Illustration by Mary Susan Weldon

One sunny spring afternoon, friends sat together in the backyard of a Corvallis home sipping wine, bemoaning the recent hike in gas prices to $3.50 per gallon. Among them were a former product-development specialist for Hewlett-Packard and an Oregon State University chemist. Perhaps inspired by the bioethanol in their glasses, what might happen, they wondered, if they could turn local agricultural by-products — grass and wheat straw, fruit and vegetable processing wastes — into fuel? Thus was born the idea for a new company, Trillium FiberFuels.

They didn’t intend to compete against the rapidly expanding corn-ethanol industry. As of 2010, more than 200 facilities, mostly in the Midwest, were churning out about 13.5 billion gallons of corn ethanol a year. The Trillium co-founders’ hope was that they would develop a more environmentally sustainable product (lower greenhouse-gas emissions, less water pollution), provide another revenue source for rural Oregon land-owners and contribute to the national energy goal of producing 36 billion gallons of biofuel annually by 2022. Trillium had entered the cellulosic-ethanol business.

Priority No. 1 for any new company is to stay alive. So Trillium succeeded in competing for federal and state grants and spun off another small business along the way (Cascade Analytical Reagents and Biochemicals). In a small wood-frame building just off Highway 99 north of Corvallis, the company has developed a method (known as xylose isomerization) to ferment the 20 percent to 40 percent of plant biomass that resists being turned into ethanol by yeast. Trillium president Chris Beatty credits research by OSU Distinguished Professor Stephen Giovannoni, who isolated and sequenced the genome of a microorganism used in the company’s experiments.

The goal is to produce cellulosic ethanol at a competitive price and ramp up production quickly. “If you’re going to make a dent in this business, it’s either grow big or stay home,” says Vince Remcho, Trillium co-founder, OSU professor of chemistry and affiliate scientist with the Pacific Northwest National Laboratory. Other co-founders include Beatty, Steve Potochnik and Grant Pease, all with former or current ties to HP.

Priming the Pump

Trillium isn’t the only business collaborating with OSU to have grand ambitions. Spun directly out of research or boosted by patented OSU technology, others are aiming to grab significant shares of business and consumer markets. Some of their products are already coming off farm fields and manufacturing lines.

Through their relationships with OSU, these and other companies create jobs, diversify the Oregon economy and respond to market demands for more sustainable, consumer-driven technologies. And in turn, OSU benefits. Students gain experience through internships. Faculty stay up-to-date on industry practice. And licensing revenues provide new research funds. “The purpose of our efforts is impact,” says Ron Adams, executive associate vice president for research. “It relates to our land grant mission, so we’re furthering economic development and social progress. We’re partnering in R&D that will result in new products and business opportunities.”

Still, working with businesses isn’t like serving students or competing for research grants. Adams and others are mindful that entrepreneurs and business managers face rapidly changing risks and protect their interests accordingly. “The people who are investing their lives and money in those enterprises are not depending totally on us to get it done,” Adams says. “If you’re an entrepreneur running one of these companies, you want 100 percent control.”

While companies do look to universities for innovation and skilled, well-educated employees, “we’re not an economic development organization,” adds Brian Wall, director of the Office of Commercialization and Corporate Development. “We are an economic driver through our graduates, research partnerships and licensing. We’re always on the lookout for discoveries that offer opportunities for commercialization and new business investment. This is an important area of growth and impact.”

The rules that define that process — agreements on copyright, licensing, royalties and other steps — are based on policies created by the Oregon State Board of Higher Education.

Show Me the Money

Private-sector partnerships show up as support for problem-oriented research. Nationally, according to the National Science Foundation, industry funded nearly 6 percent of the roughly $55 billion in research performed in institutions of higher education in 2009. At Oregon State in 2011, studies funded directly by industry totaled about $5.4 million, or 2 percent of the university’s $261.7 million in grants and contracts. However, that doesn’t include contributions from research gifts, agricultural commodity groups, the forest-products industry and testing services, which bring the total close to $13 million, or about 5 percent.

What about return on investment? Perhaps the most dramatic comes from the agricultural sciences, which helped Oregon farmers and ranchers to earn a record $5.2 billion in farm-gate sales in 2011. Oregon beef topped the list as the state’s most valuable agricultural commodity. Ranchers have a long history of working with OSU researchers through Agricultural Experiment Stations in animal and rangeland science on feed, herd health and cattle management.

Impact also comes from fledgling startup companies like Trillium. Over the past eight years, new OSU-assisted companies have raised $160 million in private investment and created 350 jobs, says Rick Spinrad, vice president for research. New businesses proceed through stages, he adds, from research-inspired startup to venture-funded, revenue-producing and growth-focused.

At every step is a major hurdle: money to pay for product development, market analysis and management expertise. Among the sources of funding that help young companies transition from one stage to another are the Oregon Nanoscience and Microtechnologies Institute (ONAMI), the Oregon Built Environment and Sustainable Technologies Center (BEST) and the OSU University Venture Development Fund. The latter leverages tax-deductible contributions from private citizens. The OSU Foundation conducts fundraising, and the OSU Research Office manages investments. Recent examples include:

• Ultra-high-temperature water pasteurization for another startup, Home Dialysis Plus ($182,700)
• Market analysis of a landmark new LCD display by Inpria Corporation ($100,000)
• Development of a thermal energy storage system by a new company, Applied Exergy ($148,514)
• Proof-of-concept display for a new type of diode that could replace silicon and reduce energy, leading to a new company, Amorphyx ($150,000)

Trillium FiberFuels, meanwhile, announced in April 2012 that it received a $150,000 Small Business Technology Transfer grant from the U.S. Department of Energy (DOE) to develop a commercial-scale enzyme production process for the cellulosic biofuels industry. Based on manganese peroxidase, which is found naturally in white-rot fungi, the new process emerged from the lab of OSU researchers Christine Kelly and Curtis Lajoie. The company has also received funding from sources such as the U.S. Environmental Protection Agency, the National Science Foundation, U.S. Department of Agriculture, ONAMI and Oregon BEST.

“There is a reason to invest in research in biofuels,” says Remcho. “It will play a role in U.S. and worldwide energy needs in the future. So it’s coming. We just need to do it intelligently.”

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The Oregon State College of Engineering partners with businesses from HP to Azuray Technologies to deliver solutions for product development.

Thus was born the biofuels industry — and also the first known barbecue.

Illustration: Celia Johnson

The name of that cave, Wonderwerk, means “miracle” in the Afrikaans language, and indeed biofuels were a miracle. From cooking to heating and light, fire aided the evolution of the human race. The biofuels industry even preceded Homo sapiens and anatomically modern humans by about 800,000 years.

Over time, barbecue techniques made steady progress, achieving ultimate perfection in South Carolina pulled pork. However, despite their importance and a few innovations like fireplaces and metallurgy, biofuel technologies tended to stagnate for about 999,000 years. In the developed world, biofuels were eventually dwarfed by fossil fuels like coal, oil and natural gas, and challenged more recently by solar, nuclear, wind and even wave energy.

Now, we’ve come full circle.

Biofuels are back, hotter than ever, the source of billions of dollars in new investments. From corn ethanol to biodiesel and now forest products, biofuels are often touted as a sustainable fuel source that will lessen our dependence on imported oil and provide domestic jobs. It’s ideally seen as win-win, and researchers all over the world are trying to perfect new technologies, increase efficiency and make biofuels more cost-effective.

It has also been proposed that biofuels could help mitigate climate change — that substituting them for their fossil-fuel counterparts would reduce “greenhouse gas” emissions into the atmosphere — but that assumption is facing challenges both locally and globally.

Jet Fuel

This is not your caveman’s biofuel. A U.S. Department of Agriculture program that was announced last year will bring $80 million to Pacific Northwest industry and universities, $9.8 million of it to Oregon State University, for a diverse program of research and education to create aviation fuel out of tree plantations and low-value wood products. Through the miracle of cellulosic ethanol, some jets of the future will fly on fuel made from Pacific Northwest trees.

Illustration: Celia Johnson

“We could take material that isn’t now being used and create a new billion-dollar industry in the Pacific Northwest,” says John Sessions, a distinguished professor of forest engineering at Oregon State and principal investigator working on the Northwest Aviation Renewables Alliance.

“At the same time, we could help thin forests that are unhealthy and overcrowded, benefit wildlife habitat, reduce the risk of catastrophic fire and provide some badly needed jobs in communities that have lost their historic base in timber production,” Sessions says. “This won’t solve all of the nation’s energy concerns, and we shouldn’t say that it will. But it could make an important contribution.”

Sessions is quick to point out that “not all biofuels are created equal” and that thinning forests will cost substantially more than just using residues from existing logging operations — although the cost issue would look much better if commercial timber from small trees were harvested along with residue. One of OSU’s primary roles in the new initiative is to identify ways to get wood out of the forests more efficiently, and Sessions says that cutting logistical costs by 30 percent or more is a reasonable target.

However, questions about the modern biofuels industry have been raised almost since its inception, and as the debate enters the forest-products industry, it’s getting more intense. Cost is a big issue. So is what many ecologists consider the single most serious environmental threat in the world today — global warming, or the greenhouse effect.

Carbon Emissions

Some early proponents of biofuels suggested that they could be “carbon neutral” or even better, meaning they will not compound concerns about greenhouse warming and might even reduce it. Since they are produced from crops or trees that “sequester” carbon from the atmosphere as they grow, the theory was that sequestration would offset most or all of the carbon they release when they are turned into one type of fuel or another.

Illustration: Celia Johnson

“Different sides in this debate tend to pick the numbers that best support their arguments,” says Mark Harmon, a professor of forest science at OSU and one of 18 researchers in the nation advising the U.S. Environmental Protection Agency on biogenic carbon. “The truth is more nuanced.”

The bottom line, Harmon says, is that almost any harvest of existing forest trees will cause a net increase of carbon to the atmosphere and that it may take decades or even centuries to “pay it back” with future tree growth. For global-warming concerns that are real and immediate, that’s a problem.

“This is a dilemma, and there won’t be any magic fix,” he says. “Forests are renewable, but only over very long time spans. Biofuels from tree harvesting would create a carbon debt that would be very difficult to pay back, like borrowing on one credit card to pay off another. The enthusiasm for them may have gotten ahead of the science.”

Harmon has estimated that, in an Oregon Coast Range stand, if you removed solid woody biofuels for the reduction of catastrophic fire risk and used them to produce cellulosic ethanol, it would take 339 years to reach a break-even point in carbon sequestration.

Another study last year at OSU, the largest and most comprehensive yet done on the effect of biofuel production from West Coast forests, echoed these concerns. It found that an emphasis on bioenergy would increase carbon-dioxide emissions from these forests at least 14 percent, if the efficiency of such operations were optimal. Harvest increases, for any reason, would result in increases in greenhouse emissions.

An analysis just published in the journal Global Change Biology/Bioenergy raised even more doubts, if forest biomass were to reach its ultimate potential. The authors, who included Beverly Law, a professor of global change forest science at OSU, wrote that a major global commitment to forest-biomass energy “would result in a reduction of biomass pools that may take decades to centuries to be paid back by fossil fuel substitution, if paid back at all.”

Reported emission savings from forest bioenergy are based on erroneous assumptions, they added, and a large biofuels industry would push forest management to ever-shorter rotation lengths, with depleted soil nutrients and fertility, increased erosion and flooding, and degraded fish habitat in streams. Even the economics may become more difficult, according to this analysis. In Europe, where bioenergy is subsidized, the cost of woody biomass from conifers surged in price from 300 percent to 600 percent between 2005 and 2010.

“Based on review of the literature, the paper concluded that large-scale bioenergy production from forests is neither sustainable nor greenhouse-gas neutral,” says Law, who is also a co-author of the National Research Council report on methods for quantifying and verifying greenhouse-gas emissions. “These issues have not been thought out very fully.”

By the Numbers

That’s about the same perspective held by William Jaeger, an OSU professor of agricultural and resource economics who has studied the economics of biofuels for the past five years.

“Biofuels were being seriously promoted before two main areas were thoroughly analyzed,” Jaeger says. “Those areas are net carbon analysis and economic constraints. People looked at this somewhat superficially. They said, ‘We can grow our own energy; why buy it from Saudi Arabia?’”

Biofuels, he says, were seen at first as such a win-win by most groups that they engendered almost no opposition. Political leaders loved them, environmental groups went along, jobs were being created and crop prices went up for farmers.

Under Jaeger’s analysis, however, the facts are less rosy. He analyzed ethanol produced from crops and switchgrass cellulose, including some approaches that are simpler and even less costly than the current move toward forest-based cellulosic ethanol. Jaeger concluded that existing policies have been very costly, produce negligible reductions in fossil fuel use and increased greenhouse-gas emissions.

His bottom line?

For complex reasons, the growth of a biofuel industry is doing almost nothing to reduce use of fossil fuels. And if you wanted to reduce gas consumption by 1 percent, U.S.-produced biofuels would cost 20 to 31 times more than energy-efficiency improvements. Meanwhile, the cost of taxpayer subsidies for some of these programs is extraordinary: Current ethanol subsidies to operate a 100-million-gallon ethanol plant translate to about $1 million per job, per year. Depending on the type of biofuel, there are risks of local pollution, heavier demands on land use and higher food prices for the poor.

Will some of the research being done around the world, and in the Pacific Northwest, change that? Some researchers believe it will. At least incremental improvements in efficiency and cost are probable. Whether they will be enough to offset the huge obstacles is more problematic. But while subsidizing a whole industry right now is questionable, even Jaeger points out that investment in research often has a very high payoff.

Forest Investment

“Until we work on them, we really won’t know what improved technologies will be able to do,” says Claire Montgomery, an OSU professor of forest resources. “And some of these costs have to be kept in perspective. We’re spending billions of dollars to protect our access to fossil fuels, and the cost of fire suppression in the U.S. has tripled since the mid-1990s to $1 billion a year.”

Wood or Oil?

The research cited here shows what some of those consequences, good and bad, might be when we
transform wood, a carbohydrate renewable over a scale of years to centuries, into heat or fuel.
Read more…

Other issues aside, Montgomery says, Pacific Northwest forests and rural communities are struggling. Decades of fire suppression have led to overcrowded forests, insect and disease epidemics are increasing, rural communities have high unemployment levels, and there’s little money to do anything about it. A biofuels industry could help all of these.

In her research, Montgomery is trying to identify where a supply of wood that could fuel an industry most closely matches up with the communities that need help. “Displacing fossil fuels is good,” she says. “Creating jobs is good. Helping rural communities is good.”

But a biofuels industry is not simple, certainly not as simple as once envisioned. And the issues of greenhouse warming, high societal costs and other environmental concerns are not easily dismissed.

Biofuels still make for a great barbecue. But it’s safe to say the caveman who invented this industry a million years ago had no idea, before it was all over, just how complicated the business might get.

Cellulose Power

Professor Michael Penner in the Department of Food Science and Technology is studying one of the holy grails of the bio-based fuel industry: the economical conversion of woody plant materials into ethanol and other value-added products. In the Pacific Northwest, where woody biomass is an abundant source of potential energy, the search for enzymes that can break down the tough-walled cellulose holds huge promise. Unlike the starches found in agricultural crops like corn, which can be easily converted to sugar and then to liquid fuel, woody materials are, in Penner’s words, “recalcitrant” to conversion — that is, they require extra chemical intervention before they reach the simple-sugar stage. Penner’s lab is working on cost-effective ways to attain this critical “sugar platform.”

Bleaching Agent

Fungi that commonly colonize old tree stumps may benefit the paper industry and the environment. In the Department of Chemical Engineering, Christine Kelly is using white-rot fungi and yeast to create a nontoxic alternative for bleaching paper. She has transferred a gene from the fungi, which produce an enzyme that degrades lignin, into yeast that can be cultivated under industrial conditions.

While the enzyme — manganese peroxidase — has shown promise as a bleaching agent in the laboratory, Kelly and Curtis Lajoie, a research professor in Civil, Construction, and Environmental Engineering, are refining the production process. Their goal is to coax the yeast to create an active, stable and highly concentrated enzyme that can replace currently used chemicals.

Microbe Energy

Turning sewage into voltage is the aim of Assistant Professor Hong Liu’s research in OSU’s Department of Biological and Ecological Engineering. Some bacteria living in wastewater can kick off electrons from pollutants. So Liu is developing microbial fuel cells to capture the energy stored in wastewater, while simultaneously treating the water. She envisions a day when developing nations, such as her native China, will have waste-treatment facilities powered by the very waste they process, making them energy self-sufficient and thus more widely affordable.

Liu is also working with Kaichang Li in Wood Science and Engineering to generate electricity from wood. A mixture of the hundreds of small, organic compounds in hydrolyzed wood, the researchers have recently discovered, can be converted directly into electricity with microbial fuel cells. “Liu and I are seeking funding to build the world’s first integrated, portable, compact system for generating electricity directly from wood,” says Li.

Natural Rubber

OSU agronomist Daryl Ehrensing is part of a private-sector initiative to develop a domestic source of natural rubber. With support from Akron, Ohio-based start-up Delta Plant Technologies, Ehrensing is principal investigator for the Department of Crop and Soil Science breeding program to grow a high-yield variety of the Russian dandelion. The plant, native to Kazakhstan, produces a high-quality latex that can be used in auto and aircraft tires. Other universities working on the project are Ohio State, Washington State and Montana State. In another rubber-related project at OSU, this one funded by a German rubber chemical company, Kaichang Li in Wood Science and Engineering is investigating ways to use cellulose crystals instead of silica and carbon black in tire manufacturing.

Food Coatings

Yanyun Zhao, an associate professor in the Department of Food Science and Technology, is focusing on the freshness, health benefits and market value of foods. She is developing biodegradable and edible films and coatings to prolong the shelf-life of perishable delicacies such as strawberries and other small fruits. Other projects include vacuum impregnation and infusion techniques for value-added fruit and vegetable products.