The title sounds like an oxymoron. But here it is in a CNN Story (take a look).
According to this article, the oil majors are making two points:
Dave O’Reilly, chief executive of No. 2 U.S. oil firm Chevron, said that if no advances are made in cellulosic ethanol, the United States will not be able to get beyond 15 billion gallons of ethanol per year.The U.S. uses around 140 billion gallons of gasoline per year now. O’Reilly said a practical plan would be to require ethanol in 10 percent of U.S. gasoline supplies.
“To get beyond that requires technology that has not yet been invented,” he said.
It’s not clear what this technology that he’s referring to, but I’m presuming it’s the capability of enzymes for breaking down cellulose into fermentable sugars. This is true, but there’s plenty of research going on in this field (another note on that later). There are also some drawbacks with the distribution of ethanol (it’s corrosive to the pipelines so it can’t be piped). But I think that we have proven that E85 can be produced and distributed to some scale. Furthermore, there aren’t that many E85 flexfuel cars out there, but they’re growing in popularity (here are GM’s FlexFuel models). It seems plausible to think that we can put 10% ethanol into the general fuel supply (or some lower %) and scale E85 distribution with the growth in the number of FlexFuel vehicles on the road (which as you’ll note, neither Bush nor the DOE have control over). If fuel demand remains constant over the next ten years (God willing), that might have a shot at working.
Another point:
“(Biofuels production) is going to be limited in terms of its scale, absent some significant technological breakthroughs,” [ExxonMobil CEO] Tillerson said.
The same can be said about petroleum. So maybe he should get to work on his own technological breakthroughs (CO2 sequestration, CO2 injection for drilling, super ultra-low sulfur diesel – that should keep you busy). Let the farmers do their jobs.
Another point:
“Cellulosic ethanol is all about cooking up the right enzymes. When you get into that area it is basically a Holy Grail-area rather than a known science area,” said Matt Simmons of Houston-based energy investment bankers Simmons & Co.
The same was true with the petroleum industry was started during the early 1900s. CatCrackers are only economically viable today because of the development of advanced catalysts. A more efficient catalyst for cat-crackers was the biggest prize during the early part of the 20th century. By mid-century, alumina based catalysts were used for fluidic cracking. Today, advanced zeolite-based catalysts are used to more efficiently separate liquid fuels (interesting note: my professor at Northwestern had his focus on zeolite catalysis). These materials were developed through decades of government and industry-funded research programs which Bush’s bill calls for (we’ll see if the money makes it to the scientists). However, Mr. Simmons seems to indicate that the search for advanced enzymes for cellulosic processing is some quixotic crusade and not a topic for scientific research. That seems a very narrow-minded scope, particularly for an investor (and in fact Genencor here in Palo Alto already produces advanced enzymes for agricultural product processing including fuel ethanol). The moral of the story being that the requirements of technology-based hurdles is not a need for skepticism, but one for focused investment purposes.
