As legislators weigh their options for the 2007 farm bill, the biotechnology industry is lobbying for more funding to be allocated for biorefineries. During today's OnPoint, Jim Greenwood, former congressman of Pennsylvania's 8th District and the current president and CEO of Biotechnology Industry Organization discusses why his group believes biotechnology will play a key role in the future success of ethanol. Greenwood discusses why he believes DOE should control loan guarantees for cellulosic ethanol development. He also compares the economic feasibility of cellulosic ethanol and corn-based ethanol.
Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Jim Greenwood, former congressman of Pennsylvania's 8th District and currently the president and CEO of Biotechnology Industry Organization, also known as BIO. Thanks for coming on the show.
Jim Greenwood: My pleasure.
Monica Trauzzi: Jim, BIO is the national lobbying group for biotechnology. Talk a bit about what your group does and also how important you believe biotechnology will be in the push for ethanol.
Jim Greenwood: Good. Well, we have 1,100 members; of those 1,100 members about 700 are actually what we call core members, that means they're companies. The rest are universities and research centers and so forth. Of the 700 companies the vast majority, probably 630 or something like that, are in the health field. So they represent, that includes big pharma, it includes big biotech, but mostly hundreds of small biotech companies that are really just in the research and development phase. Then we have two other sections. We have a food and agricultural section, which represents or is composed of companies like Monsanto and Dow and DuPont that do genetically enhanced crops. And then we have an industrial and environmental section that includes companies that biologically alter microbes to do things like convert cellulose into ethanol, and also that make products, plant-based plastics that are biodegradable, which is very exciting. So that's the answer to the first question. The answer to the second question, which is how important is biotechnology in energy production in this country? I think it's going to be increasingly and fairly rapidly very important. We have long known how to make ethanol from starch. The moonshiners learned that probably thousands of years ago. But what's difficult is making it from the cellulosic part of the plant, the tough part, the stalk, the stems, the wood bark and so forth. And what some of our companies have done is they've figured out how it is that, for instance, termites breakdown cellulose. Or how it is that when you walk into the forest you see fungus on fallen trees and they're busy sort of breaking down that tough cellulose. And from what they've learned there they've been able to change the genomics of microbes so that the microbes then have the ability to break down that cellulose into sugar, which then can be converted to ethanol. The goal is to, perhaps by the year 2025, to have 25 percent of our vehicle fuels coming from cellulosic ethanol, which has lots of benefits. It can reduce greenhouse gases tremendously. It reduces our reliance on foreign governments, particularly unstable governments, more cash for farmers. It's a win-win-win.
Monica Trauzzi: And in order to get to that point you're calling for increased federal financial help to make cellulosic ethanol a viable fuel. Who should have authority over loan guarantees for cellulosic? Should it be the Energy Department or the USDA?
Jim Greenwood: Well, I think that's probably less important, but we think the Energy Department because this is about producing energy. And we don't think that this is the kind of thing where the federal government has to subsidize this ad infinitum. What we need to do right now is demonstrate the commercial viability. There are already plants. There's one in Canada. There's one in Spain. But we don't have any in the U.S., and we're asking the federal government to provide 40 percent and the private sector would provide 60 percent of the funding to build midsize plants to prove the commercial application of this technology. And then we think that the energy companies and the investors and bankers will rush in and want to reproduce the effort.
Monica Trauzzi: So how much should be allocated in this year's farm bill? What's the figure?
Jim Greenwood: Well, $385 million is what we've asked for, what the president has proposed.
Monica Trauzzi: The technology for cellulosic is still a ways off, but when we're talking about cellulosic we'd be using waste in essence and you need more of that in order to get the same amount of fuel. Also, the process for turning it into fuel is a bit more complicated. Doesn't that mean it's going to be costlier? That the fuel itself that comes from that is going to be costlier? Is this economically viable?
Jim Greenwood: Yeah, we think it is economically viable. Of course, as I said, we want to demonstrate that these pilot plants. But what we'd like to see and what we can imagine in the future is a new kind of harvester that comes down through the cornfield for instance, tosses the corn cob into one wagon, which will be used for food and/or feed, tosses the stalk into another wagon which then can be broken down to make the cellulosic fuel. As we continually improve the microbes, particularly as we can make these microbes able to digest cellulose at the cold temperature, you reduce the energy inputs and the cost of the fuel.
Monica Trauzzi: What would you consider the most viable feedstock for cellulosic?
Jim Greenwood: I think there are a variety of viable feedstocks. I certainly think corn stover is one. But we're interested in testing this around the country because perhaps in New England they'll want to use waste from wood pulp from wood manufacturing facilities and from lumbering facilities. We may find that in certain parts of the country sugarcane and the waste from sugarcane is a good source. Switchgrass has been mentioned. And so I think in some places you'll find plant material that is a byproduct of agriculture, sometimes you'll find plant material that is on land that otherwise wouldn't produce, isn't the most arable, but could produce the kind of plants that could be used for it to make fuel.
Monica Trauzzi: Obviously, the issue of using food for fuel is penetrating the discussion over ethanol. Corn products are used in almost all processed foods that we eat here in America. How can we justify using such an important product to fuel our vehicles?
Jim Greenwood: Well, that's where we have to stop making that dichotomy. We're not advocating the use of more and more starch from corn to make biofuels. There's a lot of corn that's going to make ethanol right now, but what we're focused on is the cellulosic part. And eventually, and theoretically, if we can find enough biomass in agricultural waste products, or as I said in wood chips and so forth, theoretically you could actually reduce the demand on the starchy part of the corn for the use of making fuels.
Monica Trauzzi: Can farmers keep up with this growing demand? Whether it be with corn or down the line when we have cellulosic, they're going to have a lot more that they'd need to handle. Can they handle that demand?
Jim Greenwood: Yeah, yeah. I think they can. First off, our productivity continues to grow every year. Part of that is, in fact, because of genetically modified crops. Some environmentalists have questioned GMOs, but the fact that the matter is that with GMOs you can reduce reliance on pesticides. You can have no till practices, so you reduce erosion and at the same time you're able to improve productivity because you are increasing the capacity of the plant to withstand viruses, drought, cold temperatures, etc.
Monica Trauzzi: How much of the future success of ethanol do you think is based on oil prices?
Jim Greenwood: Well, of course that's a factor. In order to be competitive the consumer is not going to very frequently buy even energy-wise cellulosic fuel if they can get gasoline less expensively. I think most people wouldn't do that. So it does rely on the fact that petroleum prices continue to go up, but I don't see any likelihood that that's going to change. We have our ups and downs obviously, but I think the general trend line is going to continue to be up, particularly as places like China demand increasing amounts of petroleum.
Monica Trauzzi: Cargill Incorporated is using its biorefinery now to make chemical products such as plastics by using corn and soybeans as feedstock instead of using petroleum or natural gas. Do you think this poses problems? Are we solving one problem while causing another? Again, going back to the extra production of corn and soybeans to make everyday products.
Jim Greenwood: Well, first off, this is a very exciting development and I think it has huge environmental benefits. To be able to take products that are normally made from petroleum-based blends, and instead bioengineer plants so that they make essentially a plastic-like material within their cells, and to pull that out and then to be able to make, for instance, these plastic water bottles that everyone's running around with. I lie awake at night thinking how many plastic water bottles are piling up on this planet. And anywhere you go, you can go to the most remote island in the Pacific, you can go to the Northwest Hawaiian Islands and you'll find all kinds of plastic products washed up on shore and there's some real dangers to wildlife that come from that. So to be able to make a biodegradable plastic, where you could take all of that stuff, whether you recycle it now or throw it out in the trash, and literally be able to compost it, I think is an incredible environmental benefit. We're just beginning this science. I think we'll learn and, again, I think an ultimate goal would be to be able to use products that use plants that are not competing with, that are not already providing food and feed.
Monica Trauzzi: All right. We're going to end it right there. Thanks for coming on the show.
Jim Greenwood: OK, thank you.
Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.
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