe me, they are listening.

Catastrophic success of biofuels. That's a big statement, because the real question is which biofuel are we talking about? We've come from talking about corn ethanol to talking about cellulosic ethanol, and now people are talking about "next generation biofuels." One member of the audience has a question specifically about jet fuel—€”what is a realistic time frame for that?

Heffelfinger: Jay Keasling of UC Berkeley and the CEO for the Joint BioEnergy Institute has frequently said ethanol is for drinking, not for putting in your car tank. And lots of people talk about biogasoline, or biobutanol. One of the things you can do with the lipid content you can obtain from algae is to use it as a feedstock to go into the U.S. refining capacity, more or less as it is currently configured, not only to produce the whole slate of feedstocks that we're getting from the petrochemical feedstock, but also for all the value-added materials as well.
In terms of jet fuel, I think it remains to be seen what the answer will be. I'm told the military can pay quite a bit more due to the high logistic costs of getting fuel into the military theaters. The figure I heard was $20 a gallon for military jet fuel. If you look at the recent DARPA (Defense Advanced Research Projects Agency) calls on algae and before that vegetable feedstocks, you can see they're very interested in stimulating activities toward producing jet fuel, because that's their big transportation fuel need.

Lapsys: We're on that same DARPA program that is generating a military-grade jet fuel from algae sources. Within the next year and a half to two years you're going to start seeing commercially viable samples coming out from some big players. That's partially because DARPA has got some fantastic, very aggressive program managers pushing these solutions. Whether it will actually be out commercially to the real world is another question, but it definitely is something that will save the military money on jet fuel.

We're also a big proponent of butanol for standard passenger cars. Realistically speaking, I think that's going to be a harder sell to the oil companies that control the distribution lines. They've already fought against ethanol. I think it's going to be another battle.

This brings us to biodiesel as another option that shows promise, particularly from algae. The problem with that is that there's no set standard for what constitutes biodiesel. Everybody makes their own version of biodiesel and you have no commonality between what you get here and what you get someplace else. So that's an issue that needs to be addressed at the legislative level.

Traver: We had Craig Venter, a pioneer in the production of ethanol and hydrogen fuels, talking to us about six months ago, and he just railed on the fact that the government had done it to themselves by dictating that a certain thing was going to happen using a certain approach. Craig said "please don't do that again." I think we've learned.

Both the Department of Defense and the commercial marketplace are extremely anxious to find a non-petroleum feedstock-based jet fuel. The jet fuel process within the DOD got a real head of steam up over these last couple of years in the Air Force. The administration is turning over, but I think the good news is the government is going to continue to develop jet fuel. In addition, most of the large air carriers and aircraft manufacturers are now getting directly involved, anticipating the needs of the people who are going to develop jet fuel using a non-petroleum feedstock and trying to support them any way they can.

We've talked about the idea that ethanol's not a good fuel. Troy loves biobutanol, thank you for that. Long-chain hydrocarbons from algae can be put in diesel engines and used as jet fuel. A lot of us would like to use sorghum. Is there anything else you see out there that you think is interesting as a next-generation biofuel? And then I'd like to talk a little bit about synthetic biology and pretreatment in biomass, because part of what the audience is asking about is whether we have to grow a specific type of biomass. What are the biomass opportunities out there?

Heffelfinger: I don't view ethanol as a bad fuel. My view is that if you look at the scalability of what you can achieve with cellulosic biomass via the ethanol pathway, it is 20 or 30 percent of the transportation fuel needs for the country. But I grew up in Iowa and there's still not what we called gasohol in California because you can't get it to California efficiently. So Sandia's view is that what we really need is a distributed approach to feedstocks. Grow regionally the feedstocks for producing whatever fuel makes the most sense from the available sunlight and water and nutrient stream. I think in the Southwest that could be algae. I don't think we could grow algae in Iowa.

I think we get caught up in the question of which fuel. But I think we have to think back to the feedstock and then move forward to derive the fuel and infrastructure implications from that perspective. At this point, I think, we need to be open to lots of fuels. Ultimately we need it to be not just ecologically sustainable but economically sustainable as well.

The point here is that all of these different fuels are going to be made from biomass. And there are significant logistical issues with different forms of biomass. Harvesting jatropha, for example, causes harm to the harvesters themselves. It creates a toxin that can get into your skin. There are reports that sorghum can cause an allergic reaction. And so we have to think about the logistics of the feedstocks as well as the transportation of the feedstocks. So if we're talking biomass here, what do you think about the current logistics for different forms of biomass? We know how to harvest corn, and that's about it on a big scale.

Heffelfinger: In the near term we can do cellulosic ethanol or other fuels from cellulose. We can begin to exercise the infrastructure and understand the longer-term implications. In the longest term and the largest scale we can do some of these other alternative biomass approaches like algae. That's our view.

Lapsys: We have a more practical view, perhaps. We're a supplier, or a potential supplier, to all of these. Right now ethanol's where the market is. So from our perspective as a startup company, we're going to go after the money and supply the ethanol market. In the longer term where we're moving is to be able to break down cellulose and hemi cellulose. But there's no single enzyme that will do all of that. Every type of raw material is going to have a different combination of requirements. So I agree you're going to have regional solutions based on what is locally available and what is practical in that particular area.

Steve, what does the government think about funding flexible biorefineries that can take in multiple feedstocks and deliver a variety of fuels?

Traver: I think the government's going to come, as it usually does, from two directions. It's going to fund the things the government is responsible for funding at a fundamental research level, which industry can't get to because it's too long term. The government also will come from the consumer direction.
Once again, back to jet fuel. We want to buy a domestically produced product so we're not beholden to offshore sources.

Let me add that in the middle of this are the politicians who are getting it from every direction. There are liquid fuels of the sort we're talking about here. There is hydrogen. And then there are batteries. Each one has an advocacy.
If you take a step back, you might say batteries will work out great in an urban environment, and then hydrogen and liquid fuel might work out better someplace else because they bring to the equation range, energy density, things like that.

So the government is going to try to help them all. But helping them make it through the valley of death is tough for the government because you get so far, and now you need to build the pilot plant. You need to go from ones of millions, to tens of millions, to potentially hundreds of millions so you'll know whether you can then scale it to the thing that is going to cost a billion. It's tough for the government to pick a winner in that respect, but it is relatively easy for the government to be a partner—€”either in loan guarantees, in distributing up-front money to do some initial piece of it, or, as with jet fuel and fuel cells, guaranteeing we'll buy some product if you have some to sell us. So we'll be like a kickoff partner.

I think the new administration is going to be very proactive, along with a bipartisan group in Congress, in looking at the problems of overcoming the valley of death that companies such as yours are facing, and we'll find a way to help.

Along those lines, is the government considering a conversion of their fleets, or is it helping convert others' fleets to alternative fuels?

Traver: They are considering it. We have a lot of mechanisms, from the post office to the Army, to get a couple dozen vehicles out in the field to see how well they work. I'm sure that will be part of trying to help with the problem.
How are we using computer modeling to help us scale up. What can we model on the computer to skip over building steel-in-the-ground infrastructure?

Heffelfinger: For chemical engineering and process engineering, for example, you have Aspen-like software you can do on PCs these days. You'll also have to do a lot of bioinformatics relative to processing through experimental data like general mix sequencing, and that work is generally done on large work stations and clusters that don't require high speed interconnects. And then there are modeling problems that require more integrated high performance computing in a massively parallel context. The focus there is around molecular simulation—€”looking at structure-property relationships for enzymes, for example. Ultimately, if you can connect that kind of information with bioinformatics, you can do some complex systems biology modeling, maybe model cells, looking at metabolic engineering in much more exquisite detail. There's still a lot of work to be done scientifically, but that's the hope, at least from a Sandia perspective.

Lapsys: What we do with the supercomputer, and the reason why it's highly valuable to us, is we go through specific molecular dynamics modeling. We take an existing structure, an existing enzyme, look at its structure, and see how it changes over time. We're using that information for building our synthetic version of things. Once we have that, we are going down the same path in terms of actually seeing what the test results are compared to what naturally occurred. So from our standpoint, the supercomputing resources are crucial, and we've been exceptionally interested in the New Mexico computing center as it comes up.

Traver: I'll just say very quickly that the importance of maintaining world leadership in supercomputers, whether it's for biological processes, designing airplanes or understanding the nuclear fuel cycle, is well understood in Washington. Of course we'd love to be able to do a lot more on computers to expedite getting things done so that we don't have to spend a lot of time doing things in the laboratory. So the computers will continue to get a lot better, although the computer people keep reminding me it ain't the computer, it's the software. And so we'll work on that part too.

What is the future for next-generation fuels in New Mexico, and what are some of the state and federal policies that either support the formation of biofuels companies or technologies, or hinder them.

Traver: I would say that looking across the country in particular and the world in general, everybody is on board with biofuels—€”Israel, Argentina, Japan, Korea and everyone else. Within the country, I'd be willing to bet that every single state in the union probably has some kind of a biofuel initiative. Just as we were getting ready to come up here we were talking about what's happening next door in Arizona, in Texas, in Colorado, and the answer is a bunch. A whole bunch. People are in the process of building, depending on how you define it, either pilot plants or demo plants. They're all on essentially the same timeline. And they are being supported by their congressional delegations and by their governors. So from the standpoint of the nation, we have really got a head of steam building up here to develop biofuels.

From the standpoint of the entrepreneurs, even though we are, hopefully, bottoming out with regard to capital issues, we're going to start going the other direction. And everybody is going to be looking for the guy or gal that can make them a hero by developing a biofuel plant that can locally produce fuel. And across the nation elected officials are looking to help bring new biofuel capability.

Lapsys: Specifically we pay attention to a lot of the different incentives that are out there. On a federal level, in terms of producers, the USDA guarantees loans for building facilities. The DOE has guaranteed loans, a few hundreds of millions of dollars, to cellulosic ethanol facilities that are going up across the country right now. So there's a lot of capital infrastructure support for getting this to the next level. There also are recent mandates for fuels that say we want X amount of cellulosic ethanol—€”billions of gallons a year—€”by X date.
So that's both good and bad. It has spurred a lot of development because you know the market is going to be there for certain fuel products. At the same time, it may be restricting fuels that are a better option.

On the state level, particularly in New Mexico, there are two programs of interest. Any biofuel facility that goes up in the state of New Mexico has a 100 percent tax deduction. On top of that you have production incentives where the state will pay, I believe, up to 60 percent depending on whether it's in a rural area, for the first six months for anyone you're bringing in to do the technical production. So there are nice incentives.

How many have brand new engines. And what's the incentive to develop engines and biofuels together?

Heffelfinger: Sandia's dream is that you would have engine designers define the characteristics of the fuel they desire in a chemistry context, and then the biologist would try to make that fuel. If you could start with the engine design, get a very high efficiency engine, and then work backward to the fuel and then ultimately to the biomass, that would be the ideal set of circumstances. Unfortunately, because of the issues of scaling and infrastructure, it can't work that way yet because we don't know what the economies of scale will be for converting to a fuel.

The more speculative the feedstock—€”in the case of algae, for example—€”the bigger the error bars. So in these life cycle analyses, the best we can do right now is to understand sensitivity. In other words, if the costs of synthetic approaches for getting oil from algae are this, then that will affect the cost of a barrel of oil produced from algae by this much.

Having said that, the Southwestern Biofuels Association has identified camelina and algae as its two primary interests for the Southwest. In the case of algae the attractive features of New Mexico are that we have lots of cheap, flat land and lots of sunlight. The land isn't used to grow food. We can get a fuel source from coal-fired generators, possibly in the Four Corners but more likely in the southern part of the state down near El Paso. We have a very large source of brackish water underground that is not usable for anything else. This suggests that New Mexico and its neighboring states, perhaps even Mexico, might produce an ecosystem very attractive for growing algae at the largest scale. But again, the error bars are very big, so it's a significant R&D project.

As a final wrap up, what does the future hold, and did we forget anything really important?

Heffelfinger: I remember the 1973 energy crisis. I was 11. And I remember the job market as a chemical engineer in 1982 when oil bottomed out. I do believe the price of oil plays a large role in what this country decides to do. The cheaper the oil in the near term, the greater the importance of policy and staying the course. So for me, the big unknowns around what happens next for biofuels have to do with economics and policy.

Lapsys: Perhaps I'm a little more of an optimist. I think that given what's happened, particularly in the last six, seven years, it is apparent we've got to do something. I think there is a significant difference between the situation now with oil and the situation in the 1980s with oil. Fundamentally I believe we are going to continue to advance. I think the solutions are nearer on the horizon than a lot of people realize. It's now to a point of getting past the research component and getting into the systems engineering component. I think that is exactly what we will start to see in the next five years.

Traver: I am very optimistic because I see this as a unique confluence where the political will is now in sync with the technical capability. In the past either the technical capability was getting there but the political will fell off because oil prices dropped, or the political will was there to do something but the technology just couldn't quite get there in time. I believe we really are just a few years away from dramatic demonstrations of technical capability, and I think that the political will is present. By that I mean the American people, all 300 million of them and their elected representatives, are not going to be fooled again by a drop in oil prices. So I'm very optimistic that when we have this meeting again in ten years, it will be a profoundly different meeting because we'll be talking about an entirely different set of issues associated with how the relationship of energy production and the well-being of the planet are integrated in a way that we're not so worried about the price of the fuel.