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Fast Food Fight Over Biofuels

Will the U.S. government’s biofuels mandate increase the cost of your favorite “dollar menu” item?

A trade group of chain restaurants – which includes fast service joints – called the National Council of Chain Restaurants, has put out a report saying that the EPA’s Renewable Fuels Standard will increase restaurant food costs. According to NCCR, the RFS will cause the cost of corn to rise by 27% (according to two studies) or perhaps by only 4% (according to one study).

In addition to mandating ethanol made from corn, the RFS is the mandate driving the new industry of cellulosic ethanol. Biofuels producers of all kinds love mandates. Love is not a strong enough word, actually. I’m not sure what word DuPont would use. It just broke ground on a 30 million gal/year cellulosic ethanol facility in Nevada, Iowa.

But the fast food group argues that the RFS means higher corn costs and higher costs for everything from wheat and soybeans to beef, poultry and eggs. The average fast food restaurant spent just over $180,000 in 2011 on food commodities. Once the RFS is fully phased in, the cost of that food would go up, they claim, by 10% in the worst scenario and 1.6% in the best.

Recently, when the EPA denied requests by governors and members of congress (many representing the cattle and poultry industry concerned about rising costs of feed), it said its own estimates showed corn prices were affected only slightly by demand for ethanol – by about 1%.

The NCCR report contains the following statement:

“Increased demand for corn for use in ethanol will cause corn prices to increase, in the absence of adjustments to the supply of corn.”

But according to the USDA, both corn acreage, and importantly, yield per acre, have soared in recent years due to the additional demand from ethanol:

Corn production has risen over time, as higher yields followed improvements in technology (seed varieties, fertilizers, pesticides, and machinery) and in production practices (reduced tillage, irrigation, crop rotations, and pest management systems).

Strong demand for ethanol production has resulted in higher corn prices and has provided incentives to increase corn acreage. In many cases, farmers have increased corn acreage by adjusting crop rotations between corn and soybeans, which has caused soybean plantings to decrease. Other sources of land for increased corn plantings include cropland used as pasture, reduced fallow, acreage returning to production from expiring Conservation Reserve Program contracts, and shifts from other crops, such as cotton.

Companies that are building facilities to produce advanced biofuels (not derived from food sources) are probably more dependent on the RFS than their corn-consuming counterparts. With corn ethanol selling for $2 a gallon, fuel blenders will likely seek it out even without a mandate. While it would be more comfortable to ignore this food fight, the future of the RFS could make or break the future of advanced biofuels.

[Not surprisingly, the Renewable Fuels Association has issued a response to the NCCR's report]

 

Energy Crops: the sweet and the sour

Switchgrass, miscanthus, hybrid poplar – these are just the first three plants I think of when I hear the term “energy crop.” But I heard of a new one a few weeks ago when I attended a conference (story fortcoming) about commercializing biobased chemicals and fuels. Let me introduce you to a very big “weed” called Arundo donax

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Arundo donax is a giant reed from Asia. Credit: USDA

While most energy crops produce a few tons of dry biomass per acre, Arundo – a tall bamboo-like reed – can produce several. Like switchgrass, it is a perennial. Like Kudzu, however, it is self-propagating and possibly horribly invasive.

It looks like the huge plant (it’s a weed when it grows where it isn’t wanted, like in California), may become a lot more well-known in biofuels circles. Chemtex will use it, along with wheat straw, in its first commercial facility in Crescentino, Italy. This plant is already humming, and commercial ethanol production is expected to begin early next year.

Chemtex plans to construct another ethanol plant in eastern North Carolina. Through a USDA program intended to promote rural development through the cultivation of energy crops, the company was offered a $99 million loan guarantee to plant “high yielding energy grasses, including miscanthus and switchgrass.” According to a fascinating look at Arundo cultivation – and eradication – by the Associated Press, it looks like the giant weed may also be part of the mix.

Meanwhile, a much sweeter crop, a high-sugar variety of sorghum, may be edging its way into Brazil’s famous sugar-growing regions. Plant biotech firm Ceres, and agribusiness firm Syngenta plant to run test plots of hybrid sweet sorghum destined for ethanol production. The press release says that Brazil’s ethanol industry has created a shortage of sugar cane, and the country views sorghum as a strategic crop.

While Arundo would be harvested just for its biomass, sorghum is usually grown for its seed which is used in animal feed.

Advanced Biofuels Makers Thankful for RFS

I wanted to point your attention to Jeff Johnson’s story today about why EPA will not wave biofuel blending requirements (known as the Renewable Fuels Standard or RFS). Nine governors and many members of Congress, prodded (no pun intended) by livestock producers, had asked EPA to waive the standard saying that ethanol demand was driving up the cost of corn.

What I found interesting is that EPA estimates that waiving the mandate would only reduce corn prices by approximately 1%. This year’s U.S. corn harvest was impacted by drought, and yields plummeted to a 17-year low, Johnson reports.

While the RFS was initially written into law in 2007 to enhance U.S. energy security, it is considered the main policy vehicle driving demand for advanced biofuels. These are biofuels made not from food grain like corn, but from other feedstocks like corn stover, sustainably harvested wood or waste products. These fuels, when commercialized, are expected to help lower the U.S. contribution to CO2 emissions.

The members of BIO, a trade group of advanced biofuels firms and biobased chemical makers, reacted with joy to the announcement.

“EPA has made the right decision and we thank them for making a careful and fully considered analysis,” said Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section. “Earlier studies by researchers at Purdue University, Iowa State University and the University of Missouri’s Food and Agricultural Policy Research Institute showed clearly that a waiver of the RFS would not undo the economic harm caused by the drought.

“However, a waiver of the RFS could have undercut ongoing investments in advanced biofuels. Renewable fuels are a significant contributor to our nation’s economy and energy security, creating jobs and directly reducing reliance on imported oil. This decision allows BIO member companies to continue to deliver innovative technologies to the market to expand our domestic production of biofuels, including fuels from agricultural residues, municipal solid waste, algae and purpose grown energy crops.”

Connecting those themes – the RFS, the drought, and CO2 emissions, NOAA recently reported that man-made climate change was an important contributor to the extent and duration of the 2011 drought in Texas.

Giant Gobs of Algae Coming From Solazyme

Starting soon, oil-producing algae will be replicating at B-horror-movie quantities. Imagine a lab coat-wearing scientist running into the street shouting “300,000 metric tons!” while scores of screaming people run by, pursued by a giant wave of green slime.

But be not worried, the algae in question will be safely confined to fermentation tanks thanks their overlords at Solazyme. And many of those tanks will be in Brazil (so the people would be screaming in Portuguese, I guess.)

Earlier this week, Solazyme says that it has agreed with its sugar-producing partner Bunge to increase the production capacity for algal oils from an original 100,000 metric ton amount to 300,000 metric tons. It seems from the press release that Bunge will have a hand in marketing the tailored oils to the edible oil market in Brazil.

If you happen to live in the U.S. and have a craving for oil derived from algae, you’ll be pleased to learn that another large blob will be coming to Clinton, Iowa, starting in early 2014. Solazyme and its little green workers plan to ooze into the idle Archer Daniels Midland plant formerly occupied by Metabolix’s bioplastics operation. The plant will start out making 20,000 metric tons, but aims to grow to 100,000 metric tons.

 

What the Election Means for Climate, Energy & Cleantech

Update: Here’s a link to C&EN’s election story – including new House & Senate leaders in energy-related roles.

It’s been a quiet time in cleantech news lately, what with Sandy and the election happening in back-to-back weeks. But the election – and the superstorm – are likely to have meaningful long-term impacts on energy policy. I took a tour around the internets to see what analysts and cleantech-ers are saying in their reaction to the election results.

Though it was past my usual bedtime, President Obama’s victory speech caught my ear when he remarked “We want our children to live in an America . . . that isn’t threatened by the destructive power of a warming planet.”

With Congress still divided, most policy wonks suggest that any energy and environmental policy changes will have to be led by the White House. Things to watch include any movement to block the Keystone Pipeline or push forward with EPA regulations on smog that were delayed due to cost concerns.

Environmentalists have signaled that they will be putting pressure on the President to use national policy to address climate change. Look for Bill McKibben, activist, author and co-founder of climate change group 350.org to be very vocal. He was quoted in three articles I read.

Energy and cleantech activists are pressing for a national renewable portfolio standard that would require power generators to obtain 30% of electricity from renewables by 2030. Nearly 30 states and D.C. have such a standard, the most well-known and successful is California’s, which is headed to 33% by 2020. Wind energy backers will work to return the production tax credit.

The Washington Post points out that Obama recently spoke about upgrading energy efficiency standards for buildings – codes are currently set by state and local governments.

And renewables businesses will be looking for government action that might help them gain financing for facilities or adjust subsidies on competing oil and gas producers. On the other hand, Obama has been pursuing an “all of the above” energy strategy that is likely result in further development of domestic oil and gas (including hydrofracking) resources.

Perhaps most fascinating to me, though also the most far-fetched, is discussion about whether the fiscal cliff, tax reform, and the deficit will drive Congress to think about introducing a carbon tax. Hmmmm…

My favorite takes so far on the election and energy policy:

From the Washington Post: Obama to continue efforts to curb greenhouse gases, push energy efficiency

Politico: Obama’s green cred on the line in second term

Marc Gunther: For green business, blue skies ahead. For climate policy, who knows?

Huffington Post: Ron Pernick on Five Cleantech actions for President Obama

The Daily Climate: The “Flat Earth Five” – House Members and Climate Change

For an international take, check out Click Green, which compares the horizon for climate change action in the U.S. versus China. China will have new leadership in Xi Jinping

 

Algae Ponds: the lovers and the haters

This week’s issue of C&EN includes some news from algae-based biofuels firm Sapphire Energy. The company is reporting its first harvests of algae biomass from a large, outdoor algae farm in New Mexico.

Sapphire’s outdoor raceway ponds in New Mexico. Source: Sapphire Energy

Sapphire has grown and gathered 21 million gallons of algae biomass totaling 81 tons. Eventually, the plan is to make a kind of crude oil from the algae. They grow the stuff in very large outdoor ponds. According to the press release, “the cultivation area consists of some of the largest algae ponds ever built with groupings of 1.1 acre and 2.2 acre ponds which are 1/8 of a mile long.”

You’d think that the promoters of algae for biofuels would be clinking glasses filled with spirulina-enhanced juice at the news. But you’d be wrong.

In fact, a trade group of algae firms calling itself the National Algae Association says the kind of ponds used by Sapphire – known as raceway ponds (you can see why looking at this image) – will not scale up commercially. Instead the NAA supports the development of photobioreactors (PBRs for short). Similarly, algae researcher Jonathan Trent, writing in a New Scientist magazine piece that also appears in Slate is arguing in favor of photobioreactors. Specifically, Trent says PBRs should be deployed offshore. I’ll quote from his article where he summarizes the raceway/PBR tradeoffs:

There remains the question of how and where to grow the algae. A few species are cultivated commercially on a small scale, in shallow channels called raceways or in enclosures called photobioreactors (PBRs). Raceways are relatively inexpensive, but need flat land, have lower yields than PBRs and problems with contamination and water loss from evaporation. PBRs have no problems with contamination or evaporation, but algae need light, and where there is light, there is heat: A sealed PBR will cook, rather than grow, algae. And mixing, circulating, and cleaning problems send costs sky high.

Trent doesn’t mention what industry analysts complain about the most. When it comes to algae, though PBRs might be the best bet, they require too much capital expenditure for the equipment.

Meanwhile, Solazyme, which started life as an algal fuels firm but now is manufacturing oils for use in skin cream and other high value applications, grows its algae in a third way – its algae live in bioreactors, but in the dark. They eat sugar and make oil. Is there a best way to commercialize algae for fuels and chemicals? Is there any way? It seems that it is still too early to tell.

Switchgrass Bait and Switch

Sometimes when you dig a little on Google News you find fascinating nuggets in local news of the topics that we cover here at C&EN. A great example is in Knoxville’s alternative newsweekly Metro Pulse.*

They grew the switchgrass. Now what? Credit: University of Tennessee

Newshound Joe Sullivan digs into what ever became of $70 million that the state of Tennessee spent in the flush days of 2007 to start up a switchgrass and cellulosic ethanol industry in the state.

The good news on the project is that the promised 250,000 gal per year cellulosic ethanol plant did open, in Vonore, Tennessee. The bad news is that it has not been using any of the switchgrass grown on 5,000 surrounding acres. The switchgrass part of the project involved the University of Tennessee Institute of Agriculture. The state figured switchgrass would grow great there. And it seems to have been correct.

Sullivan reports that more than half of the $70 million project money went to build the pilot plant. But corporate partner DuPont (now DuPont Cellulosic Ethanol) has used the pilot plant to test and demonstrate its ability to make ethanol from corn stover. Corn stover is a feedstock that is available in huge quantities…. in Iowa. As it happens, DuPont’s first commercial-scale cellulosic ethanol plant is in Nevada, Iowa, and is set to come online soon.

C&EN has mentioned the Vonore plant a half dozen times (including in a previous post on this blog). The move away from switchgrass escaped our attention, but it is an important development for the UT folks and the farmers they have been working with.

So what will happen to the 50,000 tons of switchgrass that were harvested by Vonore-area farmers? Read the story to find out.

* Edited 8/28 to correct reference to Metro Pulse

Making Markets for Bio-based Fuels and Chemicals

Minnesota has long been the heart of ethanol fuel consumption. With plenty of corn and corn ethanol facilites – and a lot of drivers in E85 vehicles – the state was an early and enthusiastic supporter of bio-based fuel. But times have caught up with the northern-Midwesterners.

Now a new ethanol facility, owned by Gevo and being renovated to make isobutanol from corn, has run into an obstacle in state legislation that prevents the company from selling the alcohol to in-state fuel blenders. According to the Star Tribune, the state’s laws only specify that ethanol can be blended with gasoline (at 10% biofuel). Gevo’s Lucerne, Minn. isobutanol plant will have to ship out of state to access the fuel market.

Currently the site is being renovated to switch from making corn-based ethanol to isobutanol. Though the goal is to sell into the higher-margin chemicals market, fuels are usually a key destination to make the capacity/revenue equations work out.

There’s still time to get that settled, though. Gevo won’t be in commercial production until June, and the state can update the regulation to include other bio-based fuels. The Star Tribune points out that the President of the state’s ethanol trade group, Minnesota Bio-Fuels Association, is also CEO of Highwater Ethanol, which is also considering making isobutanol.
Highwater says it is in discussions with Butamax, a joint venture of BP and DuPont and competitor to Gevo. The two firms are been engaged in a major patent dispute. With Gevo poised to be the first in Minnesota to make isobutanol, I’m sure the firm would like to see the law changed sooner, rather than later.

Meanwhile, back in Washington, there are efforts to greatly expand the products that carry the USDA BioPreferred label. The program is a labeling/economic development/domestic bio-based materials promotion vehicle. President Obama gave it a boost last week when he signed a presidential memo requiring government agency purchasers to increase the amount of BioPreferred products they purchase. He also asked USDA to double the number of categories and products that are designated BioPreferred over the next 12 months. In the Senate, Debbie Stabenow (D-Mich.) has introduced the Grow It Here, Make It Here Bio-based Manufacturing Act which would further invigorate the effort.

I’ve been seeing a great deal of support Senator Stabenow’s bill in my in-box, from groups who expect to benefit from a higher profile for bio-based materials. DuPont, Novozymes, and the Biotechnology Industry Association trade group have publicized their support.

From a DuPont press release this morning: “The President’s action and the Grow It Here Make It Here bill demonstrate that the administration and policymakers understand the value of U.S. leadership on innovative biobased products in the United States,” said James C. Collins, president, DuPont Industrial Biosciences. “This action is a shot in the arm to America’s bioeconomy – helping support our overarching goals of boosting the U.S. agricultural sector and reducing our reliance on imported petroleum while offering a wealth of
environmental and health benefits.  This is U.S. innovation that can help create U.S. jobs for a growing global market for sustainable products.”

Trending in Liquid Fuels

I’ve never had an automobile that ran on anything other than gasoline. Sure, sometimes I buy the high-octane stuff, and nowadays my go-to fuel has 10% ethanol in it. Someday soon it may have 15%. But I’m old school. If I were more cool, I’d be filling up on trendier stuff – perhaps some home-brewed diesel from vegetable oil, for example.

Actually, french fry grease drivers are also getting to be passe these days – its so hard to keep up! According to former Pennsylvania Governor (and our first Homeland Security head) Tom Ridge, methanol is the way cool fuel. Or so he contends in an OpEd in today’s New York Times.

Sprint car drivers run on methanol. Maybe you will to. Credit: Ted Van Pelt (cc)

This idea is pretty timely for me, as I was thinking of trading in my Mazda for a sprint car. If Ridge’s idea gets traction, I won’t have to – I’ll be able to fill up with the way high octane stuff without needing to upgrade my ride. He points out that just as a normal car can run on ethanol (or be cheaply converted to run on ethanol) the same is essentially true for any alcohol fuel. It takes way more methanol to go the same miles as on the same amount of gasoline, but worry not, it’s cheap. The bottom line? Methanol can be made from (say it with me)  clean-burning, domestic natural gas.

This thread continues neatly over at the Department of Energy, where $30 million in grants will go to projects to make it possible to fuel a car on compressed natural gas (those tanks are too big, bulky, and pricey to use now, but can be improved).

And in the same press release, DOE says it will make available $14 million to explore making transportation fuels from algae.

Meanwhile, on a recent drive through Eastern Pennsylvania I again pondered the meaning behind a billboard on Interstate 81. “Future Site of the Nation’s First Waste Coal to Clean Transporation Fuels Plant.” Questions that came to mind were “what is waste coal? how do you make transporation fuels from it? that sounds like it would be expensive? and are my tax dollars paying for this?”

Anyway, that pilot plant, which was originally slated for operation in 2006, was never built. Cost over-runs and difficulty arranging the neccesary financing (at last count the cost was around $1 billion) seem to have made that idea a trend of the past.

 

Biofuels from Seaweed

The concept of making biofuels from seaweed has been floating around as an idea for a while now, but this week there were a few real news items about it. Well, I consider it real news when it makes the cover of Science

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Seaweed in your tank? Credit:
Melody Bomgardner

Following the theme that any ready source of carbon, not already used for something, is a prime target for biofuel prospectors, scientists are working to create microorganisms that can break down seaweeed alginates into sugar, and then make ethanol from it.

The microbe is our friend E. coli, and researchers at Bio Architecture Lab, a biofuel and renewable chemicals company in Berkeley, Calif. have added genes that allow E. coli to first break down alginates into smaller bits, digest those more sugar-like bits, and then spit out ethanol.  Unlike in the processes usually used for cellulosic ethanol, the Science article writers claim their bacteria can chomp seaweed without chemical or heat pre-treatment.

If seaweed as cover model isn’t convincing, a second seaweeed-flavored item announced this week is a new collaboration between enzyme maker Novozymes and an Indian seaweed company called Sea6 Energy. “The research alliance will use enzymes to convert seaweed-based carbohydrates to sugar, which can then be fermented to produce ethanol for fuel, fine chemicals, proteins for food, and fertilizers for plants,” says the press release. (I read that to mean the non-sugar portion would be made into food and fertilizer – if sugar can be made into protein I’m going to have to change my diet).

Here’s the benefits that the seaweed pushers are claiming: seaweed has a high sugar content (presumably after those enzymes get to working), they don’t require irrigation (ha! no kidding) or fertilizer, and of course, duh, they don’t take up cropland. Seaweed – also called macroalgae by some – can be raised and harvested without those fancy bioreactors used by algae-to-fuel operators.

Seaweed can, however, be a purpose-grown crop. In fact, Sea6 already has a supply chain set up for that, as do firms like the chemical company FMC that harvest and process seaweed for the food markets. Alginate and carrageenen are already big business helping to make your low-fat Ranch dressing taste creamy (see Call in the Food Fixers for more on seaweed in your food).

But what works for the high-margin food additives business may not be profitable for the lower-margin fuel industry. Still, it’s an idea that’s spreading.