In April 2006 one of the Northwest’s most environmentally friendly cities, Eugene, played host to the grand opening of the Northwest’s first biofuel station, SeQuential.
It appeared the fuel had staked its claim as a powerful opponent against emissions within the Green Revolution.
But according to a recent study by three Oregon State University economists, consumers might want to scale back their expectations regarding biofuel.
Biofuel is the result of converting biomass, which consists of recently living organisms, into a renewable fuel for transportation. Besides reducing greenhouse gas emissions, biofuel’s main selling point is its role as a renewable alternative to crude oil.
Oregon State’s research team sought to discover how cost-effective biofuel’s environmental benefits really are. Comparing corn ethanol, canola biodiesel and wood-based ethanol, William Jaeger, Robin Cross, and Thorsten Egelkraut found that biofuels will absolutely reduce greenhouse gas emissions, but at a much higher cost and with a much smaller output than traditional fuel saving options, such as a gas tax or raising fuel economy standards.
The report states, “Indeed, for all three of the biofuels evaluated, energy independence is achieved at costs that are 6 to 28 times higher than for other policy options such as raising the gas tax or tightening corporate average fuel economy standards.”
“Even with all three biofuels produced in Oregon at the maximum levels indicated, the total energy contribution would be only about two-thirds of 1 percent of Oregon’s annual energy use.”
The researchers cite “limits on local production and on markets for coproducts (animal feed)” as the main reasons for biofuel’s shortcomings. The group did conclude, however, that canola biodiesel and corn ethanol are commercially viable options.
This announcement comes three weeks after Oregon Gov. Ted Kulongoski signed the Biofuels Bill into law at the Eugene SeQuential station on McVay Highway. The bill creates tax credits for biofuel users and growers and requires that 10 percent ethanol be added to all on-road gasoline and 2 percent biodiesel to all on-road diesel, among other features.
According to the study’s press release, Jaeger, an associate professor within Oregon State’s Department of Agricultural and Resource Economics, summed up the findings by saying, “Especially in terms of energy independence, these biofuels represent a costly and inefficient method compared to other approaches the government might take to achieve the same goal.”
The news, however, hasn’t turned many heads within Eugene or the greater biofuel community.
Eugene Mayor Kitty Piercy said, “We’ve been hearing for a long time that corn in particular, what it takes to grow and harvest and use it as a fuel, is a pretty expensive thing. I think that everybody has recognized that that particular source [corn-based ethanol] will not be viable in the long run.”
Piercy has endorsed biofuels since her term began in January 2005 and has no plans to change. Currently, biofuel powers every City of Eugene-owned fleet vehicle, many of which are hybrids. The city has a gas tax, meant to spur consumers onto bike paths or other alternate modes of transportation and a Web site meant to raise awareness about residents’ carbon footprints at sustaineugene.com. And like many biofuel supporters, she realizes that they alone are not the answer for a better environment.
“Everybody recognizes that conservation is the foremost investing we can do and, secondly, one of the most important things Eugene has been trying to do is a gas tax to charge people for their usage and perhaps have an influence on how much gas they use,” said Piercy. But, she also disagreed with one of the study’s recommendations, saying, “I don’t believe that carbon taxes take the place of alternative fuel.”
This packaged idea of alternatives – taxes on gas and carbon usage, increased efforts to raise fuel economy standards and the use of biodiesel – is heavily supported within the biofuel community, as well. Companies that, just like Piercy, have never doubted that biofuels are an expensive method for curbing emissions.
SeQuential co-founder and Director of Policy and Business Development Tomas Endicott, who holds a master’s from the University, was not taken aback by the study’s findings, either.
“Biofuels aren’t going to be the silver bullet, but they’re helping people become aware that there’s not just gas and diesel fuels. The best alternative would be to have a carbon tax, a gas tax, higher fuel efficiency standards and using biodiesel.”
“The OSU study seemed to be taking to tack that biofuels won’t change the problem in and of itself. I don’t think anybody thought that anyway.”
Currently, SeQuential operates a joint venture facility in Salem that produces 1 million gallons of biodiesel each year, using 90 percent cooking oil, harvested from Oregon restaurants and food processors and 10 percent Oregon-grown canola oil. According to the Oregon Department of Agriculture, approximately 1.3 million gallons of biodiesel are produced each year in Oregon.
To Endicott, the study’s finding that some forms of biofuel aren’t viable economic options isn’t the issue, saying that the massive increase in canola production within the state is.
With the guarantee of a rapidly growing biofuel market in Oregon as a result of the Biofuel Bill’s mandate to incorporate biofuel into all fuel statewide, the market is expected to generate new revenue streams by an estimated $400 million.
With the addition of two currently under-construction ethanol plants in Oregon – one in Clatskanie that will produce 110 million gallons each year and another in Boardman that will produce 40 million gallons – the state’s production of ethanol will spike from zero to 150 million gallons almost overnight. According to the Department of Agriculture, both plants are expected to be operational within eight months.
The plants’ construction is another vital step toward energy independence in Oregon, Endicott believes.
“Six million gallons of gasoline are consumed in Oregon every day at a cost of $12 million and most of that money is leaving Oregon’s economy because there are no oil wells in Oregon,” said Endicott. “You can create a renewable fuel standard and all the biofuel could come from Iowa, but that doesn’t help Oregon. So it was important to give Oregon growers a leg up against the Midwest biofuel industry that is already well established.”
In the meantime, there is still zero ethanol produced within the state, and biofuels are still the more expensive option to reduce greenhouse gases, just as the study found. But that hasn’t stopped supporters from forecasting a future where biofuels have far-ranging economic and environmental effects. Until then, Endicott believes, it all boils down to personal choice.
“They (biofuels) are simply something we can do today to substitute for gas or diesel. It’s an opportunity to do something right now … I think that just opening people’s eyes to the awareness of the alternatives really does make a difference.”