Leading producers of ethanol and biodiesel Friday says their industries face serious barriers to meeting the 2017 growth targets outlined this week by President George W. Bush to reduce dependency on gasoline.
"The current solutions won't get you there," Jeff Trucksess, executive vice president of Green Earth Fuels LLC, a biodiesel developer, told an industry gathering here Friday morning.
Following up on prior pledges on energy policy, Bush Monday outlined additional measures to boost alternative energy development, limit gasoline consumption and comply with a recent Supreme Court ruling on global warming. Bush's plan included a goal to produce 35 billion gallons of renewable and alternative fuel by 2017, many times above current levels.
A Bush administration official Friday defended the viability of the president's goals, but the discussion at the Houston event underscores the magnitude of the challenge facing the U.S. as it struggles to feed its growing energy needs in an increasingly carbon-limited world.
"I've yet to meet anyone who thinks more than half could be from ethanol and biodiesel," Pearce Hammond, an analyst at Simmons & Co. International, says of the targets. He says total production of ethanol and biodiesel could reach 17.5 million gallons by 2017. Hammond says there could be other solutions to the conundrum, such as coal-to-liquids technology or the use of natural gas as a transportation fuel.
But Hammond, who emceed some of the sessions Friday, also warned that U.S. gasoline demand is forecast to grow by some 35 million gallons a day over the next decade.
"It just touches on how big the challenge is to penetrate and change the fueling habits," he says.
Friday's event was heavily attended by finance and energy professionals, underscoring the growing interest in alternative energy in Houston. The gathering was sponsored by the law firm Haynes & Boone.
Speaking with reporters after a luncheon address, Paul Dickerson, an Energy Department official, says the administration's goal is realistic. He pointed to other fuels under development, as well as to leading-edge technologies being funded chiefly by private-venture capital.
"We're more bullish on the output than some of the folks here," says Dickerson, the chief operating officer for the department's Office of Energy Efficiency and Renewable Energy.
"Looking at our new reality, what's really needed is to get our new technology off the shelf and to the businesses," he says. "The market can handle a lot of what we're trying to do."
Bill Spence, president of Standard Renewable Energy, which owns a stake in a Galveston biodiesel facility, predicted U.S. biodiesel production would climb from today's level of under 1 billion gallons a year to 2-4 billion.
"Our basic problem is there isn't enough feedstock," says Spence, whose plant runs on soybean oil. Scientists are looking at genetically modified crops as a possible feedstock, but it will take a "game-changing" technological breakthrough to significantly boost output, he added.
Pamela Beall, a vice president at Marathon Petroleum Corp., pointed to industry statistics that show ethanol production rising from 5 billion gallons a day in 2006 to 8 billion in 2008 and potentially up to 15 billion by 2017.
Beall says that the industry's ability to grow beyond 15 billion gallons would be constrained by feedstock limitations and infrastructure concerns. Producing 15 billion gallons a year can be reached "easily" - even before the deadline, she says. But going beyond that requires identifying feed stocks other than corn, testing conventional automobile engines to identify the maximum amount of ethanol that can be successfully blended with gasoline and building infrastructure so that the southeastern U.S. can access the fuel.
Source: Dow Jones Newswires