It is becoming increasingly evident that, in the near-term, acute demand for aviation biofuel is going, one way or another, to result in heavy demand for jatropha and jatropha oil-based fuels.
New deals for SGB in Brazil are confirming the trend.
There, at the head of the pack, well down the track from everyone else as an aviation biofuel – there it is, your friend jatropha.
Really? The blunder crop? Destroyer of D1 Oils? Official Sponsor of “things-that-went-wrong”?
Yep, it’s back.
This time — like Peter Jennings, who embarked on a storied 20-year run as ABC Nightly News anchor after a disastrous and short anchor desk tenure as a 27-year old in 1965 — it looks like jatropha is here to stay.
All along, it was wrong to blame the plant. A fish rots, as they say, from the head. As SG Biofuels CEO Kirk Haney has pointed out, “jatropha didn’t fail, jatropha 1.0 business practices failed.”
Among them, poor farming practices, poor seed selection, poor site analysis, questionable claims.
“Every product that didn’t use hybrids or some kind of genetics will fail,” Haney told the Digest. ” It’s just impossible to get a high and consistent yield without an improved line. Those who do not have the hybrid vigor will never be successful. They will never see the early flowering, the big fruit clusters — and in the end they will be people who were very good at selling a vision.”
You see, there’s the easy road and the hard road in biofuels.
The former — well, it is not unlike Pleasure Island in Pinocchio where the boys drink beer, smoke cigars and generally make jackasses of themselves. In biofuels there’s the “plant them anywhere, they all grow, they grow wondrously, it’s like free money” wing of the movement.
Then there’s the hard way. In SGB’s case, five years of research, developing a germplasm library including more than 12,000 unique genotypes. Partnering with the likes of Life Technologies. Conducting multi-year client trials in multiple locations with up to 1,500 tested varietals, aimed at selecting out 3-4 winners.
But here’s what you get for all the trouble. In the case of SGB alone, 250,000 acres signed up in various field trial and deployment agreements – including an agreement to trial jatropha with Bharat Petroleum in India with 86,000 acres for first phase commercial deployment following the trials — and a similar 75,000 acre deal in Brazil with a consortium including JETBIO, Airbus, the Inter-American Development Bank, Bioventures Brasil, Air BP and TAM Airlines.
The economics of jatropha-based aviation biofuels
SGB has been relatively cagey about yields – pointing out that they will vary substantially depending on geography, but some time ago they pointed to 350 gallons per acre as a suitable target given effective site selection and cultivation processes. Even 200-300 gallons in cold regions like the United States. That’s a huge improvement over the 60 gallons of oil per acre that soybean produces.
350 gallons per acre and 250,000 acre equates to around 87 million gallons of oil – hardly a dent in the aviation fuel market, but far beyond pilot or demonstration stage. Those are commercial volumes, enough to 3 million passengers from Miami to LAX on Airbus A320s.
The economics are there, once the trial plots have transformed into full-blown deployment. As Haney observed last October at Advanced Biofuels Markets, they have achieved costs of $99 per barrel or less across three continents — “all-in, fully loaded, from buying our seeds, growing, harvest, crush into crude, capex, opex, all of it.” That was a 13 percent discount over Brent crude at the time.
The combination of the right economics, commercial-scale deployment, and an approved pathway to make jet fuel from jatropha oil — in the form of the Hydroprocessed Esters and Fatty Acids” ( HEFA) fuel spec approved by ASTM in 2011 — gives jatropha the lead over a wide range of competing crops, including oil seeds like camelina and carinata, algae-based jet fuels, and a variety of feedstocks that can eventually fit into the proposed alcohol-to-jet fuel spec.
SGB Signs Landmark Deals in Brazil
If there was much doubt about the traction that jatropha is getting, it disappeared this week with the news that SGB has signed landmark agreements in Brazil with Embrapa (Brazilian Agricultural Research Corporation), the country’s leading agricultural research institution, and with Fiagril, one of the country’s leading biodiesel refiners, to advance the development of Jatropha as a next generation energy crop.
“Our agreements with Embrapa and Fiagril validate the market acceptance of our Jatropha hybrids in Brazil and provide a strong platform from which to quickly expand commercial production,” said Kirk Haney, president and chief executive officer. “We look forward to benefiting from Embrapa’s expertise in Brazilian agriculture as we deploy Jatropha projects for Fiagril and other customers.”
The Embrapa deal
SGB’s strategic research partnership with Embrapa will combine the company’s breeding and genomics platform, including the largest and most diverse library of genetic material of Jatropha in the world, with Embrapa’s leadership in the advancement of new technologies that have increased agricultural productivity in Brazil. Embrapa has identified Jatropha as one of the most promising new energy crops in Brazil.
Since its establishment in 1973, Embrapa has generated almost nine thousand technologies, products and services for Brazilian agriculture, along with the institutions that form the National Agricultural Research System. The work has opened new agricultural frontiers, raising productivity and reducing production costs in the field. With that, Brazil has improved food security, promoting conservation of natural resources and the environment and generating income in rural areas.
“We have identified Jatropha as one of the most promising energy crops for the production of oil for biodiesel and bio jet fuel in Brazil,” said Manoel Souza, general director of Embrapa Agroenergy. “The first efforts to deploy the crop in Brazil were plagued by a lack of improved cultivars and insufficient technological expertise. We’re confident that through our partnership with SGB we can quickly overcome those challenges.”
The Fiagril deal
The agreement with Fiagril, the third largest company in the state of Mato Grosso with revenues in excess of US$1 billion per year, includes the establishment of a JMax Knowledge Center near Fiagril’s 200,000 metric ton-capacity biodiesel plant in Mato Grosso — as a complement to soybean cultivation there. The center is a professionally-managed trial where SGB is advancing elite Jatropha adapted to local growing conditions while establishing best agronomic practices to enable successful commercial deployment.
Jatropha and SGB in Brazil
In Brazil, SGB has deployed three JMax Knowledge Centers™, including one in conjunction with a multi-stakeholder initiative including JETBIO, Airbus, the Inter-American Development Bank, Bioventures Brasil, Air BP and TAM Airlines. SGB is working with its partners on a multi-phased program leading to the deployment of intercropped Jatropha plantations in the Central-west region of Brazil for the purpose of bio jet fuel production. SGB’s trials continue to demonstrate the superior performance of its Jatropha hybrids compared to commercial varieties in terms of plant vigor, health, flowering consistency, stress tolerance, seed and oil yield across multiple geographies.
The bottom line
It’s profit and cost, in the end. The only green premium is the one you will pay in the form of elevated interest rates and fewer subsidies if you have a green project.
For that reason, jatropha has acquired some fiscal vigor in addition to the hybrid vigor that it has lately acquired.
The crop is miles ahead in terms of at-scale deployment, and the economics look good for that to continue. The crop is likely to continue to be grown in the India, Brazil, sub-Saharan Africa and Central America for some time, if not always. EU and North American growers looking to supply aviation fuels may look to carinata as an alternative, or camelina.
But for now, it’s jatropha in the lead. And it could be something special in the air.