Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

Issues in Focussynthesis gas. Any other elements contained in thebiomass are removed during the gasification step.The carbon monoxide and hydrogen are then reactedto form liquid hydrocarbons and water.Although BTL products are high in quality, BTLplants face several challenges. They have high capitaland operating costs, and their feedstock handlingcosts are especially high. BTL gasifiers are significantlymore expensive than the gasifiers used in CTLor GTL facilities. Furthermore, the cost of a BTLplant per barrel of output is several times the cost ofexpanding an existing petroleum refinery or buildinga new one. As a result, while new BTL plants arebeing built in Germany, there is no commercial productionof BTL in the United States. BTL productionand its market implications are discussed under“Nonconventional Liquid Fuels,” below.In another process, vegetable oils and animal fats canbe reacted with hydrogen to yield hydrocarbons thatblend readily into diesel fuel. The oil or fat is pressurizedand combined in a reactor with hydrogen in thepresence of a catalyst similar to those used in hydrotreatersat petroleum refineries. The products of theprocess are bioparaffins. Bioparaffin diesel fuel issimilar in quality to BTL diesel, with the added benefitof being free of byproducts. The improvement inquality over methyl esters (biodiesel) is not free, however.A bioparaffin plant is less expensive than a BTLplant but more expensive than a biodiesel plant,because the bioparaffin reaction takes place underpressure, and a hydrogen plant is needed. Bioparaffinsalso share with biodiesel the problem offeedstock costs. Vegetable oils are expensive, especiallyif they are food grade. The catalyst needed alsoadds significant expense. The world’s first bioparaffinplant is being built at a petroleum refinery in Finland,but there are no plans for U.S. bioparaffin capacity atthis time.Ethanol. Ethanol can be blended into gasoline readilyat up to 10 percent by volume. All cars and lighttrucks built for the U.S. market since the late 1970scan run on gasoline containing 10 percent ethanol.Automakers also produce a limited number of vehiclesfor the U.S. market that can run on blends of upto 85 percent ethanol. Ethanol adds oxygen to the gasoline,which reduces carbon monoxide emissions fromvehicles with less sophisticated emissions controls. Italso dilutes sulfur and aromatic contents andimproves octane. Because newer vehicles with moresophisticated emissions controls show little or nochange in emissions with the addition of oxygen togasoline, ethanol blending in the future will dependlargely on octane requirements, limits on gasolinesulfur and aromatics levels, and mandates for the useof renewable motor fuels.Ethanol production from starches and sugars, such ascorn, is a well-known technology that continues toevolve. In the United States, most fuel ethanol currentlyis distilled from corn, yielding byproducts thatare used as supplements in animal feed. Three factorsmay limit ethanol production from starchy and sugarycrops: all such crops are also used for food, andonly a limited fraction of the available supply could bediverted for fuel use without driving up crop prices tothe point where ethanol production would no longerbe economical; there is a limit to the amount of suitableland available for growing the feedstock crops;and only a portion of the plant material from thefeedstock can be used to produce ethanol. For example,corn grain can be used in ethanol plants, but thestalks, husks, and leaves are waste material, onlysome of which needs to be left on cornfields to preventerosion and replenish soil nutrients.The underutilization of crop residue has drivendecades of research into ethanol production from cellulose;however, several obstacles continue to preventcommercialization of the process, including how toaccelerate the hydrolysis reaction that breaks downcellulose fibers and what to do with the lignin byproduct.Research on acid hydrolysis and enzymatichydrolysis is ongoing. The favored proposal for dealingwith the lignin is to use it as a fuel for CHP plants,which could provide both thermal energy and electricityfor cellulose ethanol plants, as well as electricityfor the grid; however, CHP plants are expensive.Currently, Canada’s Iogen Corporation is trying tocommercialize an enzymatic hydrolysis technologyfor ethanol production. The company estimates that aplant with ethanol capacity of 50 million gallons peryear and lignin-fired CHP will cost about $300 millionto build. By comparison, a corn ethanol plant with acapacity of 50 million gallons per year could be builtfor about $65 million, and the owners would not bearthe risk associated with a new technology. Co-locationof cellulose ethanol plants with existing coal-firedelectric power plants could reduce the capital cost ofthe ethanol plants but would also limit sitingpossibilities.Electricity ProductionSome of the electricity generating technologies andfuels represented in NEMS are currently uneconomical,and there are still other fossil, renewable, andnuclear options under development that are notEnergy Information Administration / Annual Energy Outlook 2006 45