Lester Brown, president of the Earth Policy Institute, said Thursday that cellulosic ethanol isn't the answer to the United States' dependence on foreign oil, as some advocates have claimed.
"The problem is the cost of cellulosic ethanol with existing technologies is roughly double that of corn-based ethanol," he said during a conference call.
While today's ethanol is mostly made from starch-based materials, such as corn or sugar cane, it faces opposition from critics, such as Brown, who argue that using farmland for fuel crops will jeopardize the food supply.
And according to Brown, the "food vs. fuel" debate is about to get ugly as the United States helps generate global food insecurity on a scale never seen before.
"The world is facing the most severe food-price inflation in history as grain and soybean prices climb to all-time highs," he said in a statement, pointing to record-breaking wheat prices and corn prices that are nearing historic highs. "All these prices are double those of a year or two ago."
Also, the growth of starched-based ethanol is limited. The U.S. Energy Information Administration in 2006 estimated that starch-based ethanol production will top out at 12 billion gallons a year -- at least using today's technologies - unless the industry taps into food crops.
That's far less than the 36 billion gallons per year that the country is required to use by 2022 under the new energy bill President Bush signed in December, and the bill mandates that 21 billion gallons of the total must come from nonfood sources.
Advocates contend that cellulosic ethanol -- ethanol from nonfood parts of crops, like wood chips, switchgrass and corn cobs -- could one day allow ethanol to meet a significant portion of the world's fuel needs and also could solve the "food vs. fuel" issue.
Companies like Poet and Abengoa Bioenergy have been in a race to develop the next-generation fuel, which is yet to be produced on a mass scale.
But cellulosic plants are estimated to cost two to three times that of starch-based ethanol plants, which cost roughly $150 million for a 100-million-gallon-per-year facility, according to Jim McMillan, a manager at the National Renewable Energy Laboratory's National Bioenergy Center (see With GM Deal in Hand, Coskata Promises $1 Ethanol).
And even if the costs came down, Brown thinks growers of cellulosic-ethanol feedstocks, such as switchgrass, will still want to use the best farmland in an effort to become more profitable.
One compromise solution Brown suggested is to have a cutoff price, which would restrict ethanol production if the price of corn reaches a certain level.
Aside from Brown, there is some evidence that cellulosic ethanol could face feedstock challenges ahead.
Gathering cellulosic feedstocks already has proven more difficult and expensive than some companies expected (see Q&A: Harvesting Cellulosic Ethanol). And companies like Ceres hope to grow high-yielding cellulosic crops specifically for ethanol (see In Brief: Growing Biofuel Crops).
As ethanol companies have seen their margins squeezed as corn prices rise while ethanol prices fall, a study earlier this month suggested that cellulosic-ethanol companies might experience similar risks (see Ethanol Margins Suffer and Ethanol's Tough Times Continue).
Wood chips have been considered potentially one of the easiest cellulosic feedstocks to tap into, since they already are gathered in pulp mills. Research firm Forest2Market found that wood-chip prices also are rising.
Working from a baseline price of $28 per ton, Forest2Market estimates that the cost of wood chips is rising at 2 to 3 percent per year. Adding cellulosic ethanol into the equation, the firm expects the cost to grow 5 to 7 percent annually.
But companies like cellulosic-ethanol startup Coskata say they have calculated such price variations into their business plans (see With GM Deal in Hand, Coskata Promises $1 Ethanol). Aside from wood chips, Coskata CEO Bill Roe said earlier this month the company could potentially also tap into construction debris and construction waste.
"There are collection centers for a lot of this," he said. "The material already amassed, they don't know what to do with it, and in worst case it's burned."
--Jennifer Kho contributed to this story