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The Advantage of Organic Biofuel Production

Presidio Economics | Friday October 14th, 2011 | 0 Comments


3p is proud to partner with the Presidio Graduate School’s Macroeconomics course on a blogging series about “the economics of sustainability.” This post is part of that series. To follow along, please click here.


By: Kevin Ward

What’s an advanced biofuel?

Early so-called first generation biofuels are made by fermenting food products (e.g. grains, seeds, sugars) into short-chain alcohols (e.g. ethanol, butanol) or transesterifying plant oils into biodiesel.

The feedstock for these fuels competes with food crops for land and reduces biodiversity. In the case of natural plant oils, feedstock is increasingly scarce. While advanced biofuels can include the same products as first generation fuels, they do not compete with food production because they can be made from non-edible plants (e.g. switchgrass, Miscanthus), agricultural waste, or even wastewater, in the case of algae.  An additional attraction may well be an engine performance advantage due to advanced biofuel producers’ emerging ability to custom tailor the exact ratio of chemicals produced by a given organism and feedstock. Advanced biofuels generally include longer chain and more energy-dense compounds like isoprenoid and terpene-based hydrocarbons (e.g. farnesol, geraniol, isopentenol), as well as similarly energy dense fatty-acid derived hydrocarbons (e.g. fatty alcohols, alkanes, alkenes). Although relatively less important for applications that have potential substitutes such as electrification (e.g. personal transportation powered by “green” electrons), high energy density fuels are critical to applications sensitive to weight (e.g. aviation).

What is the organic-certified advantage?
The Energy Independence and Security Act of 2007 requires that the EPA apply lifecycle greenhouse gas (GHG) performance standards to confirm that each category of renewable fuel emits less GHG than its fossil fuel counterpart.  In the case of advanced biofuels, this means at least a 50% reduction in emissions.  Further refinement and standardization of life cycle analysis tools is needed to clearly show that benefits of organic-certified feedstock include additional cost and GHG reductions.

For now, the reduction of supply-chain risk associated with fossil-fuel intensive production (e.g. pesticide, herbicide, fertilizer, irrigation pumps, price volatility, supply shocks) may suffice.  Although these risks may be offset with organic production upon the expectation of new regulation, or once petroleum costs exceed a certain threshold, it is important to note that, because it takes three years to convert acreage to organic, it may be too late to wait.  Companies that develop relationships with organic-certified input suppliers (e.g. Global Organics Limited or Native’s Demeter-certified sugarcane waste in Brazil) can help ensure access to critical inputs for the future while also lowering their long-term cost structure by decreasing the bargaining power of conventional suppliers. Finally, the switch to organic helps companies with lofty vision statements advocating sustainability to develop the transparency and track record of authenticity capable of inoculating their brand against increasingly informed and vocal stakeholders.

Kevin Ward is a molecular biologist and Presidio MBA student interested in making it easier for people to live well now without mortgaging the future.

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