The article makes the general claim of the Renewable Fuels Standard as a "dumb law," and contrasting it with something that could "fuel America." This dichotomy is silly, to say the least. While there are legitimate criticisms of the RFS, the gas-to-liquids (GTL) and coal-to-liquids (CTL) technology that Celanese is pushing has little to do with the goals the renewable fuels standard is trying to achieve - those being both carbon reduction and energy independence. In typical Forbes fashion, the Helman pays lip service to the first goal and omits or pooh-poohs the disadvantages of CTL and GTL technologies by making false comparisons to corn ethanol.
There are few things I would like to highlight.
First, one of the huge disadvantages of CTL and GTL technologies is that they have large emissions. It ought to make sense - after all, you are taking a hydrocarbon feedstock, adding energy - usually from that same feedstock - and turning it into a liquid fuel that is then burned. That's two different processes that release carbon dioxide into the air that wasn't there before. Instead, the writer puts out this ridiculous statement:
And while using fossil fuels means emitting carbon dioxide, it’s not clear that corn ethanol is more carbon-friendly. A 2010 study by researchers at Rice University found no reason to believe that the process of planting, tending, harvesting and processing corn into ethanol emits less carbon dioxide than does gasoline.This carefully constructed statement is a lie. Corn ethanol has well-known problems with energy accounting, measuring an energy return hovering just below or just above 1. But the reductions displayed in its carbon accounting have never been in doubt. The EPA and the EU environment recently confirmed that corn ethanol is a net emissions reducer, mainly because it takes in carbon from the atmosphere in addition to releasing it during the processing, fermentation, separation and final product combustion stages. I believe the figure the EU came up with was that for each ton of carbon dioxide emitted from corn ethanol, 77% is ultimately from hydrocarbon sources. While this isn't great, it's still a net reduction.
So look again at that statement. The Rice University researchers' study ignored the beginning and the end of the carbon accounting. Instead, it focused on production and refining. While there is value to a study of this type, using it in this argument is ludicrous. It completely ignores that gasoline releases 100% novel carbon dioxide into the air, stuff that was safely sequestered before, while the carbon from ethanol is bio-based! The danger is that people will take what they've heard about corn ethanol's energy accounting and confuse it with the carbon accounting, and its that fallacy which this article was written explicitly to exploit. Conveniently selecting and omitting information like this is pretty blatant intellectual dishonesty.
The worst part about this statement, however, is what it doesn't say: compared to both gasoline and corn ethanol, CTL and GTL are worse. A good rule of thumb for any process of that type is that between a fifth and a third of your feedstock you are going to have to burn for heating value. This immediately puts your energy return below 1, by definition, since you are planning to also ultimately burn the final products for heating value. It also means that your emissions are, at the very best, going to be worse than for gasoline, because you just spent a lot of energy making smaller molecules (syngas from methane and coal) and turning it into larger molecules which must then go through the same refining processes. While Celanese's CTL and GTL might be better than, say, Fischer-Tropsch synthesis, it is unlikely to outperform biofuels.
Why are CTL and GTL at all viable, then? Well, partially because there's no carbon tax in place, and partially because CTL and GTL depend on pricing. The article has the following to say:
What if Washington doesn’t get aboard? No matter, says Sterin. China sees ethanol as a vital fuel, but with so many mouths to feed it can’t waste farmland growing it. Celanese initially planned to build a 60-million-gallon-per-year ethanol addition at its Nanjing complex, but when Beijing issued final permits in March it was for an 80-million-gallon plant. (The Texas plant, in contrast, will do fewer than 6 million gallons.) Even so, he’s hoping politicians will at least give Celanese a shot at competing in America. “We don’t need subsidies,” says Sterin. “We’re ready to go.”With the bottoming out of natural gas prices in the US, it should be obvious why the technology suddenly looks viable. They won't need subsidies, they're ready to go" because natural gas prices are lower in real terms than they've been in ten years - and ten years ago, oil was trading at under $20 a barrel.
On the other side of the Pacific, food prices in China are close to three times what they are in the US. To combat this, the Chinese government has essentially mandated that corn use for fuel be discouraged, since for them food security is paramount. But that concern has nothing to do with why Celanese wants to bring this concept to China. For them, it's all about cheap feedstock, in this case the world's largest reserves of brown coal, or lignite. Coal to fuel and coal to chemicals in China is nothing new. Methanol from coal is commonly blended into liquid petroleum gases (LPG) for stovetop use in China. Coal produces carbides, which, via acetylene, can lead into the production of PVC and oxo-alcohols.
Then there are some things the writer advocates that are ridiculous.
Thirteen congressmen led by Pete Olson, whose district around Houston, Tex. encompasses dozens of chemical plants, including Celanese, have introduced a bill to add natgas-derived fuels to the RFS. Any change would face attack from the greens but is supported by animal farmers who want cheaper feed corn. “We would prefer not to have the RFS at all,” says a spokeswoman for Olson, “but this is a step in the right direction.”Putting aside that adding natural gas derived fuels to the RFS hollows out half of its entire purpose, his only source for animal farmers wanting cheaper feed corn is a Congressman's publicity office. It also ignores entirely the issue of distiller's grains, which have to a large extent alleviated many farmers' concerns about feed supply.
The things that disgust me most, though are the ways in which the writer doesn't cite things that are wrong, per se, but give the reader every chance to make a connection that is false. More importantly, it distracts from the overall goal.
But that hasn’t happened, even though the feds under both Bush and Barack Obama pumped $1.5 billion in grants and loan guarantees into upstart cellulosic producers. Most, like Range Fuels, Cello Energy and E3 BioFuels, have ended up bankrupt. Survivors like Abengoa Bioenergy produced fewer than 6 million gallons last year.Ignoring the fact that this is blatantly partisan (though giving lip service to blaming the other side, too), it implies that the majority of those companies that received government support went bankrupt, without saying so, even though that is not true. While many cellulosic biofuels startups have gone under, the vast majority of them never received government support. Biotech is always a high risk business, but the process for receiving government support is similar in nature to a rigorous investment due diligence - it tends to weed out the worst offenders. By no means have even a simple majority gone bankrupt. Conveniently, Helman leaves off other successful players besides Abengoa, including POET, Mascoma, and others.
But more importantly, it distracts from the overall message and goals of the USDOE loan guarantee program. Recall what I've just mentioned: biofuels are a high risk business. It does not matter how many companies fail, only that some succeed. The USDOE's program was expected to cost money, not be revenue neutral, because failures were anticipated.
As in the first-generation ethanol market (both sugarcane and corn), only a few technologies are likely to succeed and consolidation is likely to lead to most production being from only a few players. The DOE program was to help technologies otherwise unlikely to be commercialized from a business perspective, not from a technical perspective, and it took on the business risk knowingly.
I have had a lot of trouble with Forbes' coverage before. What bothers me about this piece is not so much that I disagree with it but that it draws on half-truths and lies to make its point. It is possible to present the facts and still claim that CTL and GTL technology ought to have a future in the US. It is equally possible - and considerably easier, in some ways - to similarly look at the RFS and its cellulosic ethanol mandate and come away unimpressed.
Due in part to my familiarity with these issues, my bullshit detector went off fairly quickly when I read this article. But the insidious way in which it was written continues to strike fear into my heart. How many others will pick up on what I've seen? Not many.