By Tom Still

MADISON – With gasoline prices hovering around $2 per gallon
or less for regular grade across Wisconsin, drivers are saving money every time
they fill up their tanks.

The story for producers of alternative fuels and researchers
seeking to unlock next-generation biofuels is very different. Their tanks are
running on vapors.

Economists predict that low gas prices are likely to
continue through 2015 and save consumers billions of dollars throughout the
year. The chief economist as Mesirow Financial last week predicted savings of
$300 billion throughout the U.S. economy; an analyst for U.S. Bank’s Private
Client Reserve recently forecast about $100 billion in savings; the American
Automobile Association has estimated $75 billion in savings.

Those are huge numbers either way, with the U.S. Energy
Administration predicting in December the average household will save $550 over
the course of the year.

Reasons for the price decline include strong supply from
U.S. shale producers and “fracking” fields, as well as the return of production
in the Middle East and an OPEC decision to maintain production targets. In
addition, Libya has resumed exports, production is on the rise in Iraq and
there’s potential for lifting Iranian sanctions. Weakening demand in China and
Europe has helped – and so has overall fuel efficiency progress in the United
States, where there are more hybrid vehicles and conventional vehicles that
simply burn less gas.

The combination has dealt a blow to efforts to commercialize
advanced biofuels, such as ethanol made from woody plant waste or diesel made
from plant oils.

A recent report in MIT Technology Review noted that advanced
biofuels progress has been slow, despite federal rules requiring the use of
such fuels. In 2014 a few large-scale cellulosic ethanol plants became
operational, including plants operated by Poet-DSM, DuPont and Abengoa. All
were planned when oil prices were above $100 per barrel; it’s now hovering
around $50 per barrel.

No wonder that some cellulosic plants on the drawing boards
were cancelled, even before the oil price plunge was in full swing.

Federal biofuel requirements were created with an energy
bill passed in 2005. Signed into law by then-President Bush, the standards were
meant to promote energy independence. They required ever-increasing numerical
gallon requirements for the use of ethanol and advanced biofuels in a range of
transportation fuels.

In 2013, the U.S. Environmental Protection Administration
scaled back requirements for the total volume of biofuels that must be part of
the transportation fuel mix. The EPA cited market saturation due to
lower-than-expected demand for gas, thus limiting the amount of ethanol that
can be blended.

The EPA may update those requirements again in 2015. If
they’re repealed, the market case for cellulosic biofuels and biodiesel “would
cease to exist,” according to Wallace Tyner, a Purdue University agriculture
and energy economist cited in the MIT report.

While the “peak-oil” crowd will continue to insist that
petroleum is a finite resource and generally bad for the environment, the
short-term forecast is a barrier for producers and researchers – including some
major institutions in Wisconsin.

The global cleantech market and industry trends will be
discussed from 4 p.m. to 6 p.m. Tuesday at a meeting of the Wisconsin Cleantech
Network in Madison. Tim Donohue, director of the Great Lakes Bioenergy Research
Center, will speak at the Wisconsin Energy Institute on the UW-Madison campus.

The Great Lakes Bioenergy Research Center is led by the
UW-Madison and is one of three bioenergy research centers established in 2007
by the U.S. Department of Energy.  The center is working to meet the
nation’s need for a comprehensive suite of clean energy technologies, including
next-generation and drop-in fuels that can be used by today’s engines.

Research at the center supports the development of a
pipeline from biomass production through pre-treatment and final conversion to

Are advanced biofuels dead? Not yet, but it would likely
require federal mandates tied to a carbon policy to keep them off life support.
With global climate change a scientific reality, whether such change is
entirely man-made or influenced by natural changes, global policy appears
heading in the direction of stricter carbon limits. That’s not automatically
the case closer to home, however.

For consumers, lower gas prices are a welcome respite. For
those who want advanced biofuels to be the replacement source, 2015 could be a
year of turnaround – or a time when the fuel gauge needle bounces on empty.