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By Robert Rapier on Apr 29, 2016 with 12 responses

Reports Of A Unicorn Sighting: Is Commercial Cellulosic Ethanol A Reality?

A few people have asked if I can reproduce more of my Forbes columns here, because they don’t like wading through the ads there to get to the content. This week I wrote an update on the progress toward cellulosic ethanol commercialization, and given my previous coverage on the topic (especially Why I Don’t Ride a Unicorn to Work) this seems like an appropriate subject to discuss here.

Last week the U.S. Environmental Protection Agency (EPA) announced that during the first quarter of 2016, just over 1 million gallons of cellulosic ethanol were produced. In fact, production for the month of March jumped 64% from the previous month to 446,000 gallons produced, the highest levels of the modern era. Production this year is well ahead of the pace in 2015, when 2.2 million gallons of cellulosic ethanol were produced for the entire year.

So, have we finally reached the long-promised realization of commercial cellulosic ethanol?

Before addressing that, let’s review a couple of terms. For the purpose of this discussion a renewable fuel is one that is derived from recently living biomass (as opposed to fossil fuels, which are derived from “ancient” biomass). First generation renewable fuels (aka “biofuels”) are those made in large volume today, such as ethanol produced from corn and sugarcane, and biodiesel produced from vegetable oils. Of the 34 billion gallons of biofuel produced in 2014, 97% of the total was via first generation ethanol (74%) or biodiesel (23%) processes.

160428TELbiofuels

Second generation biofuels, also commonly known as “advanced biofuels”, generally fall into one of two categories. Hydrotreated vegetable oil (HVO), also known as “green diesel”, is produced from hydrotreating technology utilizing the same kinds of feedstocks that are used to make conventional biodiesel. Instead of reacting the feedstocks with methanol as in the conventional biodiesel process, they are reacted with hydrogen. The products of this reaction are diesel-length hydrocarbons — green diesel — and propane (as compared to glycerin as the biodiesel byproduct). About 3% of the world’s 2014 biofuel volume was produced via this method.

The technology hurdle for green diesel is higher than for biodiesel, and as a result there are fewer players. The global leader is Finland’s Neste Oil, although there are a handful of other players. The single biggest feedstock to date for this process has been palm oil, but this feedstock has also been highly criticized for environmental reasons. (There is another category of green diesel that involves gasification of biomass followed by the Fischer Tropsch reaction to produce hydrocarbons, but there are no commercial plants in operation).

The second category of advanced biofuel is the one presently of greatest interest in the U.S., and that is cellulosic ethanol. Conventional ethanol production utilizes a fermentation process to convert starches or simple sugars to ethanol. Cellulose is an important structural material for plants, and it is made up of many repeating sugar units. These repeating sugar units can be broken down by various processes into the component sugars, which can then be fermented into ethanol. The process of breaking down cellulose into sugars was discovered in France in the 1800′s, and cellulosic ethanol production was first commercialized in Germany in 1898. Commercialization in the U.S. followed in 1910, but the process was ultimately abandoned for economic reasons.

Up to this point, the advanced biofuel sector has proved to be a good way for investors to lose money. While there aren’t any publicly-traded companies whose focus is primarily cellulosic ethanol, there are a number of companies that have already gone bankrupt, or are in the process of doing so, by trying to produce advanced renewable hydrocarbons that can compete with oil. KiOR is probably the most famous publicly-traded example, going from an IPO that valued the company at $1.5 billion in 2011 to being bankrupt in 2014. Other companies that have competed in the advanced renewable hydrocarbon space have seen 90% or greater losses since their IPO (e.g., Solazyme, Gevo, Amyris).

The layman’s explanation for the reason is pretty simple. Advanced biofuels are attempting to compete with petroleum, but the reality is that with petroleum, nobody had to plant or harvest the biomass, and nobody had to apply the heat and pressure to convert it into an energy-dense liquid fuel. With biofuels, you have inputs of energy and manpower at every step — and the cost of those inputs adds up. That’s why petroleum made from ancient algae can be produced for a couple of dollars per gallon, but renewable petroleum produced from algae can be more than 10 times that cost. That’s why you don’t see any large-scale algal biofuel operations.

Circling back to the opening paragraph, which companies are responsible for this year’s cellulosic ethanol production? Over the past couple of years, several companies have announced the startup of plants. The key players have been:

  • INEOS – Startup of its Indian River BioEnergy Center in Florida was announced in 2012 with nameplate capacity of 8 million gallons per year.
  • Quad County Corn Processors – Announced first production in July 2014; claims their process is producing 2 million gallons per year from corn kernel fiber.
  • POET – Project LIBERTY plant in Emmetsburg, Iowa startup was announced in September 2014. Capacity was announced at 25 million gallons per year, and later downgraded to 20 million gallons with the potential for 25.
  • Abengoa Bioenergy – Announced start up in October 2014 of their 25 million gallon per year plant in Hugoton, Kansas.
  • DuPont – Announced start up in October 2015 of its $225 million plant in Nevada, Iowa with a nameplate capacity of 30 million gallons per year.

From published reports, it appears that the INEOS facility isn’t producing any ethanol, and Abengoa shut down its plant last December and then declared bankruptcy. Quad County is sort of a wild card, as its potential seems to be limited to a small amount of residual ethanol production at existing corn ethanol plants.

It would appear that most of the current cellulosic ethanol production is coming from POET and DuPont. I suspect that the jump in production in March was DuPont working out some of the kinks in their process. Still, if one assumes that the production is all coming from those two companies, March’s record production only amounts to about 10% of the combined nameplate capacity of the plants.

Thus, whether we are now entering the realm of “commercial” cellulosic ethanol production really depends on how that term is defined. If commercial means  production that can stand on its own and compete in the marketplace, the answer to that is still “No.” That will remain the case until you see companies like DuPont building new cellulosic ethanol plants following their experience with the first one. If anyone can do it DuPont can, but I wouldn’t place any bets on that just yet.

Link to Original Article: Reports Of A Unicorn Sighting

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  1. By Forrest on May 1, 2016 at 5:42 am

    With technology and value analysis like this, the airplane would never have developed. Nor solar panels, hydrogen fuel cell, light bulbs, and petrol fracking.

    Poet and Dupont are going through the final days of plant commissioning. That’s the production shake down time to debug. It includes modifications, redesign, invention to prevent bottle necks, break downs, trouble spots, and improve quality control. Jeff Broin had been interviewed that the feed stock was dirtier than anticipated, material handling was a bottleneck, and some of the equipment wasn’t holding up to corrosion elements. All in all he claimed this phase was going better than first generation corn ethanol production plants. I remember him telling of family history upon his father purchasing a defunct ethanol plant after Jimmy Carter days. The time and money the family had to spend to bring the plant into full production was indeed a high hurdle. Although, the corn starch process is simple as compared to cellulosic, even to this day modern plants are inventing and improving output, cost, and quality of fuel and coproducts. It was no surprise to these plant owners that the commissioning stage of production would take some time. It’s not like their throwing all their assets to the cause. Meaning the ethanol market is pretty much saturated and profits down such as the oil industry currently distressed. Broin did say the production would ramp up all through this year and hit full production. The low trajectory of production was anticipated and more of a factor of rate of improvement, not an indicator that all is hopeless.

    I read a article that Quad county and business partners have combined to offer corn starch plants process abilities to produce 20% more ethanol from the same corn kernel input. This includes the home grown or farmer grown natural enzymes corn feed stock that makes it all possible. Much of it cellulosic, some of it better or higher efficiency of starch conversion, and the rest high protein animal feed supplement and more corn oil. Ethanol process plants will probably get out of the DDG market as the cellulose component not that valuable for retail sale as compared to cellulosic conversion. The distillery yeast and vital feed elements of corn kernel a better coproduct for high value retail sales.

    Also, they may have figured out how to improve cleanliness of feed stock. Farmers last I heard are hooking up baler to combine every 3rd or 4th row to keep corn left overs from hitting the dirt.

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    • By Almuth Ernsting on May 2, 2016 at 4:42 am

      It seems rather unfortunate to me that companies which have received at least tens of millions of public funds each are allowed to keep their production rates secret so that nobody can do more than speculate as to which plant is producing how much from which technology, and which ones have failed entirely. Forrest: It would be helpful if you could give a link to the interview with Broin that you refer to. Was it recent? Btw, DuPont’s plant was officially opened a whole year after POET-DSM’s. POET-DSM has now had a year and a half since they told the world that with their plant opening, cellulosic ethanol had become a reality.

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      • By Forrest on May 2, 2016 at 9:18 am

        The Fed and State gov’t often award money as an incentive for private companies to take on risky business ventures if it’s deemed in best interest of citizens. It’s wrong to depict as if they are merely feasting on caviar upon the public treasury as often the opponents claim. These companies have more invested and look for gov’t support to decrease risk. Petrol and automotive companies do the same. Their is no secrets upon production if the ethanol is sold in the RIN market. Future production depends on market demand. Cellulosic process was proven in the pilot stage. Economic justifications proven in production phase. Production phase now active and within the zone of commissioning for stable runs with minimal problems. Completely new and invented process plants do have plenty of bugs. Process and design engineers learning tricks daily on requirements and importance of every component within the process. This is the nuts and bolts operation, but shouldn’t be portrayed as failure mode since they are not opening the pipe line valve for continuous nameplate capacity. It’s a very good sign, indeed, that production is active as compared to cutting staff, layoffs, and mothballing equipment. My internet is weak this morning, you can search energy.agwired.com for interview with Broin. I think it was captioned cellulosic ethanol production. Cindy was doing the interview and it was about one month ago. Actually, the web site was doing an update on all the producers.

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        • By Almuth Ernsting on May 3, 2016 at 10:59 am

          I work for Biofuelwatch and the massive loss of public funds spent on unsuccessful ‘advanced biofuels’ projects concerns me primarily because this is money which I believe ought to be spent on proven ways of reducing greenhouse gas emissions, such as solar power, home insulation, etc. However, if you believe that cellulosic biofuels are a promising concept that merit significant public support then I think you should be particularly concerned about the lack of transparency and public accountability regarding publicly funded projects and about the fact that hundreds of millions of not billions of dollars of funding have been handed to one scheme after another that subsequently closes down or never even got off the ground. See an article I wrote recently: https://www.independentsciencenews.org/environment/biofuel-or-biofraud-the-vast-taxpayer-cost-of-failed-cellulosic-and-algal-biofuels/ – or just see what the 2013 Audit Report about the DoE’s Integrated Biorefineries Project had to say: http://energy.gov/sites/prod/files/2013/09/f2/IG-0893.pdf. Low transparency coupled with a lack of robust due diligence by (public) funders is not a good recipe for developing any new technologies.

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          • By Forrest on May 4, 2016 at 4:38 am

            How the gov’t awards supplemental funds to R&D work is a bigger topic than biofuel. It is played loose, depending on politics, popularity, and priorities. Each administration sets the bar with priorities. I remember back when gov’t funds were shuffled about the demand was for gov’t agency’s not to pick the winners as they have miserable track record in doing so. All in all with the colossal state of waste, fraud, and abuse the biofuel investments not very big potatoes. I guess chalk it up to creative destruction. Much good comes out of these failures. Lots of talent that hasn’t forgotten the problems, science, and technology. Some of these people will continue the struggle in other venues and will contribute greatly to the cause. Much of this happen back in Jimmy Carter Gasohol days when the present day industry thanked all the talent that learned hard lessons back then that presently contribute greatly. Most of them industry leaders.

            New technology especially disruptive have many barriers to fruition, such as the audit report lists. You must understand that every venture was supported by a group of very motivated true believers that put careers and investments in the mix. That the technology and science was correct. These failures always occur from a wide array of problems and usually from critical problem such as time, money, and quality. Meaning the technology wasn’t fool’s gold errand to garner the public’s tax money. Efforts such as these require foundation commitments that the U.S. is opposed to. We want high investment with quick results. Japanese have a long term sustainable commitment to technology such as the solar panel, fuel cell, hybrid cars, etc.. The U.S. has excellent collaboration with funding from business and University for R&D work. That Enogen corn enzyme was a result of such at Michigan State. The business model for success per our tax and financial climate is to hype hype hype and attract max funding from private and public treasury. The attention span of most is just to short and most hate the technical aspects. They want to stare at the bright shiny object and dream.

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  2. By Russ Finley on May 1, 2016 at 11:40 am

    Very informative. Especially your explanation of green diesel. Also loved your simple explanation as to why making a liquid fuel tends to cost more than pumping it out of the ground.

    As for Forbes, I have to agree with whoever asked you to post here. I have never seen a website so buried in ads.. My computer starts smoking every time I visit and they won’t allow ad blocker. Don’t click your mouse or you find yourself looking at another article somewhere and the comment field is one of the worst designs I have ever experienced. I tend to avoid it for those reasons. Technically, its a very unpleasant site to visit, which is a shame because there’s some good writing being done.

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  3. By Bruce Banner on May 2, 2016 at 4:11 pm

    Robert, you need to do some additional research. DuPont is not running yet. While INEOS didn’t produce much if any ethanol in 2015 I think you will find that they’re producing ethanol now.

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    • By Robert Rapier on May 2, 2016 at 5:46 pm

      “DuPont is not running yet.”

      It looks like they pulled a POET, where they announce the opening of the plant far in advance of actually being able to start up the process.

      Do you have any links on INEOS? I can’t find that they have made any public statements about being up and running.

      Thanks, Robert

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  4. By Forrest on May 3, 2016 at 9:36 am

    I’m convinced per reading of the investments, R&D, and on the ground reports that cellulosic fuel is here to stay. The technology is upon a rapid development cycle that impacts settled science of plant technology. Much competition in the mix that will have major impact upon final product offering and plant technology.The bio chemical market is heating up and a natural part of this.

    I just read an analysis report on competing technology to minimize GHG emissions upon timeline. They stated our ICE has yet to exploit ethanol efficiency and E10 is about best they are capable of in present day. Another report claimed battery R&D is indicating improvements in power, but zero chance of breakthrough improvement. Of the choices to minimize GHG emissions per low cost and shortest timeline. Efficiency of ICE + hybrid technology the star for immediate improvement. Next up the same with biofuel that eliminates all additional carbon emissions.

    There is a poster frequenting energy websites that has very intuitive insight. EngineerPoet, if you get a chance read his posts. He claims the petrol companies are now promoting the choice of biofuel with gas as primary backup for solving GW emissions. Hmmm. Also, the claim that nuclear is the only true carbon killer on the grid!

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  5. By Forrest on May 5, 2016 at 6:09 pm

    Just today, interesting comment on Poet’s cellulosic plant operation-

    http://energy.agwired.com/

    by Joanna Schroeder

    “Project Liberty Production Ramps Up

    Posted on May 5, 2016 by Joanna Schroeder

    Project LIBERTY in Emmetsburg, Iowa, has produced and shipped several tank cars of cellulosic ethanol even as the plant is ramping up to its full 20 million gallon-per-year capacity. Last year’s startup phase yielded great experience that will benefit subsequent plants and the learning continues each day as POET-DSM Advanced Biofuels works to make cellulosic ethanol in the most efficient way possible.

    According to POET, the start-up phase that lasted more than a year, has yielded good experience that will benefit future plants. This learning, the company says, continues daily as the POET-DSM Advanced Biofuels team work to make cellulosic ethanol even more efficient.

    POET-DSM’s process uses corn cobs, leaves, husk and some stalk as the feedstock for cellulosic ethanol. The feedstock is harvested by local farmers and transported to the plant for processing. Besides ethanol, Project LIBERTY produces biogas from its anaerobic digester and steam from its solid-fuel boiler to produce power to run its own processes and export energy to the adjacent grain-based ethanol plant.:

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