Moneymakers
Five questions with Tammy Klein
Corn-based ethanol will have a vital role, but the cellulosic variety's future is unclear
By BRETT CLANTON
Copyright 2007 Houston Chronicle
Ethanol and biodiesel plants are sprouting up from Texas to Minnesota. Congress is mulling legislation that could spur more.
Tammy Klein, executive director of Global Biofuels & Americas for Houston-based Hart Energy Consulting, is in the middle of it all. From an office in North Dakota, she keeps tabs on developments in the biofuels market, energy and trade policies in Washington and research that could shape the future of alternative fuels. Armed with that data, she advises a client list that includes biofuel producers, oil companies and firms that have no ties to the industry but want to know where it's all heading. In Houston recently, she spoke with Chronicle reporter Brett Clanton.
Q: The U.S. consumes 140 billion gallons of gasoline a year, and that's growing. In your view, how much of that can realistically be reduced by substituting biofuels like ethanol?
A: We are growing capacity at a phenomenal rate. We're looking at 10 billion gallons of production capacity coming online by the end of this year. We're looking at 12 billion gallons by around 2009.
If the question is what can corn do reasonably without affecting corn prices for feed and food prices, I think the number really is about 15 to 20 billion gallons on the high scenario. That's what we can get from corn by probably the end of the decade or 2012 time frame. There have been enormous strides made in seed production, getting higher yields, drought resistant. In the 2020 time frame, you're seeing estimates of 60 to 90 billion gallons. I think that's really high. I think without disrupting prices in the food markets, 15 billion gallons is reasonable.
Q: What about when you factor in ethanol made from nonfood crops like switchgrass?
A: We've got a little ways to go on cellulosic ethanol. I think the government until relatively recently has been a little bit slow to do the necessary R&D funding to get into some of these issues. So in terms of a time frame, the government is saying five years. But to get really a solid contribution to the gasoline supply, it's going to be a long, long time. Five, 10, 15 years or longer.
Q: Even if we get to cellulosic ethanol, do you think there will still be a place for corn-based ethanol?
A: Yes, I do. If you look at the history of ethanol production and use in this country, corn has played a very vital and dominant role, and I think corn will continue to play a vital and dominant role. The corn producers and the ethanol producers fought for 30 years-plus to get an ethanol mandate in place. They didn't fight for 30 years to turn it over to switchgrass.
Q: Is it getting harder to find financing for biofuels plants?
A: The plants that are under construction are moving forward. The plants that are proposed and coming into the construction phase, those have slowed down a little bit. Last year, there were a number of factors that converged that facilitated this initial boom in construction and production and use of ethanol. Now, we're at a stage where we're waiting for Congress to come up with new mandates. The proposals have ranged anywhere from 35 billion to 60 billion gallons, and will probably be closer to 35 billion gallons in the 2015 range. But you're seeing a bit of a slowdown.
Q: Do you think oil companies would do better to invest in their own biofuel plants or just fund research?
A: Why shouldn't they do both? The refining industry has been very innovative in the past few years in terms of coming up with solutions to deal with big issues in our country, everything from low-sulfur gasoline to ultralow sulfur diesel. A lot of these companies have a lot of experience blending biofuels, using biofuels. So it may make sense for particular companies already in the arena to get into production of biofuels. Why shouldn't they? If we're truly dedicated to improving our energy independence, then we need new solutions and ideas from every sector.
brett.clanton@chron.com
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