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Hemmings: A Brief History of Biofuels

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When the price of gas leaps into the stratosphere, we scramble to find alternatives and biofuels become big news. They’re hailed as miracles of modern technology that promise to solve our energy problems – or at least ease the pain. But biofuels are not new. In fact, Henry Ford himself envisioned a future filled with biofuels, Rudolph Diesel (yep, that diesel) wanted his famous engine to run on peanut oil, and had it not been for the Civil War, we’d probably be fueling up with biofuels today. So what happened? Why did we forget about biofuels?

Biofuel Basics

Before we delve into the history of biofuels, let’s review some basics. Biofuels are, on the most basic level, fuels made from organic matter through fermentation or extraction. You can make them from pretty much any plant material. Throw some corn husks in a fermentation tank with some friendly bacteria, and you’ll eventually get alcohol. Squeeze oily plants (like peanuts), and you’ll get something you can burn in a diesel engine. Of course there’s a fair amount of distilling and refining that goes into it, but that’s the general idea.

Moonshine, War and Taxes

Biofuels have been used for more than 300 years. In the 17th century, travelers commonly used alcohol-burning stoves to keep warm. Many farmers had stills to make moonshine and lamp or cooking fuel from crop waste. In the early 1800s, a blend of camphene and alcohol was the prominent fuel for lamps. In fact, more than 100 million gallons of the stuff were sold every year.

Some of the very first internal combustion engines were, in fact, designed to run on alcohol. In 1826, American Samuel Morey ran his prototype engine on alcohol. In 1860, Nikolaus Otto, inventor of the Otto-cycle engine, burned ethyl alcohol in his engines. It seemed that alcohol would be the dominant liquid fuel of the burgeoning Industrial Revolution.

Then the American Civil War broke out. Both the Union and Confederacy struggled to finance the war, and in order to feed, clothe and arm the troops, the Union whipped up a mess of treasury notes. The notes, known as greenbacks, were technically legal tender; essentially cash. And we all know today what happens when you dump a bunch of cash into the market: runaway inflation. To curb runaway inflation, the Union created a system of internal taxation, the biggest and most extensive to date. They called it the Internal Revenue Act of 1862, and it effectively created the IRS, along with a bunch of taxes on luxury and “sin” items, including alcohol.

The Internal Revenue Act achieved its goal – it slowed inflation to a reasonable (during wartime) 80 percent – but it really put a dent in alcohol production. The tax on alcohol was $2 per gallon, compared to just 10 cents per gallon on kerosene. As a result, fossil fuel use flourished, especially in the United States, and filled the void left by the absence of alcohol as fuel.

Game of Fuels

In Europe, however, ethanol and other biofuels were still widely used. Tractors, agricultural equipment, stoves and lamps ran on the stuff. Alcohol engines were studied at the Experimental Mechanical Laboratory of Paris and the Deutsche Landwirtschaftliche Gesellschaft in Berlin in the 1890s.

At the same time, crude oil was practically oozing out of the ground all over the globe, and companies like Standard Oil were sucking it up to make incredibly cheap gasoline and other fuels, dominating the market via monopoly and making men like the Rockefellers obscenely wealthy.

When horseless carriages sputtered and trundled into the scene, there was a choice: gasoline or alcohol. In Europe, cars were made for both fuels, and in the United States most cars ran on gasoline, including Henry Ford’s first buggy. However, multiple efforts – by presidents and businessmen – were made to change that dynamic here in the States.

In 1906, the United States repealed its tax on alcohol. Teddy Roosevelt led a charge to free alcohol fuel production from taxation and government control, mainly to help break up the behemoth Standard Oil. “The Standard Oil Company has, largely by unfair or unlawful methods, crushed out home competition,” he said. “It is highly desirable that an element of competition should be introduced by the passage of some such law as that which has already passed in the House, putting alcohol used in the arts and manufacturers upon the [tax] free list.”

It was Roosevelt’s hope that cheap ethanol fuels would compete with Standard Oil’s fossil fuels, leveling the playing field in the energy market. In the scheme of things, it was just one small jab in a nearly ceaseless attack on monopolies that started with the Sherman Antitrust Act way back in 1890. During his time as president, Roosevelt also convinced Congress to establish the Department of Commerce and Labor to oversee big business and the Bureau of Corporations to find violations of antitrust laws.

Ford pursued alcohol as a fuel for different reasons. As a preeminent pragmatist, he saw plant-based alcohol as a prime fuel for American industrialization. He envisioned a sort of symbiotic relationship between farms and factories: Farms would turn crop waste into fuel for factories, and the factories would then use that fuel to make farm equipment. When he built the Model T, he designed it to run on both gasoline and alcohol. He also realized that one day we’d simply run out of easy oil. “All the world is waiting for a substitute for gasoline,” Ford said in 1916. “The day is not far distant when, for every one of those barrels of gasoline, a barrel of alcohol must be substituted.” Shortly thereafter, he joined forces with George Washington Carver to explore biofuels and bioplastics.

Still, gasoline remained cheap – between 18 and 22 cents per gallon. And oil companies had amassed a baffling amount of money and power. Gas stations popped up across the United States, creating an infrastructure for the newly popular automobile to rely on and further cementing fossil fuel’s dominance.

Even then, however, smart minds were predicting the end of the oil boom and even oil shortages. Many were also getting fed up with the fumes and smoke that gasoline engines spewed. In 1917, Alexander Graham Bell famously said: “Alcohol makes a beautiful, clean and efficient fuel… Alcohol can be manufactured from corn stalks, and in fact from almost any vegetable matter capable of fermentation… We need never fear the exhaustion of our present fuel supplies so long as we can produce an annual crop of alcohol to any extent desired.”

When geological surveys in the 1920s reported that the Texas oil fields were, eventually, going to dry up, biofuels became a hot topic. Ford once again promoted his agrarian utopia of farm-grown fuel. “The fuel of the future is going to come from fruit like that sumach out by the road, or from apples, weeds, sawdust – almost anything,” he said in a New York Times article in 1925. “There is fuel in every bit of vegetable matter that can be fermented. There’s enough alcohol in one year’s yield of an acre of potatoes to drive the machinery necessary to cultivate the fields for a hundred years.”

Ford was so excited about biofuels that he backed Kansas-based ethanol company Agrol in the 1930s. The company marketed a 10 percent ethanol blend and opened more than 2,000 stations across the Midwest. The plant’s operators, however, complained about threats and even sabotage from the oil industry. Whether this is true is still up for debate, but the plant closed down in 1938 due to, once again, the cheap price of gasoline.

Large-scale ethanol production kicked back in during World War II, when it was used to make “Buna-S” synthetic rubber. After the war, production fell off. Biofuels fell almost completely out of favor. Cheap gas reigned supreme.

Embargoes, Air Quality and Food

After that, biofuels didn’t get much press until the Arab Oil Embargo of 1973, which sent everyone scrambling for alternatives. Jimmy Carter created federal incentives for the U.S. ethanol industry and 100 new corn alcohol plants were built in the mid-1980s. In 1984 a total of 163 ethanol plants in the United States produced more than 595 million gallons of the stuff. Almost all of it was mixed with gasoline as an octane booster.

Then in the late 1980s, the price of oil dropped to an insanely low $12 per gallon barrel, leading the ethanol industry to nearly go bankrupt. If it weren’t for several clean air and environmental protection acts in the 1990s, ethanol production may have stopped altogether. Instead, oil companies began to use it as an octane booster, and by the late 1990s, the United States was producing about four million gallons of ethanol a year.

Today biofuels are once again in the news. Oil prices are rising and crude oil is increasingly more difficult to get. Even conventional oil companies are buying stock in ethanol, and genius software magnate Bill Gates just bought a quarter of Pacific Ethanol, Inc. Scientists are engineering algae that can make biodiesel out of thin (carbon dioxide-rich) air. It seems like Ford’s agrarian-industrial utopia may just become a reality.

But biofuels suffer from one fatal flaw: Most require farmland. As the world’s population soars past 7 billion people, farmland becomes more and more valuable – for food. And that fact has not gone unnoticed. In 2007, a group within the United Nations called for a five-year moratorium on food-based biofuels, including ethanol, calling them “a crime against humanity.”

In addition, biofuels aren’t as energy dense as fossil fuels. A gallon of ethanol, a biofuel usually made from corn or cane sugar, contains only 70 percent of the energy that’s in a gallon of gasoline. But unlike fossil fuels, biofuels don’t take millions of years to make.

Still, biofuels will undoubtedly have a role to play in the emerging new energy economy. Many see them as a way to reduce U.S. dependence on foreign oil and to create jobs, rationales behind the EPA’s Renewable Fuel Standard and recent rulings allowing the use of E10 and E15 ethanol-blended fuels nationwide. And one can be sure that every time gas prices spike or roll past another previously unthinkable price point, discussion of increased biofuel use will follow.

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