The Search for Alternative Fuels

Jeffrey Young
May 16, 2006

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The recent surge in oil prices has bolstered efforts to develop fuels that are not made from petroleum. A number of alternatives are being explored, but none are ready to make a major immediate impact.

As oil becomes increasingly expensive, alternative fuels become more competitively priced and sought after as an energy substitute. It happened in the 1970s in the wake of two major oil shocks, and it is happening today as global demand nearly outpaces available supplies.

No Silver Bullet

Today, the list of possible alternative fuels has greatly expanded beyond crop-based ethanol, which first rose to prominence in the 1970s. Last year, the United States produced nearly 9.9 billion liters of ethanol and plant construction is underway to increase yearly production by an additional 1.7 billion liters.

There are other oil substitutes. Methanol is alcohol made from non-food sources such as agricultural waste and wood. Soybeans or used cooking oil can be turned into diesel fuel. And creating liquid fuels from coal is also being re-explored.

But Richard Kolodziej at the Washington-based Natural Gas Vehicle Coalition says none of these fuel substitutes are ready to take over the critical role oil-based fuel has played for more than a century.

"There is no silver bullet answer and there won't be [one]. People talk about hydrogen, but we don't know when and if that's ever going to be commercial [i.e., available in the marketplace]. In the meantime, we have to use what we have. We have ethanol. We have bio-diesel. We have natural gas. We have propane. We need to be pursuing all those," says Kolodziej.

Each alternative fuel has its supporters and detractors. For example, George Olah at the University of Southern California, who won the 1994 Nobel Prize in chemistry, says he believes that one non-oil fuel has clear advantages over others.

"I am very strongly promoting not ethyl alcohol [ethanol], but its simpler cousin, called methyl alcohol or methanol. It can be made out of different sources. One is coal. It can be made out of natural gas. We can make it from carbon dioxide," says Olah.

The Nobel laureate says that unlike fossil fuels, which nature deposited in certain places and not others, carbon dioxide is everywhere on earth and can't be controlled by a cartel.

Ethanol and Biomass

But George Olah's enthusiasm for methanol isn't shared by Richard Kolodziej at the Natural Gas Vehicle Coalition.

"In the United States, we tried methanol," says Olah. "It was going to be the answer about 20 years ago. California was very aggressive in putting in methanol [fueling] stations. I believe there are no methanol stations in California anymore. And no manufacturer is making methanol [fueled] vehicles, I believe, anywhere in the world."

Kolodziej says methanol was found to be highly corrosive to engines and fuel systems, and says that has to be corrected before methanol can be a viable oil alternative.

Methanol's "cousin," ethanol, is highly popular in agricultural areas such as the U.S. midwest because it increases demand for crops that are the mainstay of farm incomes. But ethanol's detractors say making it consumes almost as much energy as what ethanol can provide as a fuel. Detractors also point to the vast area needed to grow the corn or grain, and say these crops have more value as food.

Because of the drawbacks in producing crop-based ethanol, some researchers are looking into making fuel out of agricultural waste and other non-food materials - - often called "biomass." John Felmy at the American Petroleum Institute in Washington says the process is promising but not yet fully developed.

"Celluostic ethanol, in a sense, presents kind of a holy grail for the [energy] industry. What you do is take biomass, woody crops, waste [and] things like that, and apply a series of processes that converts it into sugars, and, ultimately, an alcohol that can be used for fuel," says Felmy.

Biomass proponent John Deutch, a chemist at the Massachusetts Institute of Technology, says making ethanol from biomass takes much less energy than it does using food crops. He says that biomass production could create the equivalent of 160-to-320 million liters of oil per day in the next few decades. The United States, however, consumes about 3.2 billion liters of oil a day, so Deutch says biomass fuels won't replace oil in the near future.

Liquidized Coal

Making liquid fuels from coal is another alternative to oil. Germany did it during World War Two after it was cut off from Romanian and other oil fields. South Africa has pursued coal conversion since the 1980s. The process could be especially attractive to the United States because it has vast reserves of coal, including high-sulfur coal that is too environmentally "dirty" to burn in electric power plants.

While the conversion process is already known, Semih Eser at Pennsylvania State University's Energy Institute says don't look for coal fuels at filling stations anytime soon.

"I would say [it will take] 10 to 15 years, really, to get the plants in place and running. Based on the current technology and the cost estimates, I would think that a break-even point for coal conversion to liquid fuels would be viable at an oil price at about 85 dollars a barrel," says Eser.

And price equivalency, according to industry analysts, is how the alternative fuels industry is going to make an impact. When oil costs soared in the 1970s, serious efforts to create alternative fuels got underway. Then in the 1980s, a sharp drop in oil prices curbed those efforts. Conventional gasoline and diesel fuels were too cheap compared to alternatives.

But once again, crude oil is approaching record highs and many analysts say that continued strong demand may cause prices to fall only marginally, if at all. Because of that, they say, the effort to develop and sustain an alternative fuels industry may now be economically viable.