FAQ: Guide to alternative fuels

Here's a handy guide to the major players in the alternative fuel world. Photos: Fuels of the future

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
11 min read
What will you fill up your car with in five to ten years? It's hard to say. Several different alternatives to petroleum and diesel, or ways to economize on them, have come forward in the past few years, and each has its own pluses and minuses.

Experts warn that it won't be easy to get off of petroleum or reduce how much the world uses. The amount of energy per liter derived from petroleum is far better than most of the alternatives, a worldwide infrastructure based on it already exists, and people tend to be lazy--seeking out alternative fuels takes some effort.

Fuels of the future

If oil drops below $55 a barrel, most of these alternatives stop becoming attractive, says Dan Arvizu, director of the National Renewable Energy Laboratory. And the Organization of the Petroleum Exporting Countries is watching what is going on in alternative fuels and can gauge oil prices accordingly.

"We do have a problem with how serious we are about our energy challenges," he said.

Global warming and improving technology, however, are making the alternatives more realistic all the time. Here's a guide to the main alternatives.

1. Ethanol

What: Ethanol is an alcohol produced out of corn, sugar cane or other food crops. During the production process, the plant material goes through several stages of heating and reduction. Ethanol is typically mixed with gasoline. Some cars can run on a mix of 85 percent ethanol and 15 percent gas, but ethanol is most commonly used as an additive in smaller percentages. Forty-seven percent of U.S. drivers today use some form of ethanol, but they usually only put small amounts in their cars: many states now use it for a substitute for MTBE, a common fuel additive with potential health risks to humans and other animals.

Pros: Ethanol pollutes less than regular gas. And we already know how to make it in large volumes. Brazil uses ethanol made from sugar cane extensively. Investors are pouring billions of dollars into ethanol refineries in the U.S. There are 109 ethanol plants in the U.S. and 40 new projects coming on line, according to Michael Eckhart, president of American Council on Renewable Energy (ACORE).

Cons: Where to begin? First, food crops aren't an ideal fuel source. An acre of corn produces 480 gallons of ethanol, according to Paul McCroskey, chief financial officer at Ceres, which makes enzymes for the fuel industry. That's a lot of land.

Ethanol only puts out two-thirds the energy of gas, so car mileage is lower on ethanol. Ethanol production also generates tons of carbon dioxide, which, if it's not captured turns into greenhouse gases. Producing ethanol also requires lots of energy. It's popular, say some, because farmers love it, and they tend to show up on Election Day.

To top it off, the price of corn is climbing, while gas prices are declining. In January 2006, ethanol sold for $3 a barrel, while a bushel of corn cost $2. Now, ethanol sells for $2 per barrel and corn goes for $4.20 a bushel, according to ACORE. "We have seen the most profitable space in the fuel business disappear in a year," said Eckhart. OPEC, he added, will lower oil prices to put pressure on the ethanol industry.

2. Cellulosic ethanol

What: Cellulosic ethanol is also an alcohol, but it's made out of wood chips, corn stalks and agricultural waste products. Some scientists also believe cellulosic ethanol can be produced out of plants like switchgrass that require little fertilizer and water and could grow in the windswept plains of South Dakota.

Pros: The feedstock dilemma essentially disappears. The vegetable matter used in cellulosic ethanol has almost no value, which will mean margins won't get compressed by commodity price shifts, and critics can't argue that food crops in a hungry world are going to cars. Mascoma, Dyadic International and other companies are also devising ways to convert the high-cellulose waste matter into alcohol with microbes and enzymes, thereby cutting production costs and total greenhouse gas emissions.

The goal is to get cellulosic ethanol to the point where the "real" cost per gallon will run you $1.62, according to Arvizu. (The real cost is how much ethanol it will take to go as far as a gallon of gas will take you. Typically, 1.67 gallons of ethanol equal 1 gallon of gas.) By contrast, the "real" cost of standard ethanol is close to $3.50 or more now, he added.

Cons: It pretty much only exists in labs right now, but larger-scale production is coming. Mascoma plans to open a trial plant that can produce 500,000 gallons a year by the end of this year.

"It (commercial cellulosic ethanol production) used to be five or six years out, but we could get it done in three years. The key is being able to build a plant that can do one to two million gallons," said William Baum, executive vice president of Diversa, which finds microbes in exotic locales and puts them to work.

Like regular ethanol too, cellulosic faces a retail problem: the stations emblazoned with Shell or ChevronTexaco signs won't be clamoring to carry it. That's partly why only 1 percent of U.S. stations--mostly independents or pumps at grocery stores--serve ethanol.

3. Poo-troleum and fish-tank fill-up

What: It turns out you don't have to compress dinosaurs and plants for millions of years in the earth's crust to get petroleum. You can make it. BioPetrol in Israel says it has adapted the Fischer-Tropsch process for turning coal into petroleum to turn human sewage into petroleum.

Meanwhile, in the States, LiveFuels is working with Sandia National Labs to refine a technique for converting algae into petroleum. The dinosaurs actually had little to do with our modern-day tar pits, said CEO Lissa Morgenthaler-Jones. The big oil fields, such as the ones in the North Sea, were actually created by algae, she claimed.

Pros: No one really wants the feedstock. LiveFuels says it can potentially get 10,000 gallons of useable hydrocarbons for an acre-size pond a year. The hydrocarbons would be boiled down into useable diesel or petroleum. The ponds would be fed by farm waste water.

"This stuff loves agricultural run-off," Morgenthaler-Jones said.

Cons: It's experimental with a capital E, so no one knows what the costs will be or whether it can work on a broad scale yet. Plus, there is the greenhouse gas question. These fuels are carbon neutral in the sense that no carbon will be dug up from beneath the earth and ejected into the atmosphere. These fuels rely on carbon that's already on the surface in the form of waste or algae and it will decompose. Still, it's petroleum, so CO2 still comes out of the tailpipe.

4. Biodiesel

What: It's diesel fuel made out of soy, palm or other vegetable oils. The drippings from a deep fat fryer can run a diesel car, as long as you filter it and heat up the oil to make the oil more viscous. Biodiesel refiners essentially do the filtering for consumers. There are 85 biodiesel plants in the U.S. and 65 in construction, according to ACORE.

Pros: It's got far fewer economic and environmental hurdles than ethanol, says Martin Tobias, a former Microsoft exec who now runs Imperium Renewables, a biodiesel maker. Diesel cars are very popular in Europe, and several manufacturers make high-mileage diesel cars. Some truck and bus makers already produce diesel hybrid trucks. Biodiesel could be sold to those people right now. And since industrial diesel users buy their fuel directly, they don't have to worry about corporate service stations snubbing biodiesel altogether.

Finally, biodiesel puts out far less carbon gases. Sulfur can be a problem with soy-based biodiesel, but Tobias says it can be contained.

Cons: Farming sometimes isn't the most eco-friendly activity, and some worry that a surge in demand for palm oil will lead to slash-and-burn agriculture and pollution in the tropics. Advocates, though, say that farmers are tackling this problem. One group in Colombia is growing biodiesel feedstock on old coca plantations. The rising popularity of biodiesel is expected to impact the cost of food oil.

Even after the new facilities get built, biodiesel is a drop in the bucket of the world's fuel needs. There are only 150 million gallons of the stuff produced a year in the U.S. and, although that number will climb to 250 gallons this year, the U.S. consumes about 62 billion gallons of diesel a year.

5. Hybrid cars

What: Toyota scored big with the Prius, which runs on an electric motor and a gas motor: in the city, it mostly runs on electric, but switches to gas on the freeway. General Motors wants to cut the use of gas further with its Volt. In the Volt, which could be ready in two or three years, the gas motor doesn't run the car. Instead, it exists to recharge the battery. In the end that leads to less fuel consumption. Ford, meanwhile, is touting the Edge, an SUV in which a hydrogen fuel cell recharges the battery. The battery in the Edge also gets charged by plugging into a wall.

Similarly, several small companies have touted plug-in hybrids. These are similar to the Prius, but the battery for running the electric motor can be recharged through a plug.

Pros: The less the gas motor gets used, the greater the gas mileage and the lower levels of greenhouse gas emissions. Ford has also minimized the tasks for the hydrogen fuel cell so you won't have to worry about refilling it too much, especially if you charge the battery.

Cons: None that are too big. The public clearly likes hybrids. Still, Toyota has been the big success story here. It is unclear how well GM and Ford will do. Also, questions remain on whether the public really will buy hybrid SUVs and sedans. SUV customers tend to look at features beyond fuel efficiency, but the data isn't conclusive yet.

6. Electric cars

What: Better batteries are allowing car manufacturers to run cars wholly on electricity. Tesla Motors, Think Global and Wrightspeed are marketing all-electric sports cars and economy cars. Zap says it will do a mid-size sedan. Some companies are selling electric scooters and rickshaws into India.

Pros: The more a vehicle runs on electricity, generally the less pollution it creates. An all-electric car produces no tailpipe emissions. Emissions are created indirectly because the power plants that charge the batteries in these cars often run on coal. But in most cases, you see a big reduction in greenhouse emissions. Battery makers like Altair Nanotechnologies and Valence Technology hope to score big.

The mileage is fairly astounding; it only costs a few cents per mile to run an electric car. Tesla and Wrightspeed have also shown that electrics can hang with Ferraris and Porsches.

Cons: The range. Most of these cars can only go 100 to 200 miles before they need a recharge, although Zap says its car will go 350 miles. Forget conspiracy theories: earlier electric cars died out because they didn't get very far and had ornate charging procedures, say execs at Toyota, and even electric car advocates. Batteries also cost a lot of money. Building an all-electric car like a Honda Accord today would probably cost you $20,000 or more in batteries, says Ian Wright, founder of Wrightspeed. Progress is occurring and sales are growing, but it will take time to improve the battery technology.

7. Gas to Fuel

What: Shell and ExxonMobil are ramping up production of a fuel in Qatar called Gas-to-Liquids that's derived from natural gas. It significantly reduces the sulfur, carbon monoxide and other pollutants that belch from car tailpipes. And although more costly than regular gas, it should help crimp the air pollution in places like Los Angeles, or in New Delhi, where diesel buses are banned. GTL is made through a variation of the Fischer-Tropsch process invented nearly a century ago for turning coal into gas. (Irwin Rommel, the German field marshal in World War II, drove across North Africa on coal turned to liquid).

Pros: Instead of starting with coal, the GTL process begins with synthetic gas created in an industrial plant. The synthetic gas derives from natural gas--which is far cleaner than coal--and other materials. You can actually drink it. Food producers use a kosher-approved GTL derivative used to line juice boxes. It goes straight into diesel buses and cars. It's on sale in select stations in Europe and Asia.

Cons: It's expensive. A gallon of GTL takes an inordinate amount of natural gas. The oil companies are mostly only making GTL out of oil fields that are too expensive or difficult to connect to pipelines. While GTL is already being sold in select stations in Europe, it will mostly pop up in polluted megacities.

8. Compressed Natural Gas

What: A barbeque on wheels. CNG cars and buses run on methane, which pollutes less than regular gas. They've been around for years and can be seen at the airport all the time. Researchers at the University of Bath, however, are working on sportier models.

Pros: They've been around for years. Hence, there aren't technological problems to work out. The world's supply of natural gas is also fairly good. CNG taxis and buses are popular in places like Dubai because the oil fields are close by, according to Richard Steele, CEO of AFV Solutions, which makes CNG and hybrid-diesel buses.

China is eyeing more CNG cars, according to Barbara Finamore, director of the National Resources Defense Council's China Clean Energy Program. They want to clean up for the Beijing Olympics and "biofuels are not a good bet here" because crops can compete with food, she said.

Cons: Natural gas isn't renewable and, even though it's cleaner than regular gas, it's still a fossil fuel.

9. Hydrogen

What: For years, hydrogen was widely considered to be the fuel of the future. In hydrogen fuel cell cars, hydrogen and oxygen are mixed in a fuel cell. The resulting chemical reaction produces electrons, which power a battery in the car, and water vapor. There is no pollution created in the reaction. Toyota and Ford have talked about bringing out hydrogen cars in 2015 or 2020.

Pros: It will be nearly impossible to run out of hydrogen in the universe. The prototype cars have also continued to improve. Some hydrogen prototypes can run at over 100 miles per gallon. Engineers are also figuring out ways to store the compressed gas so hydrogen cars can still have a trunk.

Cons: Although the car doesn't belch pollution, making hydrogen typically produces large amounts of carbon dioxide at the factory. To make hydrogen, most producers combine methane with water and heat up the mix to 815 degrees Celsius, which produces 9.3 kilograms of carbon dioxide for every kilogram of hydrogen. Hydrogen is also expensive to make, store and transport. You can't send it down regular pipelines. Then there is that problem of building hydrogen filling stations.

Competitors aren't scared.

"Hydrogen is hopeless," said Martin Eberhard, CEO of Tesla.