Can biofuels be the solution?

One strategy to decrease our incredible dependence on oil for transportation has been to grow billions of gallons of biofuel.  

Nearly every gallon of gasoline purchased in the United States is blended with a small percentage of corn-ethanol, and the world biofuels market is exploding. 

So shouldn't all those who want to curb the use of fossil fuels be cheering this on? 

Well, that all depends on an extremely complicated set of factors. 

There are many reports on the productions costs, conversion techniques, tax credits and subsidies involved, but I want to focus instead on a simpler issue.

With a quick look at the numbers, it becomes clear that we cannot meet the projected demand for transportation fuels unless we address efficiency first.

Today's Biofuel Industry

Five regions of the world consume 60 percent of the liquid transportation fuel supply -- the United States, the European Union, Brazil, India and China.  This includes, gasoline, diesel, and biofuels. 

Corn supplies the United States with a large majority of its ethanol, Brazil uses sugarcane, and the EU grows rapeseed and soybeans for biodiesel. India and China are still catching up, but both are expected to increase demand for transportation fuel more than three times what they currently use.

Each feedstock has distinct advantages and disadvantages, especially when considering its environmental effects. 

You may have heard some of the debate over corn-ethanol in this country, based mostly around the fact that it does not have a very high energy return -- it takes a lot of fossil fuel inputs to grow, harvest, and convert corn to ethanol. 

Many see Brazil as a good example of a successful biofuels industry, but they, too, have had their share of struggles. 

The industry is improving by producing biofuels at lower costs and higher quantities. We are even seeing breakthroughs on technologies like cellulosic ethanol, which can create fuel from agricultural waste. However, when we take a close look at some figures it is easy to see the problems that lie ahead.

Meeting Our Fuel Demand

In 2005, the world consumed 488 billion gallons of transportation fuel -- 166 billion gallons of that was used by the United States. 

The projected worldwide demand, according to the Energy Information Administration, International Energy Agency, and World Resources Institute, is thought to reach 628 billion gallons per year by 2020 and 744 billion gallons per year by 2030. 

These are big numbers that are a little difficult to comprehend, so let's try to put them into perspective. 

In 2007, the United States used 20 percent of our harvestable land to produce 6 billions gallons of ethanol. By 2030, the projected demand for U.S. transportation fuels will be almost 240 billion gallons per year. 

Consider the difference and you begin to realize our current ethanol production is a drop in the bucket. So how much can the biofuels industry realistically provide the transportation industry?

The answer rests with not how much, but rather how wisely the two industries can come together. 

To even consider replacing fossil fuels with biofuels, we FIRST need to drastically increase efficiency -- how wisely can we use our liquid transportation fuels? Can we reach 100 miles per gallon by 2010 with our vehicles? Can plug-in hybrids get us to 200 miles per gallon? 

If we don't start with these questions and innovate an entirely different transportation system for the fuel-hungry vehicles and aircraft we have now, we will quickly find that not only can't we drill our way out of this energy problem, we can't farm our way out of it either.

Jeffrey John is an analyst with Rocky Mountain Institute.