GM and Ford Stand by Biofuels Despite Ongoing Criticism of their Environmental Credentials—Interview

GM Wholeheartedly Endorses Ethanol

"Why are we so excited about biofuel?" General Motors (GM) Vice President of R&D and Planning Larry Burns rhetorically asks in an interview with Global Insight at the opening of the Geneva Motor Show in Switzerland last week. "Because a lot of it can be made," he answers. Burns goes on to clarify that he's not talking about food sources, but about "agricultural waste, municipal waste, grasses that are specifically grown."

"GM remains very committed to biofuels," he enthuses. "We have over 3.5 million vehicles on the road today that can use blends of ethanol."

Earlier this year, the Detroit giant made the unusual step of investing in a U.S.-based biofuel company (see United States: 14 January 2008: NAIAS 2008: GM Announces Major Investment in Ethanol Venture). "We think it's important to encourage the development of the biofuel industry which is why we invested in Coskata," Rick Wagoner, Chairman and Chief Executive Officer (CEO) of GM explained to Global Insight last week. Coskata is an Illinois-based biotech start-up which has developed a process that uses bioreactors to create ethanol out of nearly any form of waste product, including municipal waste, agricultural by-products, and even used tyres, for less than US$1.00 per gallon. Independent analysis of the process by the Argonne National Laboratory in the United States has reported that Coskata's method generates up to 7.7 times the amount of energy for every unit produced, and reduces CO2 emissions by 84% on a well-to-wheel basis. According to Burns, this process also uses less than a gallon of water to get a gallon of ethanol.

"Pretty exciting stuff," says Burns. "Studies we have done in the US show that almost 40% of energy required for automobiles by 2030 could be supplied by biofuels. 35% of that 40% would be from non-food sources of ethanol."

Wagoner expands: "It wasn't a lot of money we invested in Coskata but we wanted to continue to support the development of the biofuel industry. We don't have any intention of becoming a fuel developer over time, that's not what GM is in business for." He went on to admit that "we are a little anxious about how the economics of this are going to work," but predicted a time when oil companies would eventually become more engaged in biofuel production if the interest in ethanol continues and the applications for the use of biofuel continue to expand.

Ford Remains Committed but with Less Conviction...

Dr Wolfgang Schneider, Ford of Europe's Vice President of Environmental Affairs says that his company also remains committed to biofuels, although he is notably more cautious on the subject than his peers from GM.

"We at Ford do believe that biofuels are part of a longer-term solution but you need to make biofuels politically acceptable and acceptable in society. Right now, there is a lot of uncertainty around them," he said. "I should say that we are very firmly in favour of certifying biofuels from a sustainability point of view," Schneider was keen to stress. "Absolutely, there is no way round it. We are very concerned about the current discussion because in a way it discredits biofuels. The sooner the certification comes, the better. We don't want to sacrifice rainforest or anything for biofuels, that is totally unacceptable."

Schneider also talked of his wish to move on to second-generation biofuels as quickly as possible. "We really need to make a breakthrough on biofuels, we need to go to the second generation. With first-generation biofuels some are better than others, some don't bring any CO2 benefits at all," he said.

On the subject of why Ford is still promoting them, given all these caveats and conditions, Dr. Schneider is honest. "When you blend biofuels with fossil fuels, you don't need a new refueling infrastructure and you don't need new technology. It's cheap and it has a mass effect. Our philosophy is that if you really want to change something environmentally, you need to have a mass phenomenon and you need to create volume." For this reason, he says, one of Ford's priorities is to expand its range of flex-fuel vehicles in Europe, so that for every Ford model you can buy in Europe, you will also be able to buy a bioethanol E85-compatible variant of it. This will include the new Fiesta which was world premiered at the Geneva show last week.

...As the Environmental Impacts of Ethanol are Debated

The information and figures quoted by Coskata and GM are impressive but differ wildly from what some other recent studies into the environmental impacts of bioethanol have thrown up. The ethanol produced by Coskata is what is known as second-generation ethanol, which is a more sophisticated way of producing the renewable fuel than the first-generation practices currently employed. At the moment, almost all ethanol produced in the world is made from agricultural crops which are grown specifically for the purpose of making ethanol, leading to concerns about just how much land could and should be turned over for fuel crops. Second-generation fuel would use waste products from materials or different forms of "biomass" that are used for other purposes, thereby eliminating many of the land-use concerns. Second-generation processes also promise to be considerably more energy-efficient than many of the first-generation techniques currently in use, and critically, use substantially less water.

The environmental impacts of the ethanol that is already produced in the world today vary substantially, depending primarily on what raw material is used to create the fuel and how modern the production processes are. The United States is these days the world's biggest producer of ethanol, making the bulk of it from corn. Corn is generally considered one of the most inefficient feedstocks for ethanol, because the process of extracting the energy from the crop itself requires so much energy, in some cases leading to the absurd situation whereby more energy is used up during the production of ethanol than actually created, resulting in a negative net well-to-wheel greenhouse gas impact. Another problem with corn-based ethanol is the vast amounts of water needed during the production process. Many of the corn-based ethanol factories in the United States are old and use outdated processes instead of new state-of-the-art technology, which further diminishes their well-to-wheel greenhouse gas reductions.

In Brazil, on the other hand, which is the global leader in clean and efficient bioethanol production, having been producing it in vast amounts since the 1970s, the process of making it from sugar cane is extremely efficient, often leading to well-to-wheel greenhouse gas savings of more than 100%. It is far easier to extract energy from sugar cane than from corn for example, while many Brazilian factories take advantage of sophisticated combined heat and power (CHP) processes during the manufacture of the fuel, which not only generate enough energy to power the ethanol factory itself but also excess energy that can be exported back to the national grid for wider communities to use.

Other brand new ethanol plants are now springing up around the world which boast impressive greenhouse gas savings, for example the United Kingdom's first bioethanol plant which was opened towards the end of 2007 (see United Kingdom: 23 November 2007: U.K. Opens First Bioethanol Factory as Government Sends Out Mixed Biofuel Message).

Outlook and Implications

The debate surrounding the environmental impacts of biofuels continues to rage on, and shows no sign of quietening down. It is such a politically charged subject involving so many parties with vested interests that one has to be sceptical of the results of the many "independent" studies which are released on a monthly basis and whose conclusions invariably show huge discrepancies compared with previous reports into the same subject. On the one hand, one must consider the attractive financial subsidies on offer to the farming and agricultural communities, which could cause some supporters to put an overly positive spin on the potential of biofuels. On the other hand, many suspect that the oil and food industries have for some time been engaging in underhand lobbying practices which have successfully managed to smear biofuels in the media, almost causing them to crash before their maiden flight.

The fact that the term "biofuel" is in itself such a vague and ambiguous expression does not help matters. There are huge differences between biodiesel, bioethanol and biogas, while the existence of high and low blends of each further complicates matters. There is still a huge amount of confusion, among both the general public and politicians, and also within the industry about what exactly constitutes a biofuel, which biofuels are "bad" and which are "good".

GM and Ford are therefore in a difficult position. Under immense amounts of pressure to reduce the environmental impact of the vehicles they sell, the widespread use of high-blend biofuels such as bioethanol E85 could allow them to do so in a manner which would not send them to the bankruptcy courts. If the ethanol is produced in an efficient and sustainable manner, GM and Ford's flex-fuel cars have the power to contribute significantly to the reduction of greenhouse gases from transport. On the other hand, they are coming under criticism for taking the easy way out, and promoting an alternative to gasoline and diesel which could be even more damaging to the environment than the burning of the fossil fuels they are supposed to be replacing. Strategies such as GM's promise to make its entire HUMMER product offering E85-compatible do not help its cause in this respect giving the critics the ammunition they need to insist that these companies have little interest in either changing their own behaviour or that of their customers.

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