We Should Focus on Bioplastics, Not Biofuel

(MoneyWatch)  Why do industry heads, policy wonks and the general public focus on turning plants into fuel, rather than other, potentially more lucrative and useful substances? Making biofuels to replace gasoline seems like the intuitive and obvious way to reduce our oil consumption -- but appearances can be deceiving.

The past decade has seen an immense push of money and resources into various biofuels. First it was corn ethanol. Brazil popularized sugar cane ethanol, and today companies like Coskata and Range Fuels are working on breaking down various "woody" substances, mostly grasses and trees, into fuel our cars can burn.

There's one glaring problem. Transportation fuel is one of the cheapest commodities on the planet. In many places, a gallon of gasoline is cheaper than a gallon of water. It's an incredibly difficult technical challenge to make fuel from corn or switchgrass compete on price with the oil we pump from the ground.

So far, there are no successful makers of second-generation biofuels from woody plants, and many of the first generation companies that made fuel from corn went bankrupt. Unless gasoline prices are high, these companies simply can't make money.

A less obvious problem is that, contrary to the glowing predictions of some experts (usually people with a stake in making biofuels succeed), there's no way we'll grow enough of any plant to stop using oil for transportation. Biofuels cannot replace more than a small percentage of our oil needs -- perhaps 10 percent.

Bioplastics and bio-based chemicals, on the other hand, avoid both of these problems. First, on a per pound or per gallon basis, most chemicals and plastics sell for a higher price than gasoline or diesel fuel. In some cases they sell for a high multiple.

Rather than having to figure out how to operate on a razor-thin margin, or none at all, a company that figures out how to make a plastic from a plant rather than oil will likely have some financial breathing room.

Second, our potential stock of plant matter is closer in size to the needs of our plastic and chemical markets than our transportation market. Each year, making plastic consumes about four percent of the world's available oil supplies. Take a look around: chances are you're surrounded by plastic, in your computer, your furniture, your electronics, maybe even your clothing. Today, it's all made from oil.

Could the oil that goes to making that plastic be replaced by plants? You bet. A new study suggests that 90 percent of our plastics could be bio-based in fairly short order.

There are already companies working toward making bioplastics and biochemicals. Startups like Cereplast, Metabolix and Novomer are in the game, as well as giant companies like Archer Daniels Midland and Dow Chemical.

It's not enough; ethanol and other biofuels still get far more attention and funding, especially from government, even though biofuels are failing to reach production targets. In developing industries, technologies that get grant money and press attention usually win out, so more companies continually show up promising biofuel breakthroughs.

Using plants to run our cars seems sexy. But it's time to pay attention to what makes sense.