Sunday, July 29, 2012

Advanced biofuels, chemicals capacity to reach 5.89B gallons by 2017

 July 27, 2012

Advanced Biofuels & Chemicals Project Database; 278 projects now tracked; 157 project updates, 29 countries in the July 2012 release; free download.

In Florida, Biofuels Digest is reporting that global advanced biofuels and renewable chemicals capacity will reach 5.89 billion gallons by 2017, up from 5.11 billion gallons by 2016 reported in the November 2011 release, 4.37 billion reported in May, and 3.95 billion gallons reported in January, based on company announcements to date and Digest estimates.
Today, the Digest released the latest version of its free Advanced Biofuels Project Database, which tracks advanced biofuels and renewable chemicals capacity for the 2011-2017 period. Previously the Database tracked projects through 2016.
Both pure-play biofuels and renewable chemicals projects are include, plus integrated biorefineries that are capable of producing food, feed, fiber, fuels and chemicals.
The overall Database is available free to the 49,000 registered subscribers to the Digest’s online publications, and the download links are contained in the daily Biofuels Digest and 3X weekly BioBased Digest newsletters.

Key projects and capacities

The database now tracks 278 advanced biofuels and biomaterials projects, up from 207 in November 2011 and 128 in May 2011.
The database includes the project capacity, location, feedstock, product(s), processing technology and project notes.
Overall, the compiled data indicates that advanced industrial biotech capacity will reach 1.15 billion US gallons by in 2012, 1.55 billion in 2013, 2.54 billion by 2013, 4.15 billion by 2015, 5.50 billion by 2016 and 5.89 billion by 2017.
This compares to 1.21 billion gallons in 2012, 2.15 billion by 2013, 3.24 billion by 2014, and 5.11 billion by 2015.
The May 2011 release showed a projected 1.577 billion gallons by 2012, 2.574 billion by 2013, and 3.283 billion gallons by 2014 in the May projection.

Enhanced database released in September 2012

An enhanced edition of the database will be released in September 2012 with enhanced project details, including key personnel, cost and margin analyses, strategic and supplier partners, financing and risk analysis. This release will be available to the 1,000 members of the Digest’s TAKEOFF community; delegates to the upcoming Advanced Biofuels Markets in San Francisco will receive a complimentary 12-month membership in TAKEOFF.
The next release of the overall Advanced Biofuels Project database is scheduled for December 2012, and will remain free to Biofuels Digest newsletter subscribers, which is available free via

154 project updates; projects in 29 countries

The new database includes updates on 154 new projects, and includes projects in 9 countries, including Australia, Austria, Brazil, Chile, China, Denmark, Germany, Norway, Sweden and the US.
Project timelines and capacities have been revised for Abengoa, ALgae.Tec, Algenol. Amyris, Beta Renewables, BioAmber, Blue Sugars, Butamax, Coskata, Dupont, Enerkem, Genomatica, Gevo, Green Biologics, Joule, KiOR, LanzaTech, Myriant, POET-DSM, Rentech, Solazyme, Solaena Fuels, Sundrop, TerVIva, Virdia and ZeaChem, among many others.
In adding projected capacities through 2017, the Digest produced estimated project development timelines based on known partners and capacity goals. In particular, the estimates for companies with more than 4 commercial projects through 2017, incuding Gevo, Butamax, Solazyme, and POET-DSM among others, are subject to partner agreements and project announcements that will come at a later date; and should be properly viewed as Digest estimates based on broad company targets and/or sector growth; actual project timelines, locations and volumes are subject to market forces.

More about the Database

The database tracks what are broadly referred to as “next-generation” technologies and feedstocks; the production of biofuels using traditional technologies, and traditional crops such as cane, corn, and soybeans is not tracked here, even though some of these fuels (such as Brazilian sugarcane ethanol and most forms of biodiesel) qualify as “advanced biofuels” under EPA rules that govern the US Renewable Fuel Standard.
“Advanced, next-gen biofuels are now on track to become a $20 billion global business by 2017,” noted Biofuels Digest editor & publisher Jim Lane, who complies the database. “However, let’s focus on the positive trend, while exhibiting caution on the numbers, given the great deal of policy and financial uncertainty.”
Lane noted the emergence of the strategic investors as drivers of the sharp growth rates in the sector. “It is worth noting that giant companies are backing these projects, in addition to the start-ups and venture-backed firms that have been in the game for several years.” Lane said.
BP, Shell, Total, Chevron, Petrobras, Petronas, Marathon, DuPont, Dow, BASF, Bao Steel, Roquette, PTT Chemical, FHR, Valero, Waste Management, and INEOS are among those investing in the commercialization of advanced industrial biotechnology, as well as airline giants such as British Airways and Qantas who are seeking alternative sources of fuel.

Wednesday, July 25, 2012

Maple Energy brings 37MW ethanol and electricity power plant project online in Peru

24 July 2012

Maple Energy, an integrated energy company with assets in Peru, has announced that its Ethanol Plant is now complete and producing both ethanol and electricity.

Commercial operation of the US$280 million 37MW power plant, located in the Piura Region on the north coast of Peru, had originally been planned for 2011, but was delayed to this year due to a dispute with third-party providers. A dispute with one third-party provide is still ongoing, but the plant has finally been completed and is generating electricity, Maple said.
The company expects to gradually increase the amount of electricity produced during the third quarter of 2012 - eventually providing sufficient power to satisfy the requirements of the ethanol project, while enabling Maple to begin selling excess electricity production to the national power grid by the end of the third quarter of 2012.
Penta Tanks Terminals S.A. completed the installation and commissioning of the ethanol storage, loading, and shipping facilities near the port of Paita. The loading and shipping facilities, which form part of the Penta Facilities, are expected to be operational during August.

First ethanol export

In anticipation of these facilities being placed into operation, Maple has been storing a substantial portion of the fuel-grade ethanol produced from the ethanol project in the storage tanks at the Penta Facilities. The Company expects to export its first shipment of ethanol in August.
Over 165,000 tonnes of sugar cane have been harvested and processed by the company since it began processing sugar cane at the end of March 2012. Maple expects to increase the amount of sugar cane it harvests and processes per day as the company continues to “ramp up” the processing of sugar cane and the production of ethanol during its initial phase of operations, it said. It expects to harvest and process around 900,000 tonnes of sugar cane from its plantation during 2012.
Maple “continues to be engaged in a dispute with one of its third-party providers” for the project, the firm added. In 2012 arbitration proceedings were initiated by this party as a result of the dispute. In addition, the firm is seeking to implement certain interim remedies through the Peruvian court system. “Although no assurance can be given, Maple believes it has meritorious defenses to the claims brought by the provider, and the company intends to defend its position vigorously,” Maple said. 

Tuesday, July 24, 2012

Cellulosic ethanol in Germany soaring

Clariant opens Germany’s biggest cellulosic ethanol plant

 July 23, 2012
In Germany, Clariant inaugurated Germany’s biggest pilot plant for the production of cellulosic ethanol from agricultural waste. Located in Straubing, Bavaria and supported by the Bavarian government and the Federal Ministry for Education and Research, the project will produce up to 1,000 tons of cellulose ethanol from around 4,500 tons of wheat straw based on the sunliquid® technology developed by Clariant. It represents an investment of around $34 million.

Biofuels is policy now: Mandated and seriously growing

Replacing the Whole Barrel of Oil and the Need for Biobased Chemicals Policy Now

 July 23, 2012

Post Kitty Hawk: 2012 and Beyond: Overwhelming Evidence in Support of Replacing the Whole Barrel of Oil and the Need for Biobased Chemicals Policy Now

by Stephen J. Gatto
Chairman & Chief Executive Officer, Myriant Corporation
Special to the Digest
We in the biobased chemicals industry have had our Kitty Hawk moment.
What that means is: we have proven the thesis that biobased chemicals can be produced, brought to commercial scale and quickly sold to a receptive, growing and eager marketplace. We have also demonstrated that sustainable chemicals can be made here in America at a cost that is lower than anywhere else in the world which results in a product-pricing model that, even without subsidies, is competitive with petroleum-based chemical manufacturing processes.
These factors in the aggregate suggest the time has long since come and gone to ask why biobased chemicals should be included in a national energy policy or why anyone would want to invest in the industry.  The question now must be, ‘Why Not?
Given the national and global opportunities presented by biobased innovation, now is the time to recognize the value of policies and programs in support of accelerating commercialization and advancing the nation’s market leadership in the biobased chemicals industry.
Election Year, Rejection Year, Politics
For at least some people with legislative power and influence, election year politics may be justifying rejection year politics. But when it comes to now proven technologies and commercial scale operations coming on line for biobased chemical production, it’s time the associated evidence of the national and global benefits trumps party lines. A clearer or more compelling case cannot be made that now is the time when the right thing to do should transcend the self-interested preferences of regional constituencies. Now is time for a lasting and all-inclusive policy, versus another round of poll-icy-driven actions or worse… inactions.
The Immense Risk of Waiting and Debating the Obvious and Proven
A failure to establish a durable U.S. energy policy that includes incentives for the production and commercialization of biobased chemicals carries significant national and global implications. The international leadership opportunity within our grasp, supported by the fact that we can be, right now, the lowest cost producer of biobased chemicals among all nations will be lost to countries with more resolve and a better understanding of the stakes.
Lost time invites the heightened risk of continued manipulation of petroleum supply and demand. Inaction risks lapsing into yet another century of fossil-fuel-based dependency, resulting in a nation held hostage to its habitual default position in favor of the familiar: fossil fuel. Moreover, a failure to support proven innovations that hold the key to our emancipation from fossil-fuel-based products risks nothing less than planetary non-sustainability.
The 90%-Plus Solution
Approximately 90% of all chemicals produced today from petroleum can be produced biologically in an organism. But that fact alone does not, nor should it, lead to an automatic conclusion in favor of full speed ahead. Prudent people examine the practical matters and raise thoughtful questions associated with innovation. Some answers:
Ongoing Innovation
Breakthroughs in synthetic biology, genetic engineering, biomass yield, plant genomics and microbiology are leading the rapid development of high-performing products that can be true drop-in substitutes for petroleum-based chemicals.
The integration, optimization and rapid acceleration from lab to commercial-scale is proving the power of these advanced technologies. Many of these biobased chemical technologies and processes are cost-advantaged over petroleum-based products, even without government subsidies.
The Global Economic Impact
Independent and industry-led analysis and projections point to a marketplace that is on a growth trajectory to achieve more than $500 billion by 2025. The World Economic Forum predicts that the biobased economy has the potential to generate $230 billion to the global economy by 2020. In the United States, bio-refineries that process sustainable biomass can/will generate $88.5 billion in economic activity according to USDA projections. Myriant’s focus alone represents a market opportunity in excess of $40 billion.
Jobs Creation
The biobased products industry employed more than 50,000 people as of 2010, according to an Iowa State CIRAS study. This same study points to the fact that the biobased industry can generate a minimum of 100,000 jobs annually.
The Existential Threat to Planet Earth via ‘Business as Usual’
Today’s world population is approximately 6.5 billion, growing to an estimated 9.2 billion individuals by 2050—all using and depleting natural resources. This isn’t sustainable or affordable, especially considering the price spikes in oil, particularly over the last three years.  It is time to integrate feedstocks processes that are stable, predictable and renewable worldwide.
It’s Time for a Final Up and Down versus Back and Forth
The biobased chemicals industry has justified its case before the legislative bodies. The logic and benefit of a national energy policy inclusive of biobased chemicals could not be clearer. To build a robust bio-based economy, U.S. policies should provide technology-neutral support to all biobased products. Biobased chemicals and products companies need and deserve stable, long-term, forward-thinking policies to bridge the risk gap for investors. Specific policies should include:
A Renewed Farm Bill Inclusive of Biobased Chemicals
A Farm Bill that includes both inclusion of and parity for  biobased chemicals with biofuels, as well as mandatory funding of key Farm Bill key energy title programs, including BCAP and Bio-refinery assistance programs. Recent actions in the Senate to move a bi-partisan bill that defines and includes renewable, biobased chemicals and provides $800 million mandatory funding over five years for energy titles is to be applauded.
It’s incomprehensible that the House Farm Bill supports only discretionary spending on energy programs, while cutting $500 million from the funding level in the 2008 Farm Bill. Further, the Bill is silent on the inclusion of biobased chemicals. Is this a signal that the Republican-controlled House does not endeavor to see our Nation reduce its dependence on fossil-fuels, create jobs or drive economic development?
While the House can argue that advanced biofuels has had its day in the sun, why wouldn’t they strive to reduce consumption of petroleum-derived products by promoting the commercialization and use of chemicals and products made from renewable resources?  It’s time for the House to focus on replacing the “whole barrel of oil.”
Expanding Public/Private Partnerships
Governments and private industry are partnering to invest in technological processes and strategies that will further advance the low-cost production and wide-spread propagation of economical biomass feedstocks. Federal loan guarantees and grants in support of new refinery construction, as well as plant retrofits, are necessary signals to private investors that the Government will continue to support commercialization of biomass-based products.
Tax Codes that Extend and Support Reward Investment and Innovation in Industrial Biotechnology
Less than 4% of U.S. chemical sales are biobased today but a recent USDA analysis shows that the potential market share could be in excess of 20% by 2025 with adequate policy support. One example is proposed legislation,S.1764, “Make It in America Tax Credit Act of 2011” that serves to extend and modify advanced energy investment project credits and also enables qualifying biobased products and other alternatives to petrochemicals to qualify for investment tax credits.
Now, all eyes are focused on our Nation’s elected leadership and their ability to put progress ahead of politics and get the job done. In short, to use a common, if not soon to be outdated expression, it’s time, in more ways than one, for Congress to step on the gas.

Monday, July 23, 2012

Brazil to scale up algae plant by 2013

In Brazil, a plant run by SAT will be producing biofuels from seaweed 
at industrial scale for the first time and is expected to be built by late 2013. The factory will be located on a sugar cane plantation in Pernambuco and will produce 1.2 million liters of algae-based biofuel annually.
Rafael Bianchini, head of SAT’s Brazilian group, said that the goal was to “convert the CO2 from a passive to an active” state. “For each ethanol liter produced, one kilogram of CO2 is released in the atmosphere. We are going to take this CO2 to feed our plant,” he added.
The project is still awaiting approval from the county’s National Petroleum Agency.

The 2012 London Olympics, biofuels-style: BP to showcase its three most advanced biofuels

The 2012 London Olympics, biofuels-style: BP to showcase its three most advanced biofuels

 July 23, 2012

As the 2012 Summer Games approach, BP Biofuels launches its showcase for cellulosic ethanol, renewable diesel, and biobutanol.

Amidst the blizzard of demo drives and informational marketing, why are these molecules key to “fueling the future”?

This Friday, the games of the 2012 London Olympiad will commence, and for nearly three weeks more than one billion viewers worldwide will be treated to the best, the fastest, the most graceful and the most stirring performances in sport.
Here in the US, coverage of the opening ceremonies will begin at 7:30 Eastern time, as NBC sounds the familiar medley of Leo Arnaud’s Bugler’s Dream and John Williams’ Olympic Fanfare, designed as Williams said to musically represent “the spirit of cooperation, of heroic achievement, all the striving and preparation that go before the events and all the applause that comes after them.”
Because of the massive scope of the viewership and the immense crowds in London, the Olympics are something of an unparalleled marketing platform. This year in London, BP Biofuels will be using the occasion to showcase the future of fuels, when BP’s sugarcane-based diesel, cellulosic ethanol and Butamax biobutanol will be used (in blends) to power the Olympic fleet, and will be available at BP’s retail site right before the Hammersmith Flyover in west London.
The site is home to BP’s largest station in London, and well known to visitors shuttling along the A4 between Heathrow and the West End. There, BP will promote biofuels with information displays; a new, futuristic BP Ultimate Bioblended dispenser; and, the opportunity to experience the fuels themselves.
“The Olympics have given us a podium,” noted BP Biofuels chief executive Philip New, “to convince the most skeptical media in the world – the UK media – that these future fuels are real, not science fiction. And to demonstrate to a cynical world that advanced biofuels are here.”
“At the back of the station,” New added, “we have built these three pavilions to take you through the story of how we are fueling the future. We’ll have miscanthus growing there, and this really cool pump that recognizes what car is coming up and what it wants. We’ll have hundreds of guests, journalists, and VIPs and we will have an opportunity to educate them that all we are talking about is for real.”

Cellulosic ethanol

On hand will be cellulosic ethanol produced at the BP Biofuels demonstration plant in Jennings, Louisiana. Blended with BP Ultimate unleaded it is, at 103, the highest-octane fuel ever pumped from a UK forecourt.

Renewable diesel

Also on offer will be renewable diesel made in BP’s partnership with DSM’s Martek unit, which New notes is “in the same family as Solazyme-type technology.” The fuel, which is produced from conventional sugars, is being produced at a “Jennings-scale” pilot by the partnership.


The third advanced biofuel is biobutanol, produced in the Butamax joint venture demonstration plant, constructed by BP and DuPont in the UK (at Hull). Now, interestingly, the biobutanol will be blended at 24 percent with conventional gasoline. Let’s look at that in a little more detail.

The biobutanol opportunity

As we have covered extensively in recent months in the Digest, both Butamax and its rival Gevo have signed up just on 1 billion gallons in ethanol production capacity into their early adopter advisory groups. The plant conversions are already taking place for Gevo, and in 2014 Butamax is expected to go operational with its first conversions.
What makes those conversions interesting the very near-term potential of biobutanol to be a “blend wall killer,” as New observed.
How so? There’s some controversy over the exact maximum blending rate that will be allowed for biobutanol – but it is widely believed that biobutanol can be green-lighted under the Clean Air Act for blends of up to the 16-17 percent range.
(From a vehicle compatibility perspective, keep in mind that, for the London Olympics, biobutabnol will be blended in BMW 5-series hybrids with no modifications whatsoever to the vehicles. In fact, BP Biofuels has tested biobutanol at 60 percent blends with gasoline with no trouble.)
So, how exactly is that a blend wall killer? Well, keep in mind that, for example, the US ethanol fleet of around 180 production plants can produce nearly 15 billion gallons of ethanol per year. Yet the US consumes these days around 130 billion gallons of gasoline – leaving a lot of ethanol will no place to go (except export markets) owing to the 10 percent blend limitation.
At a 16 percent blend rate, the same gasoline demand could support 20.8 billion gallons of biobutanol. And, keep in mind that the ethanol production would max out at around 12 billion gallons of biobutanol, owing to the lower yields because biobutanol is a bigger molecule.
Where does that leave us? Instead of 2 billion gallons of ethanol with no place to go, the US could add 70 percent more capacity and still have room to grow.
And, because a gallon of biobutanol (based on its BTUs) counts for 1.3 gallons of ethanol in totting up obligations under the Renewable Fuel Standard, that 20.8 billion gallons in production would count for 27 billion gallons of ethanol-equivalent fuel under RFS2.
Leaving the US biofuels industry with only 9 billion gallons of ethanol-equivalent fuel to produce via other capacity. That translates to 7 billion gallons of renewable gasoline, 6 billion gallons of biodiesel or 5.3 billion gallons of renewable diesel – to mention options in other drop-in fuels.

The Bottom Line

BP Biofuels has cleverly selected its fuels – choosing, for example, not to showcase its main current product, which is the Brazilian sugarcane ethanol produced at its three large refineries and sugarcane plantations in Brazil.

Why clever?

Currently biofuels already make up three per cent of transport fuels used around the world and BP estimates they could account for seven per cent of all transport fuels by 2030.
BP is doing much in London this week to demonstrate exactly how the industry is going to move from 3 to 7 in roughly half the time that it took the industry to get from 0 to 3. Which means focusing attention on the reality of biobutanol, the reality of cellulosic biofuels, and the reality of drop-in diesels made today from conventional sugars and (soon, we hope) from cellulosic sugars as well.
All of which will ultimately reflect, as John Williams said of his Olympic fanfare, “the spirit of cooperation, of heroic achievement,” not to mention “the striving and preparation.

Sunday, July 22, 2012

Biomass into gas fuel putting another leap for biofuel commercialization

Coskata switches focus from biomass to natural gas; to raise $100M in natgas-oriented private placement

 July 20, 2012

Coskata, looking at CAPEX opportunities, political uncertainty, and the investor climate — switches to an “all natural gas” feedstock strategy.

Initiates a $100M private placement, puts Alabama project on hold. In today’s Digest, we look at the rationale, the impact and the way forward.

“In North America there’s a golden opportunity,” Coskata CEO Bill Roe says, in bringing the Digest up to speed with changes at Coskata. “The sea of natural gas is almost a problem, leading to historic price dislocation, and a level of availability that has not been seen for a long time. With our technology, it will give us a lower ethanol cost on a per gallon basis, and a remarkably lower capital cost because the kit that one needs to aggregate and gasify biomass, and then condition the syngas, is appreciably more than reforming natural gas.”
Accordingly, the company now plans to utilize natural gas as its exclusive feedstock for its first several commercial-scale projects. Now – keep in mind, Coskata was already utilizing natural gas for around one-third of its feedstock needs in its previously planned first commercial project in Alabama. What is notable here is the switch to an all-gas strategy.
“What we are not saying is that we are breaking ranks and abandoning feedstock flexibility,” reflected Coskata CEO Bill Roe, in discussing the directional shift with the Digest. Rich Troyer, Coskata’s chief business officer, echoes that “Coskata is not losing focus on biomass; it is still in our future.”
“What we are saying, Roe continues, “is that natural gas has moved to the front, as the first and most obvious feedstock that we can utilize for our commercialization strategy.”
“With our Alabama project being always 1/3 natural gas,” he added, “we began to get a schooling on natural gas availability. At the same time, across the board, that conventional wisdom that low gas prices would kill exploration and drilling began to change. The lifting cost in these formations began to be understood from the impact of horizontal drilling and fracking. Now, we understand it better, that there will be exploration opportunities that make sense even at $3 gas or just above that.”

Coskata’s $100M capital raise

While not expressly confirming that they have abandoned their IPO, the company has launched a $100 million , bank-led private placement, with international dimensions, specifically aimed towards strategic investors and especially those with positions relating to natural gas.
With respect to the company’s IPO, Roe commented: “The track record thus far is not inspiring – what’s happened out there. A lot of us in the queue ready to go – cooling our jets. Right now, you would only go if you are absolutely desperate, because outcomes will not be not satisfying. For sure, new issuers are struggling across the board, and especially those with new technologies and those that will be waiting for several years to have meaningful EBITDA. Meanwhile, natural gas is attracting a whole new cadre of potential investors, though we still think there is a point in time when the window will reopen, maybe 2014.

First commercial project

Our first project will be based on 100 percent natural gas, and will produce 17 million gallons of ethanol. The financing package is something they expect to be able to wrap in Q4, that will lead to ground-breaking on their first commercial project in Q1 2013 and a first commercial completion in late 2014 after a 20-month construction timeline.
Roe commented: “This is still liquid processing where we are processing syngas to fuel grade ethanol, and it is nearly identical to the design for our biomass conversion. We are simply changing the front end of the plant.”
With respect to site selection, the company will only note right now that “the natural gas opportunity abounds in different states and geographies. With individual states, some are extremely aggressive, some don’t have the budgets to do things like attractive incentives. But there’s a strategic element to this, going back to a whole host of interested parties.
“For those investors, this is no longer about renewable fuels, but about the arbitrage that will take place between the cost of natural gas and cost of petroleum.

The natural gas opportunity

Let’s look at that in the context of US natural gas production. Specifically, let’s look at the example of North Dakota, where a whole bunch of oil is being pumped out of the Bakken formation, and right now there is a level of coproduction of natural gas that does not have a home. They flare most of it because they are unable to get it into the grid. You see that also in parts of Appalachia, where natural gas has been found but the infrastructure is not yet available to get it into the power pool.
Here’s the opportunity: it’s simply the arbitrage of lifting natural gas, now available at the Henry Hub at $2 and change per million BTUs, into the fuel markets where the prices are more like $28 per million BTUs for finished fuels.
“Even if gas settles into the $4-$6 range,” Roe observed, “as many observers now predict they will in the US for a decade or two, these economics are extraordinary. We don’t understand the tiger we have by the tail.”

The capex and project size sea change

The Coskata project always had a natural gas component, so in dropping the biomass component there is a lot of cost that just falls away. Material handling, chipping, sizing, drying, gasification, gas clean up – all those unit costs come out.
The impact for Coskata? A 130 million gallon natural gas project costs the same as a 65 million gallon woody biomass project.
But there’s more, as they used to say in selling Ginzu knives. There are the economies of scale, once the limiting factor of the transportation of biomass is removed. “In processing biomass,” Roe noted, “we are limit to a maximum of 100-150 million gallons, about the size of a big ethanol plant. With a natural gas feed, much larger plants can be built.”
The company has plans on the drawing board, for example, for a 270 million gallon project, although economies of scale are reached with natural gas in the 130 million gallon range.
“The bioreactor portion is the same, just more trains with our NG2 and NG3 project; the scaling risk has essentially been eliminated, there are just more reformers and multiples of the same size bioreactors.”

The Alabama project and the company’s USDA conditional loan guarantee commitment

The fate of the company’s Alabama project? Though an optimal location for a woody biomass focus, “Boligee will not be the site of our first project,” Roe confirmed to the Digest.
Now, a couple of weeks ago, the USDA extended a conditional loan guarantee for $89 million related to the project, based on the Alabama location. “We’ll keep the project alive with conditional loan guarantee commitment; as we don’t expect to look to USDA to allow us to use this for a different purpose. We’ll see if there is a change to the RFS or not.”

The impact of policy uncertainty

Which brings us to the impact of policy uncertainty on Coskata’s decision.For sure, an impact there was.
“We are not of the belief we know more than anyone else about the future of RFS,” Roe commented, “but the drumbeat we continue to pick up in DC does not inspire confidence. It’s a sad commentary, as the debate over RFS2 is completely political at this time, leaving us unprepared to take the risk to sink major capital at this time in a project, and see RFS2 change markedly right in the middle of construction.”

Offtake impact

Where’s the ethanol going to go – especially if, produced from natural gas, it finds itself outside of the RFS2 scheme because it does not produce sufficient emissions improvement compared to conventional fuels.
“Right now – based on our discussions with obligated parties and big ethanol marketers, we do not see restrictions in entering into the same markets today. For those looking at ethanol in terms of the RFS2 compliance structure, they can buy a 2 cent corn RIN to match up with the natural gas product. This pathway will not attract a RIN, but the cost point is so low.”

Yields – natural gas vs biomass

Here, Coskata is more cagey, except to say that the same attributes that caused the company to have transformatively low fuel production costs with woody biomass, with yields of over 100 gallons per ton, apply to natural gas as well.
“At our demonstration project, we learned a lot about reforming natural gas as well as woody biomass,” said Roe. “The amount of data accumulated at demonstration emboldened us , and others will have to learn in the university of hard knocks, as we learned by building a $30 million demonstration.”

Australia and other international opportunities

Now, Coskata has been investigating an Australian project for some time, based on woody biomass gasification. What’s the fate of their international ambitions? For now, no changes in plans, but for sure there are going to be different opportunities based on a changed strategic investor group, and there are plenty of strategic investors in, Asia. Not to mention Russia.

Aviation and other fuel markets

There been a lot of activity of late in the alcohol to jet area – no obligated parties, no RINs there, just pure economic opportunity. What are the opportunities for Coskata?
“We certainly are aware of the ATJ developments,” Roe said. “Overall, we see the opportunity but it is not a cakewalk to get there. I am not exactly sure that we are convinced that ethanol as the base material is the best way to go. There are other alcohol products that could be better feedstock materials, and though we have initially focused on C2, we have work going on with C3 (propanol), C4 (butanol) and another higher alcohol. We are 18-24 months away from a C4 butanol.”

Coskata – still a biofuels company?

For sure, and on two counts. First, Coskata is not abandoning biomass just yet, though putting it squarely in the back seat for now. But more importantly, it continues to use microbiology to perform its ferment syngas into its target fuels and chemicals.
“The longer I am at this,” commented Coskata’s Roe, “I believe now more than ever that microbiology as the conversion process is much more efficient than catalytic technologies.”

Others in the queue that may switch to natural gas

Well, in recent months, there’s been Sundrop Fuels, and Primus Green Energy – with Coskata we now have three, and that makes a trend.
Who’s next? Siluria has been focused on natural gas for quite some time. Accelergy has been pursuing a combination of coal and biomass in China within an overall XTL focus, and let’s see how their project opportunities change.
Others that may see striking opportunities with natural gas reformation, to create their syngas for catalytic conversion?
Clearly, LanzaTech and INEOS Bio have to be considered to be in that mix – given that they also have technologies that offer biobased fermentation of syngas to produce biofuels and chemicals.
Then, there are a group of companies that are working on gasifying MSW and using inorganic catalysts. Like Fulcrum and Enerkem. A number of them stranded in their capital raise, as Sundrop, Primus and Coskata were, to varying degrees.

The Bottom Line

This is a change induced by the capital formation challenge facing advanced biofuels – and particularly the smaller project developers (as opposed to the bigger balance sheets).
There is the problem of the closed IPO window, the lack of sufficient strategic investors, in the face of the policy uncertainty, for biomass pure plays.
For Coskata, there is the capex opportunity to, as they say, construct a 130 million gallon project for the same price as a 65 million gallon project.
“Why is there not a rush to embrace technologies such as Enerkem, Terrabon, Coskata, Fulcrum Bioenergy or others that can convert MSW into liquid fuels?
The bumps in the road are three. One, the technology is expensive over the generally small radius in which MSW can be profitably aggregated. Two, the technologies themselves are just reaching commercial demonstration scale. Three, they all could use a more affordable stream of optimized syngas.
Syngas, keep an eye on it. We have found more profitable, breakthrough ways to use it, than make it. Getting the right syngas at the right price. Well, that’s been an area where a lot of companies have been working.”
For now, this is an opportunity generally limited to the United States and Canada, where the technologies are being deployed to liberate vast quantities of natural gas. Longer term, we look to Russia as a future leader, as well.
Stay tuned, there will be more. From Coskata and, we suspect, from other biobased developers that are compelled by the same economics.

Thursday, July 19, 2012

USA Biofuels for military- a mighty development.

The Navy’s Green Strike Group sails on biofuels blend: will it sail again?

 July 19, 2012

As the Pacific-based forces of Can-Do battle the Washington-based forces of Shouldn’t-Try, we look at the 6 Big Myths of Military Biofuels

In Hawaii, the US Navy demonstrated its Green Strike Group as part of the 2012 Rim of the Pacific Exercise (RIMPAC), the world’s largest international maritime warfare exercise that includes 40 surface ships, six submarines, more than 200 aircraft and 25,000 personnel from 22 different nations.
On July 17th, military Sealift Command fleet replenishment oiler USNS Henry J. Kaiser (T-AO 187) delivered 700,000 gallons of hydro-treated renewable diesel fuel, or HRD76, to three ships of the strike group. Kaiser also delivered 200,000 gallons of hydro-treated renewable aviation fuel, or HRJ5, to Nimitz. The fuels were provided by Solazyme and Dynamic Fuels.
Both fuels are a 50-50 blend of traditional petroleum-based fuel and biofuel comprised of a mix of waste cooking oil and algae oil. deliver 900,000 gallons of a 50-50 blend of advanced biofuels and traditional petroleum-based fuel to the U.S. Navy aircraft carrier USS Nimitz (CVN 68) strike group. 

The fuel delivery is part of the Navy’s Great Green Fleet demonstration, which allows the Navy to test, evaluate and demonstrate the cross-platform utility and functionality of advanced biofuels in an operational setting.

A note from Vice Admiral Philip Hart Cullom, Deputy Chief of Naval Operations for Fleet Readiness and Logistics

Energy is an integral part of warfighting. It has been since the Industrial Revolution, and that’s not about to change. If you are a Sailor, government civilian or a contractor on the Navy team reading this blog, I ask you to do your part by thinking Energy in everything you do.
“This week, as part of the international Rim of the Pacific Exercise, the Navy embarks on the largest demonstration of military operations using renewable biofuel. In the modern age of warfare, energy is fundamental to our warfighting. We use it in our aircraft, ships, and expeditionary vehicles, and throughout our shore infrastructure. Unfortunately, this makes fuel both an indispensible enabler of our warfighting and a major potential liability.
“When there are unpredictable spikes in the price of fuel, our Sailors and Marines are likely to fly less, steam less, and train less. This is not an insubstantial expense, and we cannot, and should not, trade readiness for fuel.
“Advanced 2nd and 3rd generation alternative fuels, such as those we are experimenting with during RIMPAC, will allow us to continue to perform our mission in a manner that frees us from relying upon a diminishing resource. As with the development of any new technology or product, up-front research and development costs in alternative fuels are a necessary part of getting to a new way to power the Fleet. Technological advances and demand are beginning to drive economies of scale and production quantities that can drive down the costs of alternative fuels.”
Vice Admiral Cullom also provided a video message, available here via YouTube.

Industry reaction

Advanced Biofuels Association president Michael McAdams attending the RIMPAC Green Strike Group demonstration aboard the USS Nimitz

Advanced Biofuels Association President Michael McAdams

“This is a significant achievement for America’s domestic biofuels industry, and a proud moment for our nation as we’re seeing the results of American ingenuity and innovation in this home grown advanced biofuel that is successfully powering the world’s largest state of the art warships. What’s happening today in the waters of the Pacific is proof that America’s domestic biofuels industry is no longer assessing hypotheticals of ifs or when, instead, today, we are now asking, how much do you need? Moving from the beaker to the barrel, all in record time.”

Mary Rosenthal, executive director of the Algal Biomass Organization

“ Today’s successful  demonstration of the ‘Great Green Fleet’ at the Rim of the Pacific Exercise  is the latest in a series of tests by the Navy and other major players that show that algae-based fuels can perform the same, or better, than petroleum fuels.
“Fuels made from algae are made in the U.S.A, are 100-percent compatible with existing infrastructure, and in the near future, will be price-competitive with petroleum.  By developing domestic alternatives to petroleum, the US algae industry is helping reducing our reliance on imported oil, creating manufacturing jobs in rural communities, and strengthening our national security.”

The 6 Big Myths of Military Biofuels

Myths abound on military biofuels – some passed around by the usual suspects in an attempt to create fear, uncertainty and doubt, and thereby win crucial political points during an election season.
As a Reuters report notes, “Congressional Republicans have denounced the military’s green energy push as another attempt by the Obama administration to promote alternative fuels even when they make little economic sense, as in the case of the government-funded solar panel maker Solyndra, which went bankrupt last year.”
Others seem more to be the product of naïvete, often by members of the media who struggle to master the science and economics of energy under the pressure of journalistic deadlines.
In this context we’d like to examine assertions made in a feature story on the Green Strike Group published this week in Wired’s online Danger Room, entitled “How the Navy’s Incompetence Sank the ‘Green Fleet”.

Myth #1. Military Biofuels will cost an extra $1.8B per year.

True or False? Is there “a little-noticed Defense Department report shows that the Navy could spend as much as an extra $1.8 billion per year if it buys all the biofuel it’s pledged to burn?”
False and false. Which is to say, congressional Republicans have been attempting to give the report more visibility than the Declaration of Independence.
The report does mention a figure of $1.8 billion – absent the invocation of the Defense Production Act Title III, which would ensure that advanced biofuels are, in fact, cost-competitive with fossil fuels. The Obama Administration, working with the Navy, simply followed the recommendations of the 2011 report and invoked the DPA to ensure that switching to green fuels would not involve great expense to taxpayers.

Myth #2. Advanced biofuels falling 98 percent short of Congressional targets.

True or false? “In 2007, Congress set a goal of producing two billion gallons of advanced biofuels within five years. But today, firms can only generate around 40 million gallons of the stuff — 98 percent less than the original plan’s total.”
False. Advanced biofuels, as defined in the Congressional goal, specifically include sugarcane ethanol and biodiesel, and more than 10 billion gallons “of the stuff” were produced around the world last year – vastly exceeding the Congressional target.
How did Wired get its, er, wires crossed? By mixing up the definition of cellulosic biofuels with advanced biofuels. As it happens, none of the fuels used in yesterday’s exercise were cellulosic biofuels.

Myth #3. There is no biofuels production in the US capable of supporting military fuels – it’s fantasy fuel.

True or false? “Currently, there’s not a single commercial-grade biorefinery operating in this country.”
False and false. There are more than 180 biorefineries operating in the United States. More importantly, since what Wired is driving at is the manufacture of military fuels (rather than, say, ethanol), all of them capable of making intermediates that can be upgraded to military-spec aviation fuel.
Keep in mind, all biofuels made for military purposes today are manufactured in a two step-process – first, an intermediate is made, and then it is upgraded through processes such as UOP’s hydroprocessing technology. It’s the same with crude – you don’t pour crude oil into an aircraft or destroyer – after recovery, it is processed and upgraded at a refinery to meet a military spec.
Also keep this in mind. In the 2012 demonstration the HEFA fuels were used, from a new renewable fuel spec developed and approved in the past two years, and which primarily utilizes fats, oils and greases to make renewable fuels.
By the 2016 deployment of the Green Strike Group, the ATJ standard is expected to have been approved. What’s that? Instead of upgrading oils to military fuels, this is for the upgrade of alcohols into fuels. The military will have a vastly larger pool of suppliers and production capacity to tap into in 2016.
So, why all the fuss about invoking the DPA? The Navy is planning to use the DPA to ensure that it has a reliable, cost-competitive supply of military fuels. DPA-invested production capacity will be, by contract, providing fuels at a cost-competitive price and with a dedicated supply to the military. The US Navy, like everyone else, is determined not to repeat the mistake of recent years and buying renewable fuels in the open market.
In this way, it is returning to the same strategy it used in the conversion from coal to petroleum back in the early 1900s.
The oil industry in Wyoming really got underway with the Teapot Dome complex, which was a Navy fuel production depot. Ultimately that complex was released to the public (initiating an energy brouhaha – the Teapot Dome scandal – that makes the upheaval over Solyndra look like chicken feed, and was described as the most serious public scandal prior to Watergate). President Harding’s Interior Secretary, Albert Fall, in fact went to jail as a result of the scandal, the first US cabinet official ever to do so.
The British Navy did much the same when converting from coal to oil. Concerned over supplies and costs, First Lord of the Admiralty Winston Churchill pushed through a plan to found the Anglo-Persian Oil Company to guarantee afordable, reliable sources of the new fuel. Today, that company is still around – it’s BP.

Myth #4. Biofuels are heavily subsidized and are a showcase for government subsidy programs gone wrong.

True or false? “In 1980, Congress began a major investment in the production of corn-based ethanol with a 45-cents-ger-gallon subsidy. Thirty years and $45 billion later, that program is widely considered to be a disaster; at least 40 percent of the U.S. corn industry is now diverted into producing biofuel.”
True and false. True, the Congress introduced a subsidy in 1980. The program has resulted in, according to the most recent study, a $1.09 per gallon reduction in the cost of gasoline by reducing US petroleum demand, almost single-handedly eliminated a farm support that was costing US taxpayers even more than the ethanol subsidy; and the ethanol subsidy itself has been discontinued.
On the 40 percent figure, Wired has mistaken corn shipments to ethanol plants for corn usage by ethanol plants. It’s true (well, not quite, but close enough for horseshoes) 40 percent of corn is shipped to US ethanol plants – but only one-third of the corn kernel, by weight, is used for ethanol. Another third, for example, is returned to the feed markets as a low-cost, high-protein animal feed.
Imagine if you will, the family of eight at the Sunday dinner table. You are the first, say, to tuck into the mashed potatoes. You take your share of a 2-pound tub, and then pass it to your right, and everyone takes their share. It is not true to say that you consumed 2 pounds of mashed potatoes.

Myth #5. Biofuels technologies drive up food prices, excepting technologies that never seem to arrive.

True or false?  “If you use crop land, you increase the price of food. Using ‘new’ land would work — if you depend on a bunch of technologies which haven’t been commercialized yet, a bunch of things that don’t really exist in this world.”
False and false. Food and crops are not the same things, just because food is made from crops. Lots of things go into making food – mostly, energy and marketing. In a $4 box of Corn Flakes, there is less than 10 cents worth of corn. I know – you’re about to tell me that I am referring to processed foods, as are used in developed countries – but what about staple foods such as are used in Africa. Well, let’s consider (sub-Saharan) Africa, and the traditional staple crop, cassava. Eat that raw, you die – without energy-intensive cooking, it forms a cyanide in your body.
And, it’s false that “a bunch of technologies which haven’t been commercialized yet, a bunch of things that don’t really exist in this world” are required to make biofuels from ‘new land’.
Take for instance, Dynamic Fuels’ 75 million gallon commercial-scale facility, which makes military fuel intermediates from animal waste – and which provided much of the fuel for this 2012 demonstration.

Myth #6. Former green tech supporters are now leading the charge against advanced biofuels.

True or false. “One-time green tech supporters were now lashing out at the biofuel program. During the 2008 election, Sen. John McCain pushed his plan to “in five years become oil independent,” modeled after the U.S. military’s project to build the atomic bomb.”
A mile from true. Arizona Senator John McCain is the long-time, well-known, leading opponent of biofuels, in virtually all its forms, for more than a decade. The Senator is one of just 20 or so Senators who voted against the Bush Administration’s Renewable Fuel Standard legislation (The Energy Independence and Security Act), and has been a leading opponent of cleantech mandates in power and fuels, cleantech tax incentives, production tax credits, and loan guarantees.
As Friends of the Earth pointed out in the last election cycle:
“John McCain says he opposes funding wind and solar: “You should let the free-enterprise system take over,” McCain says [Grist, 10/1/07]. McCain no-shows for vote to extend renewable energy tax credit, measure fails by one-vote margin, McCain advisor later says he opposed measure [CQ, 12/13/07]. McCain previously voted against tax credits encouraging renewable energy production [Senate Vote 42, 3/14/06; Senate Vote 125, 5/21/01]. McCain votes against establishing national renewable energy standard to promote wind, solar and other alternatives [Senate Vote 141, 6/16/05; Senate Vote 50 3/14/02; Senate Vote 55 3/21/02; Senate Vote 59 3/21/02].”
Not that there’s anything wrong with the Senator taking a position against federal investment in developing new technologies and industries. It’s just plain wrong to style Sentator McCain as a green tech supporter in this context.

Will the Green Strike Group – much less the Great Green Fleet – sail again?

If the Navy has its way, yes. Will the Navy get its way? Much depends on the 2012 US presidential election and, just as crucially on the US congressional elections.
One thing you can take to the bank. Should the Fleet sail again and when the Fleet sails again, it will not be at a massive cost to the taxpayer. That’s the purpose of the DPA Title III program, which should properly be seen in the context of the way that the Navy’s transition from coal to oil was structured, not dissimilarly, in the early 20th century.

A note on leadership from Gen. Colin Powell (Ret.)

“In the military we are always looking for ways to leverage up our forces. Perpetual optimism, believing in yourself, believing in your purpose, believing you will prevail, and demonstrating passion and confidence is a force multiplier.”