Biofuels study sees 90 billion gallons by 2030

SIOUX FALLS, S.D. — The U.S. could produce enough ethanol to displace nearly a third of all gasoline use by 2030, but gas would have to cost more than it does today for the plan to work, according to a study released Tuesday by Sandia National Laboratories and General Motors Corp.

The researchers found that annual ethanol production from plant waste and energy crops could reach 90 billion gallons by that date, with 75 billion gallons coming from cellulosic feedstocks such as switchgrass, corn stover, wheat straw and woody crops.

Cole Gustafson, a biofuels economist at North Dakota State University in Fargo, N.D., said the 90 billion figure is the most aggressive he's heard to date, far surpassing a federal mandate calling for 36 billion gallons of renewable fuel to be blended into gasoline by 2022.

"I really question if we can even make that," Gustafson said. "This technology has been very slow to evolve."

The government would need to protect the industry from low-priced competitors.

"What we end up finding is that we're going to have some significant challenges with regard to competing with very low priced petroleum products," said Art Pontau, Sandia's deputy director of combustion and industrial technologies.

The "seed to station" floor cost of ethanol without taxes is $1.50 per gallon, and gasoline will undercut it if it's priced below $2.25 per gallon without taxes, or $2.65 at the pump, the study found.

The average national retail cost for a gallon of gasoline on Tuesday was about $1.93. One year ago at this time a gallon cost about $2.95.

The cost of E85 ethanol was $1.655 per gallon Tuesday.

The study took a value-chain approach to cellulosic ethanol, accounting for the variety of feedstocks and processes to convert crops to fuel, as well as storage, transport and distribution issues, Pontau said.

"We didn't pick the most optimistic assumptions or the most pessimistic," Pontau said. "We tried to pick something that we thought would be manageable in this sort of environment and time scale."

Pontau said the study is designed as an evolving model that the industry can use to identify places where investment in research and development makes sense.

It found that cellulosic ethanol could compete with $90-per-barrel oil, assuming 91 gallons of ethanol could be produced from a dry ton of biomass, building a cellulosic ethanol plant would cost $3.60 per gallon of capacity and plants would pay an average of $40 per dry ton of feedstock.