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Jan 22, 2013

Advanced, Non-Food Biofuels Come of Age

 

After a decade of false starts, finally, light at the end of the tunnel.

For the better part of a decade we’ve heard how imminent plants would soon yield significant volumes of advanced, non-food biofuel. So far, almost none of this production has been realized.

Here is a small sample of the industry’s tribulations: A BC International plant in Louisiana was supposed to produce commercial volumes of non-food biofuel by the early 2000s, but after several changes of name, ownership, and/or technology, the plant never did. Iogen, backed by Shell via joint venture, had intended to produce at commercial scale five years ago, but plans seem to have fully stalled, with layoffs in April 2012 and cancellation of a new plant in Manitoba. And Coskata, a Khosla Ventures company, was conditionally granted a $250 million USDA loan guarantee in early 2011, only to give up in 2012 on cellulosic fuel as a feedstock (abandoning the guarantee) and instead focus on natural gas.

As a result of the lack of advanced, non-food biofuel production, the EPA has dramatically revised downward its cellulosic biofuel blending requirement for oil companies under the current Renewable Fuel Standard (RFS2). Those annual reductions have grown from 95 percent in 2010 to 98.3 percent in 2012, when the EPA cut a 500MMgal requirement down to just 8.65MMgal. What’s more, even these reduced volumes haven’t always materialized. For instance, between July 2010 and October 2011, no volume of cellulosic biofuel was sold into the general market.

But there are signs that 2013 will be the year that the advanced, non-food biofuel spigot finally opens, with several plants nearly built or already producing initial product.

Non-Food Biofuels Quietly Already Here

Despite sparse media coverage, significant volumes of non-food biofuels have been produced in the U.S. for a couple of years now, albeit under the general “advanced biofuel” RFS2 category, not the “cellulosic biofuel” RFS2 subcategory. Some of these RFS2 “advanced biofuel” feedstocks are food-based, such as soy for biodiesel, and in lower volume, sorghum for ethanol. However, many biodiesel producers are increasingly utilizing non-food feedstocks such as low-grade corn oil (a secondary product from ethanol manufacturing), cooking waste oils, and non-food animal fat/rendering.

Renewable Energy Group, the largest U.S. biodiesel manufacturer, produced 83 percent of its biodieselabout 125 million gallons (nearly a day’s worth of all diesel fuel consumed in the U.S.)—from these non-food sources in 2011. Manufacturers of renewable diesel, which yields different fuel molecules than biodiesel, have also targeted these feedstocks, with commercial volume production ongoing in Europe as well as forthcoming from plants under construction in the U.S.

But these oily feedstock volumes pale in comparison to the potential feedstock volumes most “advanced” non-food biofuel companies are targeting; namely algae, cellulosic wastes and crops, and carbon-based garbage.

Technology Not the Only Challenge

Most advanced biofuel start-ups and corporate research teams have tens to a few hundred million dollars each in funding to develop a technology platform and production facility. It is no small tasks for these firms to produce a product that costs close to, or less, per gallon than the commodity products of gasoline, diesel, or jet fuel. These fossil fuels have benefited from a century and a half of research, development, and demonstration—RD&D undoubtedly totaling well into the trillions of present value dollars.

But the headwinds have been more than technical. The timing of 2008’s economic downturn—the largest since the Great Depression—did not help the burgeoning advanced, non-food biofuels industry. Crude oil commodity prices plummeted for the first year of the recession, weakening financier interest in competing platforms, and in fact crude (WTI price here in the U.S.) has still not exceeded 80 percent of its 2008 pre-crash high. Coupled with the downturn, the always-challenging “valley of death” capital jump required to go from demo to commercial scale was doubly damaging.

Add to these headwinds at least two more: the EPA’s failure to hold oil companies to RFS2 cellulosic ethanol volume totals, and the continually moving target of environmentalists.

The EPA’s aforementioned decision to lower blending limits because the volume wasn’t available undermines the purpose of the limits. Why would oil companies contribute plant construction capital to meet a mandate if the EPA continually minimizes the mandate by lowering the blending requirement?

Meanwhile, the mainstream environmental movement continues to shift its perspective on biofuels. What began as “all that is ‘bio’ is good” (more-or-less pre-2007) became “all that is non-food is good” (~2007 to ~2010) to most recently, “the devil is in the details,” with concerns around extended land use and carbon soil sequestration issues of dedicated energy crops, the degree to which waste cellulosics and their nutrients are removed from crop lands, the effects of garbage converted to fuel instead of recycling, and other matters. While continued scientific inquiry is good, the expectation that today’s learnings should change regulatory programs immediately—providing little to no certainty for investors nor time to fully vet the new scientific conclusions—can be disastrous to financing.

Light at the End of the Tunnel: Survivors May Soon Be Thrivers

Yet, Kior, Abengoa, Poet, and in Europe, Gruppo Mossi & Ghisolfi (M&G), are some of the companies that finally possess sufficient capital and have proven the ability and will to turn this capital into steel in the ground.

Kior, buoyed by a DOE loan guarantee, cash from a 2011 IPO, and the revenue security of sales contracts to high-credit quality buyers Hunt Refining, FedEx, and a Chevron-Weyerhaeuser JV, built an 11 million gal per year facility for renewable crude from woody biomass in Mississippi. Initial production recently commenced with intentions to ship commercial product this year.

Abengoa’s capital sufficiency story is similar to that of Kior—combining cash on balance sheet and a DOE loan guarantee to push through construction of a commercial-scale facility. Construction began on the company’s 23 million gal per year cellulosic ethanol plant in mid-2011. Feedstock will come from a list of potential cellulosic wastes from food crops such as sorghum, wheat, and corn, as well as prairie grasses and wood wastes.

Poet—already a top producer of standard ethanol—had enough capital via a partnership with biotech leader DSM and its own balance sheet to spurn a DOE loan guarantee and build a 25 million gal per year cellulosic ethanol facility in Iowa, which began construction ten months ago. Feedstock will be corn crop residue such as cobs, leaves, husks, and stalks, with production to begin this year.

M&G, like Poet, used its own capital and partner funds (two arms of the U.S. private equity firm TPG) for a 15–20 million gal per year facility in Italy, which was due to begin production at the end of last year. These four companies are not alone in the race to near-term high production. For example, Ineos Bio already began production at an 8 million gal per year cellulosic ethanol facility in Florida. Additionally, several of the aforementioned companies already have financing lined up for their second plant.

After nearly a decade of little more than a trickle of test volume, steel in the ground is finally here at commercial scale to produce meaningful volumes of advanced, non-food biofuel. While steel in the ground doesn’t ensure continuous successful production—witness Range Fuels’ plant closure and bankruptcy—it’s unlikely the half-dozen or so new production plants coming on line this year will face the same level of challenge. Even if they do, several of them appear to have access to deeper balance sheets to be able to weather inevitable plant start-up challenges.

Recommended Reading

Image courtesy www.shutterstock.com.

 

 

Join the Discussion


Showing 1-10 of 10 comments

January 25, 2013

I believe there should be an emphasis on using plants that can grow in salt water (especially halophytes) for production of biofuels.


January 25, 2013

We in LatinAmerica are hoping you can give us good news about the new non-food biofuels, to power the masive transportation of the near future.


January 25, 2013

Studied wastewater treatment since college ... it's algae food but making biodiesel isn't especially low carbon-footprint because the water isn't recycled.

If you don't recycle the water you'll have to truck the slurry/slime/sludge to some fields for dispersal regardless of method used at the treatment plant or biodiesel plant, this a heavy blow to carbon-footprint because of the weight, overhead is high on scheduling, many times contains pathogens and so on.

The other issue is harvesting, centrifuges used at about 100% of plants, this requires a lot of electrical power so the low carbon-footprint is gone but still way better than a fossil fuel so this is relative but significant for costs not just carbon.

When you recycle the water what's left are de-watered, pressed algae cakes that are lightweight, all the pathogens are consumed by bacteria then algae in the end, and importantly it's a good fertilizer & soil enhancer & can be stored dry & applied on-demand making it a far better agricultural product over slurries & sludges. Finally my favorite algae Spirogyra jumped wheat yields 25% tests ongoing but there ya' go.

So we don't need gasoline or fossil-diesel, using algae to purify a city's wastewater can return 7L/2gal per person per day on the system, the USA burns 6L/1.6gal per day per person in all types of transportation fuels.

This can be miniaturized to family-farm-ranch scale so that anyone can make the fuel they need by living in a home.

Then we need a low cabon-footprint fuel that runs in any IC-engine on the planet or it won't scale, from leaf-blowers to aircraft, and biodiesel can be tweaked to run in the gamut of engines with 3-grades at the pump, 2 for gasket & seal types in engines & the third to deal with odd types.

Biodiesel from algae consumes CO2 and emits O2, so when scaled this technique will seriously drop global CO2 values from world transportation running on wastewater nutrients locally so costs are low on distribution, distances trivial from biodiesel producer to pump, the water is recycled, the pressed cakes are a good agricultural product and this in high-volume so a large resource for local food production.

If the algae are tainted with heavy metals, toxins they can be disgested with solids to remove them from the food chain and have little ash left over for toxic disposal if nothing else.


January 25, 2013

Dear Mr. Sief,
You have missed the pyro/catalytic elephant in the room. Pyrolysis is the non-combustion reinvention of fire that RMI has built a theme around.

For anyone interested in, or confused by, Biochar Soil Technologies, Please view my opening presentation at the fourth USBI Biochar Conference in Sonoma California;
Carbon Conservation for Home, Health, Energy & Climate
http://2012.biochar.us.com/299/2012-us-biochar-conference-presentations

Modern Thermal conversion of biomass burns only the hydrocarbons in that biomass, conserving the carbon for the soil. At the large farm or village scale modern pyrolysis reactors can relieve energy poverty, food insecurity and decreased dependency on chemical fertilizers.

Please take a look at this video by the CEO of CoolPlanet Biofuels, guided by Google's Ethos and funding, along with GE, BP and Conoco, they are now building the reactors that convert 1 ton of biomass to 75 gallons of bio – gasoline and 1/3 ton Biochar for soil carbon sequestration.

http://www.youtube.com/watch?v=zkYVlZ9v_0o

The farm & Village scale reactors will be rolling out the factory doors this with 100,000 units planned for production. The tagline for the company "The more you drive our bio gasoline… But cleaner the atmosphere becomes"
This bio gasoline is already approved for full blending in the California gasoline infrastructure. There pilot plant up and running set to produce 2,000,000 gallons in 2013.

The CEOs have already taken the lead sponsorship for the University of Massachusetts 2013, fourth, USBI Biochar Conference, October 13-16, 2013, Please consider attending, the whole conference could be the first conference in history to be carbon negative as all in attendance travel with Bio–Jet fuel credits from CoolPlanet. Local Biochar farmers are even catering with their "Cool Food" branded nutrient dense Biochar produce. http://symposium2013.newsite.pvbiochar.org

Wee-Beastie Real estate, The Rosiest Scenario;

Total Biomass Harvest in the US; 1.6 Billion Tons

If All was processed by CoolPlanet Biofuels the Yield would be;

120 Billion Gallons of tank ready fuel , (The US uses 150 Billion gallons per year)

0.3 Billion Tons of Biochar, with a Surface Area of 600 Square Meters per Gram

One Ton has a surface area of 148,000 Acres! 148,000 Acres is equal to 230 square miles!!

300 Million Tons of Biochar equals 69 Billion Square Miles, or 348 times the Entire Surface of the Earth !!!

Costs; The field to wheel analysis is $1.50/gallon!

cheers,

Erich

Erich J. Knight
Shenandoah Gardens
1047 Dave Berry Rd. McGaheysville, VA. 22840
540-289-9750

Policy & Community Committee Chair,
2013 North American Biochar Symposium
http://pvbiochar.org/2013-symposium/


January 26, 2013

combustion, carbon - global warming vs. wind, water, sun - global cooling

why is that so hard to understand?


January 27, 2013

Good point about the EPA shifting targets to accommodate industry's inability to meet original targets. Renewables can't compete with fossil fuels without government intervention, and so its important for governments to set firm targets and actually enforce them.


January 30, 2013

I am interested in Tom Mallard's comment, especially the section "This can be miniaturized to family-farm-ranch scale so that anyone can make the fuel they need by living in a home.".

Can you, Tom, or anyone else point me to some relevant research, articles, and/or, ideally, some case studies and devices/setups where this is used? Thank you!


February 3, 2013

"What’s more, even these reduced volumes haven’t always materialized."

That would appear to be a typo. It should read "even those reduced volumes have NEVER materialized." In no year and at no time have the mandates come close to being met. Last year there was one batch of about 20K gallons of cellulosic ethanol produced by Blue Sugars Corp., which was then exported to Brazil as a marketing gimmick. That's the grand total of commercial cellulosic ethanol that's been produced in the 3 years it has been mandated -- 0.2% of the (lowered) mandate in 2012, and 0% in 2010 and 2011.


February 4, 2013

I was frustrated by the article because you do not provide enough discussion of the demonstrated success of the "survivors." Are we to assume that they have working systems that only require scale-up? And, in my experience, I have seen scale-up much more difficult that demonstrations, so how do you rate their likelihood of success?


July 26, 2014

Excellent. There are Agave and Opuntia, care-free growth,regenerative,CAM plants which are best options for biofuel/biogas power generation. Already Mexico is pioneer on this. These plants can be grown on a massive scale in waste lands in developing countries and biofuel/biogas for power plants established locally. Both these plans being CAM act as Carbon Sink.Crassulacean acid metabolism, also known as CAM photosynthesis, is a carbon fixation pathway that evolved in some plants as an adaptation to arid conditions.In a plant using full CAM, the stomata in the leaves remain shut during the day to reduce evapotranspiration, but open at night to collect carbon dioxide (CO2). The CO2 is stored as the four-carbon acid malate, and then used during photosynthesis during the day. The pre-collected CO2 is concentrated around the enzyme RuBisCO, increasing photosynthetic efficiency.
Dr.A.Jagadeesh Nellore(AP),India

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