innovate arkansas

Over the past several years, a fledgling alternative fuel industry has arisen in response to high petroleum costs and environmental issues.  

As energy sources have become increasingly stressed by increased global demand and environmental concerns, market opportunities have developed for entrepreneurs to pursue exciting new fuel products. Significant progress, driven in large part by governmental assistance, has been made in getting first generation alternative fuels into our transportation system. 

However, as a nation, we are a long way from having a viable, free-standing alternative fuel industry that frees us from importation of significant quantities of petroleum.

Arkansas has several players in the area of alternative fuels, and so it seems appropriate for both businesses and laymen to develop a good grasp of the products that are in the market that are currently touted as "green" or "renewable" replacements for petroleum based fuels.

For this discussion, we'll not focus on alternatives like hydrogen, methanol and electricity as transportation fuels, although these examples certainly have aspects of being "renewable."  Perhaps a reasonable place to start is to try to define the characteristics of a good alternative fuel. Hopefully, most could agree that any new alternative fuel should have at least the following characteristics when compared to petroleum-based fuels:

• Compatibility with current engines and the materials used to manufacture those engines.
• Delivery of an equivalent amount of energy per standard unit of volume or weight.
• Environmentally benign when compared to the petroleum-based fuels.
• Produced from readily available, renewable feedstocks separate from the food market.
• Cost competitive with petroleum-based fuels.

So, in looking through the prism of these five criteria, where are we? There are two key alternative fuels in the U.S. market at this time: bio-ethanol and biodiesel.  The ascension of each product has been driven both by healthy doses of good technology and good ol' U.S. politics.

Bioethanol, in its current incarnation in the U.S., is mostly derived from corn. As a fuel, it is not as efficient as gasoline, its targeted market. It is more corrosive to engine parts than gasoline, but is suitable for use in gasoline blends.

It is relatively clean burning but there is much debate about whether burning ethanol instead of gasoline really reduces carbon emissions significantly when considering the entire production process for ethanol. This fuel, as currently manufactured, definitely competes with resources typically used to produce foodstuffs.  

Long term, the Holy Grail for ethanol production would be the capability of using cellulose as a feedstock, thus eliminating the competition with food production. The technology for accomplishing this is still several years' away from being truly commercially viable. Even the current production from corn is heavily dependent on federal subsidies in order to be consistently profitable.

Biodiesel, in its current form, is produced from the reaction of triglycerides with methanol. These products behave similarly to petroleum-based diesel and deliver a similar amount of energy per gallon.

Biodiesel is slightly more aggressive as a solvent than diesel and so some engine parts produced from rubber or plastic may be affected.  The fuel is cleaner burning than petro-diesel, but it has a freezing point such that even blends of biodiesel and petro-diesel may solidify in cold environments.  

Unfortunately, biodiesel is produced from triglycerides that mostly come from vegetable oils, such as soybean oil, or animals fats, such as beef tallow. The supply of these feedstocks has greatly limited the amount of biodiesel that can be produced to the point where it should be considered as a niche product. 

Use of those feedstocks for energy production has also resulted in increased food prices. Like the U.S. bioethanol industry, the U.S. biodiesel industry is heavily dependent on financial support from the federal government.

So, is the proverbial glass half full or half empty as it relates to these alternate fuels? Optimists will say that we've made a good start and certainly this appears to be true, but there is a lot of work to do yet and there will be many opportunities for entrepreneurs to come up with better products than either bioethanol or biodiesel. 

Certainly, as petroleum prices increase over the long term, more options will open up to viable products and technologies, such as fuels from treated biomass, new biotechnology to produce fuels from cellulose, and new fuel candidates such as biobutanol.

(Slaton Fry, an Innovate Arkansas advisor, is the founder and managing director of ee Partners of Arkansas, LLC, a technology-oriented consulting company. He also serves as a member of Lighthouse Advisors, which provides business consulting services to Innovate Arkansas clients.)