This month I met with the Lt. Governor of a state with a substantive forest industry.  The discussion centered on ways to support forest owners, wood markets and job creating projects.  Then the conversation turned to the potential of wood-based liquid biofuels – such as cellulosic ethanol – and the Lt. Governor turned to me and asked, “Mr. Researcher, what would YOU do?”

After accepting the fact that we weren’t actually on a first name basis, I replied, “I would make it easy for users of wood to operate in your state without betting on any specific technology.”

The Lt. Governor liked the first half of the answer, but not the second half.  The fear of “missing out” on a “wood biofuels boon” has distorted policymaker views of wood market realities.  The sexy, explosive potential of reorienting US transportation fuels to rely on renewable “just-add-sun-and-water” raw materials has made fact-based discussions about the sector akin to strolling through a carnival fun house.

I remember, as a twelve-year old, looking from mirror to mirror at a county fair.  Tall and thin in this mirror; short and stumpy in that mirror.  We use mirrors both to show us what we want to see, and what we don’t.  And when we see what we don’t want, we either change our view, or change mirrors.

When it comes to liquid biofuels and cellulosic ethanol, multiple mirrors continue to reflect a consistent set of facts.  Our team has three years of research, a comprehensive US liquid biofuels study and ongoing market evidence that cellulosic ethanol faces the thorniest of practical challenges in an increasingly difficult context.  So, what are the facts?

• No cellulosic ethanol facilities operate at commercial scale.  Wood Bioenergy US tracks every announced and operating wood-using bioenergy project in the continental United States.  As of December 7, 2011, this represented 456 projects.  Of these, 39 are liquid fuel projects.  How many are operating at commercial scale?  Zero.
• Cellulosic ethanol faces unsolved technology hurdles.  The lack of wood biofuels projects is consistent with the results of our study “Transportation Fuels from Wood: Investment and Market Implications of Current Projects and Technologies.”  For 36 cellulosic biofuel projects, we estimated an 11 year lag between when the projects expect to operate and when our technology analysis indicates the technology could overcome hurdles and be viable at commercial scale.
• Government subsidies and EPA mandates failed.  The Wall Street Journal (“The Cellulosic Ethanol Debacle,” 12/14/11) recently detailed the failure of subsidies and mandates to spur progress and, by implication, facilitate deceit and unrealistic projections.

Finally, the context for these projects has become increasing stark.  In a US market environment where gasoline use has been declining this year and where supplies of natural gas have been increasing, the political urgency and investment potential of these projects dissipate.