Biofuels have increased dramatically in the U.S. Midwest since the 2000s.
The shale oil boom has reduced interest in expanding biofuel production capacity.
Does biofuel have a future in the Midwestern United States?
1. Why the Midwestern United States are well suited for biofuels production
Biofuels compete with agricultural production in terms of land use. The U.S. Midwest is blessed with some of the best soil compositions found on the planet. Rainfall is considerable and in its share it competes with other bread baskets, in some cases even surpassing other bread baskets such as the Argentinean plain, the nutrient-rich and mineral-rich black earth soils of Ukraine. These are just two of many other agricultural centers of global food production.
The point here is that in order to produce biofuels, it is necessary to restrict the production of basic foodstuffs which are of equal, if not greater, importance for national security. To put it more bluntly, there is a rivalry between food stocks, which ensure a steady supply of staple foods to the population, and the mission to reduce CO2 emissions in order to mitigate climate change.
It has been noted that the production of biofuels deprives the rich soil of the U.S. Midwest of certain minerals. This happens, among other things, when we grow corn. The nutrient-rich maize silage can be used to produce biogas. Corn is converted into renewable ethanol. But that is just one side of the coin. In some cases, the cultivation of maize results in the soil becoming less fertile because it withdraws nutrients.
Other crops, such as sugar cane, are very well-suited for conversion to ethanol. As a biofuel, ethanol is very suitable for transport.
The basic problem of sugar cane growing in the Midwestern United States is that climate variability, water availability and solar radiation are still insufficient for plant growth. By this we mean plant growth in the sense that it would make economic sense to convert such plants into biofuels, which justifies the effort involved. If you move further north from the equator from the humid, tropical zones into the temporal zones, the energy return on energy investment (EROI) is marginal at best. This means that the production of biofuels costs as much as it brings in, if generous state subsidies are not taken into account.
The energy return is much greater in countries like Brazil, which are closer to the equator and benefit from a humid climate. Further south, it will be difficult to grow energy crops, but it still makes economic sense in the Argentine breadbasket. The Midwestern United States relies on very different climatic conditions to grow energy crops. It is still managed more successfully than in European countries.
2. An abundance of hydrocarbon resources undermines biofuels production
Another difference with Brazil is the wealth of hydrocarbon resources on US territories. The shale oil boom has led to an abundance of oil and gas on the US market. Natural gas is produced as a by-product of investments in oil exploration.
Prices have fallen considerably since the first attempts to commercialise shale oil. As a result, biofuels have become much more expensive compared to current market prices for medium-weight distillates. This has slowed down the momentum of the transition from fossil fuels to renewable energy sources. As a result, the future prospects for biofuels have deteriorated. We have therefore witnessed a decline in investment in biofuel production capacity. The decline in investment has been quite remarkable in some areas, particularly in research into second-generation biofuels, such as algae fuel.
Nevertheless, we are probably currently experiencing a renaissance in biofuel research and development aimed at helping developing countries to exploit their renewable energy potential. The point is that the United States has found an alternative for the production of biofuels that is much cheaper and independent of geopolitical communities. After all, the main purpose of subsidising biofuels in the agricultural heartland of the United States was to enable energy independence on a par with Brazil. US biofuel producers want to be sure that these subsidies would continue to encourage investment in research and development of various biofuels.
3. Second-generation biofuels not yet commercially viable
Second generation biofuels are not yet commercially viable. Their development can take years to mature. More importantly, we do not yet have the infrastructure in place to provide the aviation industry with the growing production capacity for biofuels (Sustainable Aviation Fuel). In the aviation industry, we need to make significant adjustments to the existing supply chain to include biofuels in the energy mix. In the transport sector, things are looking much better, mainly because we can rely on the existing filling stations. Filling stations serve as distribution centers for the sale of ethanol.
With regard to second-generation biofuels, we need a collection system that receives fuel (liters) from various sources. The problem is that the amount of biofuels at each of these sites is too small and collection in itself is a rather energy-intensive process. What we need in the long term is a decentralized energy system that allows biofuels to be used at the source of origin. This can be achieved in agriculture and arable farming. In this case, the economic viability of biofuels depends on local demand and energy needs of each farmer and his or her personal decision whether to use biofuels.
With regard to the economics of producing second-generation biofuels, we find that the growth cycles of the plants are too slow to achieve sufficient energy yield. In this context, we also consider the amount of energy required to produce the fuel.
We simply need more research results on how plant growth can be accelerated with minimum energy input and maximum energy yield (energy output). This will be a multi-year undertaking. In general, we are facing a start-up phase until 2030, which will slowly be “overshadowed” by initial attempts to commercialize biofuels. The main beneficiaries will not be the Midwestern United States, but the developing economies. As far as plant growth cycles are concerned, countries with sufficient water reserves, rivers and access to the sea will be the biggest beneficiaries. There, algae fuel production is not in competition with agricultural use for human consumption. The potential for corn production in the U.S. Midwest is exhausted due to competition from wheat, grain, barley and rye.
In the southern states, especially Texas, Alabama and Florida, there could be great potential for algae fuel. The growth potential of sugar cane in the Midwest of the United States appears to be limited. Oil prices will increase somewhat, mainly because conventional oil reserves in the United States are declining. Nevertheless, there are plenty of oil reserves worldwide that are not finding buyers, and the US oil markets are well filled. As a result, the production of biofuels is likely to increase slowly in the medium term. There is greater potential for the new sugar cane varieties that are suitable for cultivation in northern climates.
Ultimately, we must ask ourselves this question: Are biofuels 100% renewable?
Many thanks for the shared interest in the energy world!