TO fill the tank in his Chrysler Sebring LX, Jeff Passmore drives to the back of his factory, past the flatbed trailer stacked with next week's 1,000-pound bales of straw and up to the pump that dispenses what last week's straw has become: ethanol.
Gasoline here has pushed past $1.25 (Canadian) a liter, roughly $3 a gallon prevailing in the United States, but for people like Mr. Passmore, executive vice president of the Iogen Corporation, that is good news because the price of straw is not changing much. With a few kinks to work out, the ethanol could be produced at about $1.08 (U.S.) a gallon, company officials say.
As gasoline prices rise, alternatives become more attractive, including some you might not have heard of. But any challenger to gasoline faces hurdles in manufacturing and logistics. It must cost about what gasoline costs, and that price must include getting the new fuel to the pump by integrating it with the existing gasoline delivery system.
Ethanol like Iogen's is a leading contender because it can meet both criteria. Its technical name is cellulosic ethanol because the feedstock is cellulose, the woody material that makes up a plant's stem and stalk. Grass and other agricultural wastes work too.
The secret ingredient?
"Jungle rot," Mr. Passmore said. More formally, Iogen is using Trichoderma reesei, a fungus that company officials say was discovered by American soldiers on Guam in World War II. "They couldn't figure out why their canvas tents were dissolving," Mr. Passmore said. Now, with some genetic modifications that Iogen refers to as "directed evolution," T. reesei is producing abnormally large amounts of the enzyme that breaks down cellulose into sugar. The next stage, turning sugar into alcohol, may be one of the oldest industrial activities.
Big things are happening in jungle rot these days. The same is true of synthetic diesel, another alternative fuel that would not require a new distribution system. A Denver company, Rentech Inc., says it will break ground next year on a factory that will make 33,000 barrels a day of diesel fuel from coal, using a technology called Fischer-Tropsch, known as F-T, developed in Germany in 1923. Royal Dutch/Shell Group, a partner in Iogen, is also investing heavily in a plant in Qatar that also uses F-T to turn natural gas into diesel fuel. Others are using a different substitute for diesel, leftover vegetable oil from restaurant deep-fryers.
Any alternative fuel must fit into the existing system of vehicles and fuels because oil, even if it is declining, isn't going away soon. "It's taken a century to get the cost out of pulling oil out of the desert half a world away, transporting it here and refining it and delivering it to gas stations," said David K. Garman, the under secretary of the Energy Department, in an interview. "That's a tough competitor." And any fuel that carries so much energy in so small a package, that can be dispensed as a liquid at room temperature, has major advantages.
Still, given prices at the pump, he said, "We need options, and we don't have them today." He predicted that cellulosic ethanol would play a role, but added that it was hard to project a production price. Both cellulosic ethanol and F-T require big investments before the first gallon is produced.
"A huge capital investment may make perfect sense," Mr. Garman said, "if gasoline is going to stay at $3 a gallon." At that price, he said, F-T diesel was promising.
At a former Air Canada hangar on the edge of the Ottawa airport, Iogen operates what it says is the world's first demonstration cellulosic ethanol plant. It hopes by the end of the year to announce plans for a commercial plant, but for now it is shopping for tax breaks.
Straw looks a lot like hay, but has fewer nutrients and therefore less value. A ton of baled straw goes for about $40 and yields 80 to 85 gallons of ethanol, making the price of the main raw material about 50 cents a gallon. By contrast, with oil at $70 for a 42-gallon barrel, the raw material for gasoline is about $1.67 a gallon. Iogen chose to use straw because the technology to bale it is available. Brian Foody, the president of the company, said other wastes could be used, including the entire corn plant, not just the kernels, which are used in existing ethanol plants. Even old newspapers are an option. Rapping on the wooden top of his desk, Mr. Foody said, "We could even use this," although presumably people would choose scrap lumber over office furniture.
The trick is the enzyme, which is essentially a digestive juice of the fungus. Iogen sells enzymes that help convert wood pulp into paper, fade and soften denim and process animal feed. T. reesei, it turns out, works very well on cellulose, normally a tough material to break down.
Mr. Passmore pointed out that if you put corn on a compost heap, the kernels are gone in a week, "but the rest of the plant is still there a year later," he said. "Mother nature didn't intend cellulose to break down."
Iogen delivered its first shipment of cellulosic ethanol in April 2004, and today, mixed with 15 percent gasoline, standard for ethanol fuel, it powers about 60 cars run by two Canadian federal agencies and another dozen Iogen cars, like Mr. Passmore's Sebring.
The cars are all "flexible fuel vehicles"; Detroit has produced millions of these, mostly because American regulations give automakers who build them a credit toward meeting minimum "corporate average fuel economy" requirements, whether or not the vehicles ever see a drop of ethanol. The ethanol industry said there were about 6.75 million flexible fuel vehicles in the United States, or about 3.2 percent of the 209.6 million cars and light-duty trucks on the road.
The changes that are needed to make ethanol a bigger part of the nation's transportation fuel supply are fairly modest.
Conventional cars can run on a mixture with up to 10 percent alcohol, the rest being gasoline. To go above 10 percent requires a flexible fuel vehicle, which can run on mixtures with up to 85 percent alcohol. The additional cost to produce flexible fuel vehicles is minimal. Millions of drivers already have flexible fuel vehicles but might not know it; the manual will say. The materials in the fuel system must be resistant to being broken down by alcohol, and certain engine controls must be adjusted.
So, the car part is easy. But for now there are only about 400 filling stations in the United States that sell the 85 percent mixture, half of them in Minnesota and Illinois. A far larger fraction of the nation's 180,000 filling stations sell gasohol, the 10 percent blend.
But ethanol is incompatible with the gasoline pipeline network, which sometimes has water in it; the alcohol bonds with water and becomes useless. So the ethanol must be shipped by tanker and blended where the trucks are loaded, or at the filling station. Shipping by tanker is fine over short distances, but not from the Corn Belt to the East Coast. With their ability to use a wider variety of raw materials, cellulosic ethanol factories could be more dispersed, thus closer to big gasoline markets.
No new technology is needed to blend ethanol, and the modifications required are small compared with bringing natural gas to service stations and pumping it up to thousands of pounds per square inch. Nor is new technology necessary for producing hydrogen for fuel-cell vehicles, to name two widely discussed alternatives. Both would require a different type of vehicle fleet.
The United States now uses about four billion gallons a year of ethanol, compared with roughly 140 billion gallons of gasoline. Even the four billion figure gives the wrong impression because it has the energy value of about three billion gallons of gasoline.
America could simply produce more ethanol by conventional means, mostly from corn starch. But making ethanol this way requires more energy than the finished product provides, according to the Argonne National Laboratory, a government research center in Illinois.
Some of that energy - sunshine - is free, but substantial amounts of natural gas, liquid propane gas, coal, electricity and diesel fuel are also needed. In fact, to make ethanol that has the energy value of 8.5 gallons of gasoline requires about 6.3 gallons-worth of energy from various sources, which can include diesel, natural gas and coal. But since fuel that can go into a car tank is more valuable than coal or electricity, the equation looks attractive.
Before the recent rise in gas prices, gasohol was popular partly because retailers pay 5.3 cents less in federal taxes on a gallon of gasoline blended with 10 percent ethanol, meaning that each gallon of ethanol gets a federal subsidy of 53 cents. At $3 for regular unleaded, ethanol becomes even more attractive. To many experts, ethanol is more a political phenomenon than an energy solution, a driver's subsidy to farms.
"The people who deal with this technology seem to be by and large coming at it from the point of view of advocacy, rather than hard facts about 'this is the production cost, this is the impact,' " said Dr. S. M. Shahed, a vice president at Honeywell Turbo Technologies and a former president of the Society of Automotive Engineers.
Cellulosic ethanol, though, requires far less energy to make, particularly if it is piggybacked on conventional corn ethanol, by using part of the corn that a conventional ethanol factory can't. Cellulosic and conventional ethanol could displace half of gasoline use, backers say. Cost remains a question.
Any chemical engineer would argue that North America has plenty of hydrocarbons. But chemical engineers are the only ones who would say so, because most of the hydrocarbons are in solid form, as coal.
Still, coal and oil, as well as natural gas, have the same building blocks: hydrogen and carbon. Refineries already play with hydrocarbons as if they were Tinker Toys, breaking down molecules that are too big for gasoline or diesel fuel and stringing together ones that are too small. For 75 years, various companies have done that with coal, though the technology's backers don't like to talk about it. During World War II, for example, German tanks rolled through half of Europe on fuel made that way.
Several companies now think that this technology could be a moneymaker, probably using natural gas at first and coal later.
Steam, or water in gaseous form, is introduced into a vessel filled with natural gas or coal with limited amounts of oxygen, resulting in "synthesis gas," a mixture of hydrogen (some from the coal or gas and some from the water) and carbon monoxide.
The economics depend partly on how much the factory pays for the coal or natural gas. Natural gas in the United States has soared in price even faster than oil, but at Syntroleum, a leader in the field, John B. Holmes Jr., the chief executive, points out that in many places around the world, natural gas is free. It is a nuisance that oil drillers, operating in areas where there are no pipelines, must burn off. Syntroleum is considering a project in Nigeria, where wells are expected to produce large volumes of unwanted gas along with $70-a-barrel oil.
The company will convert the gas to a liquid fuel, a substitute for diesel, on the spot using a catalyst, then have tankers transport the liquid to market.
Mr. Holmes said that Syntroleum's fuel burns better and cleaner than diesel fuel because the chemical bonds between carbon atoms are simpler. "We build these straight-chain molecules, just like you hook railroad cars together," Mr. Holmes said. Syntroleum's fuel is also sulfur-free.
As late as August, Syntroleum was telling investors that its fuel would be profitable with the price of oil at $25 to $50 a barrel.
America's coal reserves are the equivalent of 29 billion barrels of oil when converted with the existing technology, the company estimates.
The artificial diesel can be mixed with conventional diesel in any proportion. The F-T process can also work on other materials that are pyrolized; that is, heated in the presence of limited amounts of oxygen.
But investors are wary of pioneering any technology that will succeed only if the cost estimates are correct and the price of the competition, crude oil, stays high. "Everybody," Mr. Holmes said, "wants to be the first person to build the second plant."