Posts tagged “POET”
In last month’s article Where are the Unicorns?, I discussed the fact that the commercial cellulosic ethanol plants that were announced with great fanfare over the past couple of years are obviously running at a small fraction of their nameplate capacity. In fact, April was a record month for cellulosic ethanol production according to the EPA’s database that tracks this information, but that meant that at least 8 months into the learning curves for these plants actual production for that month was only about 6% of nameplate capacity.
May’s numbers are now in, and the situation has gotten worse. After reporting 288,685 gallons of cellulosic ethanol in April, May’s numbers only amounted to 114,018 gallons. This is only about 2.4% of the nameplate capacity of the announced commercial cellulosic ethanol plants. If we use year-to-date numbers, the annualized capacity is still less than 3% of nameplate capacity for facilities that cost hundreds of millions of dollars to build. Let that soak in. POET alone spent $275 million, with U.S. taxpayers footing more than $100 million of that bill. Abengoa reportedly received $229 million from taxpayers for its project. For this (plus however much that was spent by INEOS), the combined plants are running at an annualized capacity of 1.7 million gallons of ethanol, which would sell on the spot market today for $2.6 million. CONTINUE»
Congress Mandates Cellulosic Ethanol and The EPA Tracks It
The U.S. Environmental Protection Agency (EPA) is tasked with tracking compliance under the Renewable Fuel Standard (RFS2) that was set in the Energy Independence and Security Act of 2007 (EISA). Obligated parties under the RFS2 must demonstrate compliance with Renewable Identification Numbers (RINs), which the EPA created to track RFS2 compliance. A RIN is a 38-character number assigned to a gallon equivalent of renewable fuel produced or imported. For corn ethanol, 1 gallon of ethanol produced generates 1 RIN. Other kinds of biofuel generates RINs at different rates which are defined by the EPA. For certain gaseous biofuels, such as di-methyl-ether (DME) and bio-methane (methane typically produced from sewage sludge or manure), the EPA has specified that 77,000 British thermal units (BTUs) of fuel are 1 gallon of renewable fuel equivalent. Not coincidentally, this is the energy content of 1 gallon of ethanol.
Obligated parties that produce or own RINs must register with the EPA, and RIN generation and transaction data is available from the EPA Moderated Transaction System (EMTS). A RIN is attached to each gallon of renewable fuel (or equivalent) as it is transferred to a fuel blender. After blending, RINs are separated from the blended gallon and are used by obligated parties (blenders, refiners, or importers) as proof that they have sold renewable fuels to meet their RFS mandated volumes. An obligated party can purchase RINs to satisfy their obligations, and that’s exactly what many obligated parties do. CONTINUE»
In this week’s episode of R-Squared Energy TV, I answer questions about POET’s Project Liberty, about why KiOR might need a natural gas pipeline, and whether there are better options out there for utilization of waste heat from electrical generating plants.
Some of the topics discussed this week are:
- POET’s prospects for success with their cellulosic ethanol venture
- The synergy of co-locating a cellulosic ethanol plant next to a corn ethanol plant
- Why a renewable energy company might require natural gas
- Options for utilizing energy from waste hot water
The Big Names in Biofuels
So you’re hoping to strike it rich by investing in LanzaTech. Or Solazyme. Or KiOR. Or Gevo. After all, some of these companies recently had high-profile IPOs, and they are clearly “hot” given all of the press coverage devoted to them. So perhaps you have decided you want to get in on a potentially unique investment opportunity.
I get more e-mails and phone calls about investments than on any other topic. And it’s not just individual investors. I hear from institutional and private equity investors trying to determine what’s true and what’s hype, and asking whether KiOR or LanzaTech might turn out to be the Google (GOOG) or Apple (AAPL) of biofuels. Before offering any guidance, the first thing I try to do is establish your reason for investing. Are you looking for — in the words of former Fidelity Magellan’s Peter Lynch — a “ten bagger?” Are you looking for a hedge against the end of the oil age? Is this money that you are fully prepared to lose?
The second thing I would ask you is whether you really understand the company, their business model, their competition, and their potential technical challenges. (This is typically why people e-mail me — because they have questions about these things). Let me offer an example from my own investing history to demonstrate why these issues are important by telling you about the worst investing mistake I ever made. CONTINUE»
Following my inclusion in the Top 10 list of ethanol enemies, I sought to Set the Ethanol Record Straight on my actual views on ethanol. I set out three broad tenets that shape my views. They are: Tenet One: We must transition from fossil fuels with a sense of urgency. Tenet Two: We need to develop systems and services with a much lower fossil fuel dependency. Tenet Three: We must take care of our topsoil. The second and third tenets are where I usually run afoul of ethanol supporters, because I feel many of our ethanol policies simply maintain a high level of fossil fuel dependency. Further, the rush to turn corn into gold has led to practices that have… Continue»
Local Production for Local Needs I currently live in Hawaii, and one thing I hope to help facilitate is for Hawaii to become more sustainable in food and energy. We have the natural resources here to be largely sustainable, but we depend on outside sources for around 90% of our food and energy. Currently, fuel and power in Hawaii are provided by Southeast Asia and from as far away as the Middle East. Of course we do this for the same reason many countries are dependent on imports for their food and energy: That is cheaper than the alternative of self-sufficiency. But from the perspective of risk, regions with such high dependence on others for their basic needs can quickly… Continue»
Last December, I received an intriguing request from the Public Relations Director at the world’s largest ethanol producer. Nathan Schock asked if I would be interested in posing a video question that would be answered by POET CEO Jeff Broin. He said that any topic was fair game, except for questions dealing with proprietary information. I considered a number of questions, and wrote an essay detailing my thought process as I ran through a list of potential questions: The Questions I Didn’t Ask. But I had one question that had been weighing on my mind more than any other, and I posed that one in the video I sent in. Since then, Nathan and I have exchanged a number of… Continue»
I have had family visiting me for the past two weeks, which has slowed my posting down a bit. I am trying to finish up the followup story to the essay on the MixAlco process, but it will probably be early next week before that one is ready. Until then, here is a 12-minute radio interview that I did this week for a Midwestern radio program called Farm Talk: RR Interview on the USDA Report and Future of Renewable Energy We covered the implications of the USDA report covered in the previous essay, the future of cellulosic ethanol (I mentioned POET in the interview), the proposed ethanol pipeline, and what characteristics I look for in a renewable energy project. I… Continue»
Back home now, just trying to catch up on the energy news of note. Four stories that I want to highlight. First was POET’s announcement on their progress on cellulosic ethanol: Poet hits ‘long shot,’ cuts cellulosic ethanol costs WASHINGTON – The head of the world’s largest ethanol producer, Sioux Falls-based Poet, said Wednesday that his company has drastically cut its cellulosic ethanol production costs. It is a breakthrough that will allow cellulosic ethanol to compete with gasoline within two years. Jeff Broin, Poet chief executive, told reporters during a roundtable discussion that the company has reduced its cellulosic ethanol production cost during the past year from $4.13 a gallon to $2.35 a gallon. Andrew Leonard of Salon asked me… Continue»
Today (July 17th) I spent some time on the phone with POET‘s VP of Science and Technology Dr. Mark Stowers. (I was invited up for a visit, but I couldn’t swing that just now). Dr. Stowers is in charge of company R&D, which includes corn and cellulose to ethanol, as well as the investigation of novel processes for utilizing waste to power their facilities. Joining us on the call was Matt Merritt, POET’s Media Relations Specialist. We covered a lot of ground on the call. Along with the environmental impact, key interests of mine in assessing fuels of any kind are the energy inputs – what kind, how much – and the related topic of logistics. I probed the energy… Continue»