Biofuels’ 10 scariest challenges: Part 2 of 2

Upstream, downstream, processing, policy, finance – opportunities and challenges abound in the bioeconomy – but which challenges are the most intractable and daunting of them all?

In today’s part 1, #5 through #1.

They go via various aliases — naysayers, pessimists, The Party of No, doom-and-gloom’ers, realists, skeptics, and so on. For almost every aspect of a biobased supply chain or technology, there’s someone available with 15 reasons why it can’t work.

Why feedstocks will never develop at sufficient yield, or why land will never be available and affordable; why processing technologies are doomed to fail, from front end processing to final-step fuel finishing; why policies are bound to fail, or why finance will never appear.

In recent months and years, focus has fallen on financing — or the lack thereof. But, generally, financing is a creature of risk, or perceived risk, and the cost of capital is a consequence of how solvable other risks are thought to be.

Miss Part One in yesterday’s Digest? It’s here.

5. The blend wall

In the United States, passenger cars with 2001 or later model years are approved for 15 percent ethanol blends, while older cars are approved for 10 percent blends.

The new fueling station experience is on display each day at Propel Fuels.

With US gasoline consumption (for 2011, according to the Energy Information Administration) reaching 134 billion gallons — it means that the US can blend about 20.1 billion gallons of ethanol into the gasoline supply before the ethanol toleration limit is reached. Ultimately.

But, because the average vehicle age in the US is 11.1 years, meaning that only half of US vehicles can utilize E15 blends (today – as older vehicles are retired, that number will change). Retailers and automotive organizations skittish about expanding E15 any time soon.

Now, biobutanol blends at 16 percent, and each gallon of biobutanol counts for 1.3 gallons of ethanol under the RFS — because of butanol’s higher energy density. Long term, if the economics are in line, this will be a powerful engine for circumventing the blend wall.

But biobutanol will not be in wide distribution until at least 2015. And drop-in advanced biofuels, while increasing in capacity, will also be in limited availability through next year.

What’s the industry to do? Well, there’s E85 ethanol.

Solutions? Here sayeth the Center for Agricultural and Rural Development at Iowa State University, “the ethanol blend wall” can be overcome and Renewable Fuel Standard (RFS) requirements can be met in 2014 and beyond through increased use of attractively-priced E85.”

Their analysis, titled “Price It and They Will Buy: How E85 Can Break the Blend Wall,” is available here.

In today’s Digest, follow the page links below for each Scary Challenge – and potential solutions.