So, an environmentalist, a venture capitalist, a farmer, a politician, a scientist and a general were together in a room…..

That probably sounds like the lead-in to a joke doesn’t it?. You probably expected some punch line about the conflict between these players or a clash of thinking based on how differently they see the world. Well guess what. There is a topic that could be and is being discussed today by exactly this set of people – and the best part is that they all agree about it! They are even all excited about it.

If you are someone like me who likes the idea of consensus and unifying causes – this is about as good as it gets!

I know, its about time I named this amazingly harmonious topic. Its “Biofuels.” Basically the “big idea” here is that plants are amazingly efficient and low cost machines that capture energy from the sun and turn it into forms of energy that we can use. Food is a very familiar form of that energy, but plants can also make fuel that can substitute for the energy we get today from oil and coal and natural gas.

The really cool part is that when fuels generated by these little solar power machines are burned, the carbon dioxide that is in the exhaust is “carbon neutral” in terms of global warming. What the plant did to store the solar energy was to grab some carbon dioxide out of the air, combine it chemically with water and release some oxygen. When we burn it the oxygen gets added back to the carbon and CO2 goes back into the air. The difference from fossil fuels is that we haven’t added more to the system. It is a wash.

Honestly it’s a little more complex than that and I’ll get into that later, but where we could be headed with biofuels is very exciting because it is one solution to many of the most troubling problems we face on this planet. There is also the potential for that harmonious “room” to get ugly – which I hope doesn’t happen, but I’ll talk about that at the end of this blog.

Imagine if we could be supplying 10%, 20%, 30% or even more of even just our transportation fuels from plants we grow here in the US. Right now we are sending about $250 Billion a year to other countries to buy oil. You don’t have to be an economist to realize that keeping any significant percentage of that money inside our own economy would have a huge positive impact.

Then think about the Energy Security, or better yet, “Energy Independence” advantages. Right now when sketchy regimes in Nigeria or Sudan or Chad or Iran or Venezuela decide that they want to flex their muscles, they can get by with it because they have the ability to tweak a “developed world” that is highly dependent on the one thing they have – oil. Small-time despots can “wag the dog” because the major economies of the world are increasingly competing for the oil energy that is ironically concentrated in places controlled by these bad actors (actually it probably works the other way – we may be, as President Bush said, “addicted to oil,” but having oil riches seems to be just as corrosive a problem for the “pushers” as for the “users.”)

Think about it – if biofuels were a significant part of the mix, Ahmadinejad might not be able to divide the Security Council over Iran's nuclear agenda. Sudan might not be able to continue it’s genocides because of China’s need for its oil. Hugo Chavez might not be able to buy regional influence with cheap oil while his people languish in poverty.

Now take the National Security side a little further. The real center of radical Islamic Jihadism it still in South Asia – Pakistan and Afghanistan. We have taken our eyes off that ball because of the distraction of Iraq, but that is where the cauldron simmers the most intensely. The actual fuel burning under that cauldron is oil – oil by way of the money that is spent to gas-up our SUV-laden transportation fleet that then flows to corrupt regimes of the Middle East and some of which then makes its way to the radicals. Those radicals hate the governments of the region as much as they hate us, but they are more than happy to take some of the oil money that can flow through like-minded or even naïve people in Saudi Arabia or elsewhere. This isn’t something that is going to change quickly, but in something as frustrating as the Struggle for Civilization (my alternative metaphor for the “War on Terror”) wouldn’t it be nice to go to the pump and think, “at least I’m buying this ethanol from some guy in the Midwest, not some guy in the Middle East!”

But lets think about something that may be even more important in the long run – the environment. Burning fossil fuels generates greenhouse gasses that really do seem to have us on the way to climate changes that are not going to be pretty. They also are not so good for air quality. My son just came back from China and described how horrible the air is there because of coal usage. Go to the Central Valley of California sometime and you might think that West LA isn’t so bad after all. Bio-fuels can really help on both the global warming and the emissions front. These are very real advantages of biofuels of any type and the question is only one of degrees.

Finally, think about the advantages for rural America. It isn’t any stretch to say that the US has been unusually blessed in terms of having abundant land where you can grow things and a heck of a lot of it where the clouds do all the irrigation for you during the part of the year where you have the sun and heat to be productive. This is not true in many parts of the world – at least not to the degree that it is here.

Now, a trip to your local shopping mall will be sufficient to convince you that we Americans are not a nation that doesn’t get enough food. The problem is quite the opposite. We can produce food so cheaply and abundantly that we pay farmers not to farm and then we also pay the enormous health care costs of an obese population. We have been a mode where agricultural production needs to be limited and subsidized at the same time.

This paradigm could change quickly in a bio-energy economy. If we can shift to the mode where productive agricultural land is a valuable resource for food, feed, fiber, AND fuel, the days of subsidies and declining rural communities could be a thing of the past.

Now, you might be thinking that I haven’t explained why the scientist and the venture capitalist in my joke-that-wasn’t-a-joke are so happy to be in that hypothetical “room”.

Here is why. Part of this story is going to be about developing cool technology and part of it will be about business opportunities of all types. Remember I said its all a bit more complex than “plants capture energy and we get fuel?” The complexity is how efficiently that gets done. “Bio-fuel” gets a bad rap in certain circles because up to now the main story in the US has been ethanol from corn and that isn’t all that pretty because of political shenanigans and the fact that corn is not an energy crop. Don’t get me wrong – corn is an amazing crop – It’s just not as good an energy crop as others will be.

People probably only domesticated corn from a Northern Mexican plant called teosinte in the past 10 thousand years and you wouldn’t even recognize the plant if you saw it. The native American’s “genetically engineered” it into a respectable crop by selecting strongly for characteristics that favored its use for humans. The whole Aztec empire was enabled by this crop. From the mid 1800s until the 1930s, corn yields were pretty flat at around 25-30 bushels/acre. Then for the last 75 years we have been applying one technology after another (hybrids, fertilizers, pesticides, sophisticated breeding, seed treatments, biotech traits, sophisticated equipment…) and steadily increased average yields up to 180 bushels/acre and 300+ bushels on the best land. We now produce 5 times as much corn as in 1930 on much less farmland and with a tiny fraction of the workforce. Corn makes a great story about what technology and innovation can do to improve the energy capture of plants – it shows why we are not crazy to think about adding fuel to what we get from the land. Its just that corn has been optimized for getting food ingredients and for feeding animals.

The problem is that today if you make the calculation (as you should) of how much fossil fuel goes into the growing of the crop (fertilizer, pesticide, tillage, harvesting…) vs how much clean energy is generated, for corn ethanol you get a number like 1.3 or maybe 1.8. Yea, that’s better than nothing, but it isn’t the answer to our problems. In Brazil they produce a huge part of their fuel from sugar cane with an efficiency of 8-12 – that’s the tropics, but we could get into that range too.

It’s unfortunate that corn-based ethanol has been the figurehead for bio-fuels in the US. It might be an ok start, but the real answer is “cellulosic” or “lingo-cellulosic” biofuels. That just means biofuels that come from things like wood or straw or a variety of grasses. When plants capture energy from the sun they put it into various things. In corn a bunch of it is starch. In real energy crops it goes into cellulose. They are both made of the same basic building blocks – sugars – but it has been easier for us to turn the starch into sugar and then into ethanol because we know how to make the enzymes to do that really cheaply.

Our technology companies are on track to bring down the cost of the enzymes and the pre-preparation for using cellulose. With corn you get a couple of tons of “bio-fuel” per acre. There are energy crops today like switchgrass that routinely capture 5-10 tons/acre as cellulose and other crops like Miscanthus or energy cane that could feasibly be in the range of 40-50 tons/acre is we put our mind to it like we did with corn. At that point we are talking about serious potential to accomplish all the good things I’ve been talking about.

So here is the end of the blog and where I need to talk about how that amazingly harmonious “room” of diverse interests could end up arguing the way they have on so many other topics – topics that probably matter a lot less than this one.

It comes down to economics. If you are going to build a bio-refinery to produce fuel (and a host of valuable by-products that we haven’t even mentioned here), its going to be a really expensive investment because there are major efficiencies of scale. That’s just the nature of engineering stuff. So we are talking multiple hundreds of millions of dollars for each plant. If you do that, you would really like to have guaranteed access to lots of really high yielding bio-fuel crops located as close as possible to the plant. More yield/acre is better. Otherwise you spend a great deal of your “green” energy potential just gathering and transporting your bio-energy crop. Growing a high yield bio-fuel crop is also smart because it takes less land so there is less competition with food production. Its also going to be the best for the farmer who wants to make a living growing the stuff. On top of that, lots of the leading bio-fuel crop candidates do a great job of sequestering even more CO2 around their root systems.

Essentially, what you want is intensive, local production. That is what economics dictate. That’s also what you do if you really want bio-fuels to be able to solve all those problems that got everyone together in the “room” in the first place.

But this need to do things intensively is where the spirit of agreement could fall apart. Some people from the environmental side tend to jump to the conclusion that all intensive agricultural production is automatically bad for the environment. You are already hearing some voices like Bank Sarasin in Switzerland warning that this might mean more use of biotechnology (which in the thinking of Euro-precautionists is automatically scary even though their own scientists keep telling them it isn’t). The truth is that intensive production CAN be done without harming the environment and frequently biotechnology will be one of the tools that allows you to do that.

Large scale cellulosic bio-fuel refineries are a few years out so we have time to talk through this intensity and technology issue. We have time to define Good Environmental Practices for energy crops and set up systems to certify that they are being used. We have time to develop partnering arrangements between farmers and refiners because they will both need each other and we don’t want the sort of uneven leverage that exists with agricultural markets today. I think we have to do this because there is so much at stake.

So what is the “punch line?” about the diverse parties “in a room?” Let’s hope the answer is “they ultimately worked together to bring about some really positive change for mankind and for the world.” No, its not a funny line, it’s a dream worth pursuing.