“DROP IN” BIO FUELS BECOME MAJOR U.S. POLICY OBJECTIVE

A U.S. policy decision has been made that a team from U.S. Departments of Energy, Environment and Agriculture (DOE, EPA and USDA) will coordinate advancement of 3rd generation bio fuels that meet the definition of “drop in”.

Secretary of Energy, Steven Chu announced that $786.5 million from American Recovery and Reinvestment act funds will be used to accelerate both advanced biofuel R&D and completion of commercial scale biorefinery demonstration projects.

The term “drop in” refers to fuels in the bio gasoline, bio diesel and bio Jet-A group that can be used without modifications to current technology engines and existing fuel distribution infrastructure….

While reaction to this can be expected from all manner of interests, some of the stated objectives of the new program along with some of the consequences and questions that have evolved in recent months follow. .;: . Objectives of the Administration are large reductions in petroleum imports for both economic and carbon emissions reasons. The US Department of Energy (DOE) was formed 32 years ago specifically for the purpose of reducing U.S. dependence on foreign oil; an objective not yet realized. . . .
Fuels such as E85 (85% ethanol) that are effectively not “drop-in” due to the need for engine modifications and fuel distribution system changes, may now receive less attention. . Possibly the single biggest issue is the question of which bio material can be made in the huge quantities needed as substitutes for petroleum. While the best single answer to this may be algae, even at the favorable yield of 5,000 gal/acre/year, millions of acres of land for algae cultivation would be needed to achieve significant replacement of U.S. petroleum use.

Many bio fuel engineers indicate considerable research remains to be completed on economic ways to extract oil from algae although two of the smaller bio development firms, Auora and OriginOil claim they have already perfected very low cost ways to do this.

The Virent process that employs a Shell catalyst to convert cellulosic raw material into bio gasoline with petroleum equal properties will surely also be an important contender.

Unclear is whether an industry of firms will emerge that produce algae crude oil and cellulosic raw material but do not refine the raw material into finished fuels.

A hotly contested area of technology will be whether algae is best grown in open ponds or in some form of closed bioreactors such as plastic tubes or bags exposed to the sun. Some propose cultivation in closed metal tanks with sugars added as replacement for the effect of sun light. .

An interesting aspect of algae cultivation is the need for CO2 input to stimulate growth.
This raises the question of the degree to which large producers of unwanted CO2 such as coal fired utilities may team with algae growers.

With $786 million in new government development money available, bio fuel firms such as Solazyme, Shell, BP, Saphire, Coskata, Algenol and Virent , to name a few, will have opportunities to demonstrate their technologies on a comparative basis. Public knowledge of bio fuels should improve greatly as a result. .
A key question will be the degree to which oil companies produce or buy bio crude oil and whether foreign bio oil producers will emerge as exporters to the U.S. This in turn relates to the question of whether U.S. domestic bio fuel investments will be protected. .. .
Equally unclear is how algae oil produced in favorable locations with high sunlight conditions will be transported to market and whether low cost oil production will develop off-shore