Today in Biofuels Opinion: “Even as the industry develops, many of the [biofuels] companies—probably most—will not survive.”

From BusinessWeek: “Behind the very real innovations and investments, the brash claims and the breathless headlines, lies an inconvenient truth. Replacing petroleum with biofuels is a tough business. Even as the industry develops, many of the companies—probably most—will not survive. “We’ve seen a venture capital-led bubble,” says Alan Shaw, CEO of Codexis, a Redwood City (Calif.) manufacturer of enzymes used to make drugs, chemicals, and biofuels. “I cannot see how the small companies can build a business and still get a return to their original investors. The numbers just don’t add up.”

Nor will many Americans soon be filling their gas tanks with these next-generation fuels. Industry executives concede they’ll fall far short of the mandated 2010 level of 100 million gallons of biofuels made from cellulosic materials such as prairie grass or cornstalks. Meeting the 2022 goal is also unlikely. It would require not only building hundreds of fuel factories—at a cost of $500 million or more each—but also surrounding each one with thousands of acres of land planted with energy crops such as prairie grass. “We’re talking about a fairly substantial transformation of the rural economic landscape,” says Jack Huttner, vice-president of DuPont Danisco Cellulosic Ethanol, a joint venture of Danisco and DuPont (DD) that is building a demonstration plant in Tennessee.

These difficulties don’t mean advanced biofuels aren’t coming, or that they won’t play a crucial role in fighting climate change. But everything will happen more slowly than many venture capitalists say. And the probable winners will be those with deep pockets and patience, such as Royal Dutch Shell (RDS), BP (BP), DuPont, agriculture giant Archer Daniels Midland (ADM), or the rare startup with revenues from another business, such as making drugs.”

From Brownfield Network: “That University of Minnesota study on water used in ethanol production, released last week, shows Nebraska requires 501 gallons of water per gallon of ethanol. The study looked at all water used in the production process, from the farm to the fuel pump.

By contrast, the report says it takes only six gallons of water to produce a gallon of ethanol in Iowa—the wide disparity being the amount of irrigation needed to grow the corn.

Randy Klein, director of market development for the Nebraska Corn Board, defends Nebraska’s corn-to-ethanol production process.

“The water is a resource for us here in Nebraska, and it’s just a matter of managing it,” Klein says. “It’s not a matter of saying, ‘No, we can’t use it’, because it’s there, it’s an important resource and it’s a great economic tool for the state of Nebraska. And this is a good way to make that into a renewable product—to replace our dependency on foreign oil with a Nebraska product.”

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