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Palm Oil Not Clean Enough for RFS, says EPA

The eco-bonafides of palm oil have been long debated, especially in Europe, and it looks like that cat fight may now move to the U.S. The general charge against palm oil is that plantations devastate rainforests and other native habitats that suck up CO2. That problem seems particularly relevant when palm oil is used to make biofuel; land use changes may undermine any benefit in reducing use of fossil fuels.

Palm oil tree. Credit: Wikipedia

EPA has put out a notice that palm oil biofuels (diesel) do not meet the agency’s standard for climate-change gas reduction in the Renewable Fuel Standard. At a minimum, a renewable fuel has to provide a 20% emissions savings, and biofuels from palm oil rate only as high as 17%.

EPA points out that 90% of palm oil comes from Malaysia and Indonesia, and that’s where it focused its analysis. In a note, EPA gives two examples of ways that palm oil production fails. “For example, palm oil production produces wastewater effluent that eventually decomposes, creating methane, a GHG with a high global warming potential. Another key factor is the expected expansion of palm plantations onto land with carbon-rich peat soils which would lead to significant releases of GHGs to the atmosphere.”

EPA has opened a comment period on this ruling, and palm oil producers in Malaysia and Indonesia are very likely to file protests. As reported in the  Business Times of Malaysia, that country is already threatening a trade war. The article also says that the EU has similar restrictions.

Palm oil growers who would claim the EPA is biased in favor of trade protectionism would enjoy some company with Chinese solar panel producers who are fighting back against dumping charges from some U.S. solar manufacturers.

 

A New Year for Biofuels

Fuel blenders are finding that the New Year is bringing a few changes to their business. Before Congress adjourned for the holidays, it opted not to renew the subsidies for putting corn ethanol into gasoline. Though the subsidy had become a fact of life – and added up to $6 billion last year – the fall of the corn regime was not unexpected.

This morning, NPR tried to answer the question of whether anybody would notice the difference, and according to their expert, energy economist Bruce Babcock at Iowa State University, most likely no one will. You can review the segment on the NPR website.

I don’t yet have a number for 2011 production of corn ethanol, but 2010 was a record year, according to the Renewable Fuels Association. U.S. refineries produced 13.23 billion gallons of the stuff. So bear that number in mind for my next item…

Totally aside from and unrelated to the generous corn ethanol subsidy that no longer exists, the EPA still requires the blending in of biofuels in its Renewable Fuels Standard, now in its second edition (RFS2). For 2012, EPA says blenders must include 8.65 million gallons of cellulosic biofuel* in their fuel mix. That will be equivalent to .06% of all renewable fuel produced in 2012. RFS2 says blenders will need to use 9.23% of renewable fuels in their blends in 2012 – most of that will still be corn ethanol.

EPA is tracking 6 cellulosic biofuel projects that are supposed to produce in 2012, and that is how it came up with the number. This is what EPA published at the end of December:

KL Energy Corp. is the only facility in the United States currently generating cellulosic biofuel RINs. American Process Inc., Fiberight, and ZeaChem all anticipate completing construction on their production facilities in late 2011 or early 2012 and plan to begin producing biofuel soon after their facilities are complete. INEOS Bio and KiOR are targeting April 2012 and mid 2012 for the start-up of their respective cellulosic biofuel production facilities. The variation in these expected start-up times, along with the facility production capacities, company production plans, and a variety of other factors have all been taken into account in projecting the available volume of cellulosic biofuel from each these facilities.

There are a couple of other projects in the works that are likely to be RFS2 candidates, but not this year. Poet has received a conditional USDA loan guarantee and is building a co-located plant (with corn ethanol) in Emmetsburg, Iowa – scheduled for completion in 2013. DuPont now has full ownership of what used to be DuPont Danisco’s cellulosic project. No word yet on when that plant will be constructed, but it will be in Nevada, Iowa.

*Edited 1/4/12 to state cellulosic biofuel rather than cellulosic ethanol. EPA anticipates that the largest cellulosic fuel producer will be KiOR, which will be making biodiesel and gasoline from cellulose at its plant in Columbus, MS. KiOR is the only project of the six planning to make anything other than ethanol.

 

 

Advanced Biofuels: pipedream or solid investment?

I read with much amusement this week two dueling editorials about advanced biofuels; one from the Wall Street Journal and the other - a reaction piece – from Biofuels Digest. One was pr0 and one against, I’ll let you strain your brain figuring out which was which.

Editorial boards have plenty of information to pick from to illustrate a variety of contentions – from advanced biofuels are a “march of folly” paid for with “an invisible tax paid at the gas pump” to biofuel as wise investment not just for government, but for companies like Shell and BP. Evidence for the former view: Range Fuels, which absorbed both grants and loans before succombing to the perils of scale-up engineering last week. Evidence for the latter would include Mascoma‘s joint venture with Valero Energy to build a 20 million gal per year cellulosic ethanol plant in Michigan. Valero will foot a good portion of the estimated $232 million bill to construct the facility.

The crux of the problem, as Cleantech Chemistry and many others have observed (including the National Academies) is that the type of advanced biofuels (i.e. fuel not made from food-like feedstocks such as corn sugar) called cellulosic ethanol has not achieved scale to date. (There are other, more lifecycle concerns, as well). Biofuel Digest editors point out that the larger proportion of advanced biofuels scaling up now are of a different sort- like biodiesel for example. In short, they point out there are multiple roads to get to the same place.

The Wall Street Journal, to its credit, does not politicize its arguments – it rightly notes that Range Fuel’s support came from programs created by the Bush administration. Meanwhile, Biofuels Digest points out that the CapEx on the Mascoma plant pencils out to $11 per gal of ethanol for the first phase. The plant may produce up to 80 million gal per year, however, and all the usual promises of cheaper production through scale are supposed to apply.

US Cleantech firms in white-knuckle mode

There has been one positive piece of news this week for the cleantech sector – Solazyme is part of a $12 million grant to supply the U.S. Navy with 450,000 gal of biofuel. Solazyme’s algal oil will be used along with used cooking grease to power a fuel plant run by Dynamic Fuels, a joint venture between Tyson Foods and Syntroleum. They’ll be making both renewable jet fuel and marine fuel. Press releases about the deal emphasize that it is the single largest biofuel purchase in government history.

Thank goodness cleantech has the government as a customer. Private industry customers haven’t panned out so well lately for battery firms like A123 Systems and Ener1, as reported this week in the Wall Street Journal. Major investments in battery manufacturing – supported in large part from Recovery Act funds – have been met with disappointing demand from electric-car makers. A123 Systems has scaled back its scale-up plans because its big customer, Fisker Automotive, has slowed its own plants due to technical problems. Meanwhile Ener1′s customer Think Global has filed for bankruptcy protection.

When C&EN wrote about the battery scale-up, a major concern at the time was that there would be more battery capacity than cars to put them in, and that seems to be the case for now.

Back to biotech, according to a Reuters report from Pike Research analyst Mackinnon Lawrence, the biofuels industry is very concerned that budget cutting in Congress will pull the rug out from programs that are helping companies bootstrap their way to cost parity with petroleum. Part of the problem is that industry’s promises to have commercial-scale production on line by this year  have not panned out. Cellulosic ethanol is the biggest disappointment, and so now attention is likely to switch to drop-in biofuels like renewable gasoline and renewable diesel. Or, even better, jet fuel.

Qteros Regroups

Last Friday, press reports began to circulate that cellulosic ethanol start-up Qteros had fired its CEO John McCarthy, laid off a bunch of staff, and may be for sale. I was intrigued as I had written a bit about the company in the past, and realized, in retrospect, that I hadn’t heard much about it lately.

In fact, it appears that Qteros is in a bit of a huddle and may change the scope of its future plans. I asked the new CEO, Mick Sawka, formerly the company’s senior vice president of engineering and commercial development if he could update me. By e-mail he replied that “Qteros has reduced its staff and John McCarthy has stepped down as CEO. … Based on our data and that of our strategic partner, Praj Industries, we remain confident that we have one of the best process and economic routes to cellulosic ethanol production. Under our new leadership we continue to develop our process.”

Praj Industries is an Indian firm focused on engineering for biobased ethanol. It wants to expand into cellulosic feedstocks.

The partnership was announced early in January, just a day before the firm disclosed it had raised $22 million in the first part of a C round of venture capital funding. At that time, the firm implied it planned to get more investments and proceed to commercialization. It sounds like the scope of the firm’s plans may have narrowed a bit. Cleantech Chemistry will keep an ear out for more information.

I wrote about Qteros’ former CEO John McCarthy back in February of 2010, when he had just taken the helm. Two other firms, Mascoma (also in cellulosic ethanol) and Segetis (in bio-based chemicals) had brand new CEOs at the same time. In all three cases, the new CEO’s were experienced hands who were brought in to guide the biobased firms to commercialization.

Qteros is not the only one of the three that has been quiet this year. Segetis’ most recent press release came out Feb. 14 and is about a deal with Method (a household cleaner firm) to develop a tub and tile cleaner made from bio-based molecules. Meanwhile, in September, Mascoma filed for an IPO worth up to $100 million – though it has not yet begun selling stock. Both firms have the same CEOs as they did when I wrote about them in 2010 –  Atul Thakrar is at Segetis and William J. Brady is still in charge at Mascoma.

 

Why FedEx is an Early Adopter of Transportation Tech

My colleague Steve Ritterrecently attended a conference about electrofuels. Electrofuels are made by using energy from the sun and renewable inorganic feedstocks such as carbon dioxide and water, processes facilitated by nonphotosynthetic microorganisms or by using earth-abundant metal catalysts.

The conference was attended by researchers and at least one early adopter who is ready to give them a try. Cleantech Chemistry is pleased to have Steve’s report on what he learned. [Edit: You can read Steve's story on electrofuels in this week's issue]

FedEx operates more than 680 aircraft and 90,000 motorized vehicles, including delivery vans and airport and warehouse support vehicles such as forklifts. Dennis R. Beal, the company’s vice president for global vehicles gave a talk at the conference explaining why FedEx is open to many new fuel and other transportation technologies that likely would not reach the masses for years, if ever.

A FedEx all-electric vehicle pauses at the Oklahoma City airport in front of a FedEx Airbus A310. Credit: FedEx

Although FedEx is a service company, “what we sell as a product is certainty—if you absolutely positively have to get it there, use FedEx,” said Beal. Beal gave a keynote talk during the Society for Biological Engineering’s inaugural conference on electrofuels research, which was held on Nov. 6–9, in Providence, R.I.

“That means we have a very high standard for our vehicles that pick up and deliver packages,” Beal added. “We have to be very careful in making business decisions to not negatively impact our ability to deliver certainty for our customers.”

With that philosophy, about 20 years ago FedEx starting taking a holistic view at transportation options, including battery and fuel-cell electric, hybrid, biofuel, and natural gas vehicles. “If it relates to fuel in any form, or alternative engines and drive trains, we are keenly interested,” Beal said.

The company has retrofitted delivery vans itself and partnered with vehicle manufacturers, electric utilities, electric equipment providers, and federal agencies on other fronts. FedEx even teamed up with the nonprofit group Environmental Defense Fund when pioneering the first hybrid electric delivery vehicles. Beal related that he and his colleagues have had a long climb up the learning curve searching for the most efficient transportation technologies that are safe, user friendly, meet driving range requirements, and offer a secure supply of affordable electricity or alternative fuel.

“We have tried a little bit of everything to see where these different technologies will and won’t work, Beal said. “We share the results with the rest of the delivery industry—the goal is to help advance the technology so that it will be widely adopted, not just for ourselves, but to help build scale to bring the cost down for everyone.”

FedEx has built its fleet to now contain 43 all-electric vehicles, 365 diesel hybrid and gasoline hybrid vehicles, and nearly 380 natural gas vehicles. In addition, the company has some 500 forklifts and 1,600 airport ground support electric and alternative-fuel vehicles in service.

The prototypes have a long way to go to be cost comparative with internal combustion engines, Beal said. For example, a typical all-electric delivery van costs $180,000 compared with $40,000 for a gasoline or diesel version. A consolation is that electric vehicles are 70% less costly to operate. “We believe the cost is going to come down and be economically viable in the long term,” Beal noted. “But given the logistics and needs of different regions—city versus rural and colder versus warmer climates—there is no one solution that fits all.”

FedEx plans to use a collection of approaches—gasoline, diesel, biofuel, hybrid, electric, fuel cell, and natural gas—and choose the right vehicle for each mission, Beal said. “What will drive adoption, once a technology passes the certainty test, is not that it is elegant, but that it also makes economic sense.”

DuPont’s Cellulosic Plans

DuPont has been digesting its acquisition of Danisco for a while now, and has sent out an update about what used to be called DuPont Danisco Cellulosic Ethanol – now shortened, as you might guess, to DuPont Cellulosic Ethanol. In a press release, DuPont says the effort will now be led by Steven J. Mirshak, who will scoot over from his position as president of DuPont Tate & Lyle Bio Products.

Field day visitors check out switchgrass at a farm in Vonore, Tenn. Credit: UT Institute of Agriculture, P. McDaniels

The firm is still planning to build a cellulosic ethanol plant in Nevada, Iowa. Like another Iowa cellulosic ethanol plant being built by corn ethanol producer Poet, DuPont also is pushing a parallel effort to gather up the corn stover needed as a feedstock. It is a part of something called the Stover Collection Project, with Iowa State University.

Meanwhile, back at the ranch, otherwise known as DuPont’s demonstration facility in Vonore, Tenn., the company “continues to make advancements” in preparation for scale-up, though we don’t learn what those are. Nearby, DuPont partner firm Genera Energy (which is connected to the University of Tennessee) is harvesting test fields of switchgrass. Genera held a recent field day where the company showed visitors the switchgrass varieties as well as the equipment used to harvest them.

We here at Cleantech Chemistry will be monitoring  progress toward large-scale production of cellulosic ethanol. As a recent report from the National Academies has pointed out, the U.S. is way, way behind  where it is supposed to be this year in producing the stuff.

Bad Biofuels Vibes, but no Break for Solar

Last week the National Academies released a report about the federal Renewable Fuels Standard – and the scientist-authors basically panned it from top to bottom. As a policy tool, the NAS said, the RFS is unlikely to work. They point out that production of cellulosic ethanol – the type of renewable fuel the policy is supposed to spur production and use of – still struggles to get off the ground.

As Jeff Johnson reported in this week’s issue, the government estimates this year’s haul of cellulosic ethanol will be a mere 6.6 million gal, far below the RFS target for 2011 of 250 million gal. The standard mandates a huge upswing in production of cellulosic ethanol – 16 billion gal by 2022 – at which point it would pass the amount of ethanol the country is supposed to get from corn. NAS points out what most folks would likely observe – that this goal would be very difficult to meet.

But NAS goes farther by questioning the green credentials of cellulosic ethanol. As a second-generation or advanced biofuel, cellulosic ethanol was supposed to be much better for the environment than corn ethanol, and certainly a vast improvement over fossil fuels. But, Johnson reports, the authors forecast major downsides from growing crops for biofuels including “the one-time release of greenhouse gases from disturbed biomass and soil may exceed future reductions of greenhouse gases expected as a result of the shift from gasoline to biofuels.”

Meanwhile the solar saga continues. The Washington Post is still digging into government e-mails related to the Obama administration’s dealings with Solyndra – the defunct solar firm that benefited from a $535 million loan guarantee. It looks like there will be plenty of material to keep this topic open for a while – as I predicted – and the issue will continue to cast a shadow over government actions in the green manufacturing sector.

That said, the U.S. will soon become a leading destination for solar installations, as I report in this week’s issue. This is a positive development in terms of the country’s ability to generate renewable power. But it comes at a price – the low, low cost of crystalline silicon solar cells, mainly imported from China, is likely to blast a hole through a portion of the U.S. solar manufacturing base.

If I were to put on my policy hat (first I’d have to dust it off and remove some cobwebs), I’d be pondering a few questions this week. Is it more important for the U.S. to be able to ramp up its capacity to generate renewable solar power by installing cheap solar modules or should the U.S. try to spend more money to spur more solar cells, panels, and modules to be made in this country? Right now, those two goals are not aligned.

And what should the future of cellulosic ethanol be? If there are questions about the environmental benefit of a production system that can generate 16 billion gal of the stuff, how should we begin to answer those questions? Biofuel backers say we should move forward and get facilities and feedstocks going and work to improve the climatic impacts as part of the learning curve. Critics say we should acknowledge the trade-offs up front, which may minimize the role of cellulosic ethanol.

Cleantech Stocks Get Thumbs Up

Given the stock turmoil today and yesterday, recent earnings reports from IPO’d cleantech firms may be flying under the radar for most people. And to call them “earnings” reports is a bit generous, too; they are really “losses” reports, but that is to be expected for early-stage technology firms.

Solazyme's Algenist skin products - Analysts are buying it, and other cleantech stories

Still, its worth noting what analysts are saying about companies like Amyris, Gevo, KiOR, and Solazyme and what the firms reported for the second quarter. While I was mulling a post on just this subject, Jim Lane, over at Biofuels Digest got his post up yesterday covering the first three companies. So I’m giving a hat tip to him and suggesting that you go over there and read his summary.

But if the heat and the stock swings have you too worn out to do that, the short take is that though Amyris and Gevo posted results that were not as strong as expected, analysts following the firms are still enthusiastic about the stocks. KiOR will release it’s second quarter results next Thursday. The important pieces that analysts are looking for is whether the companies have a realistic plan for increasing scale (whether they use their own, or other company’s capital to do so). They also want to get a sense of where revenues will come from in the short term, for example, from product sales or off-take agreements from reliable customers.

Yesterday, Solazyme reported revenues of $7.4 million, which beat the expectations of analyst Laurence Alexander of Jefferies & Co. He had predicted $6.0 million. Most of the revenues came from R&D funding but the company has begun generating sales of its skin care line, called Algenist, made from an algae-derived tailored oil. Alexander says that the Algenist launch will turn out to be larger than expected, meaning more revenues, and thus, less operating losses, into the future.  In addition, he notes that the company will deliver 283,000 liters of fuel to the U.S. Navy and the contract calls for up to 550,000 liters. He’s put a Buy rating on the stock.

Cleantech Chemistry recently posted an interview with Cameron Byers, Solazyme’s senior vice president & general manager of fuels and chemicals about how the company plans to make money.

Algae and Water Energy

Could the energy cost of moving water sink the burgeoning algae industry?

C&EN recently checked in with a number of leading algae-growing firms to learn more about their current plans for profiting from the prolific green slime. Though eventually many hope to make money in the large market for biofuels, most firms say that other products like chemicals and high-protein fish food will go first.

Water World. Cellana's marine algae ponds are in Hawaii. Credit: Cellana

Building large-scale algae-growing systems is still too expensive to make fuels profitable. The key to bringing down costs is in the engineering of the infrastructure. A recent study by researchers at the University of Texas at Austin looked at the energy costs of moving water into and around algae-growing systems (Environ. Sci. Technol., 2011, 45 (13), pp 5861–5868).Researchers Cynthia Murphy and David Allen presented a startling conclusion:

Energy output in the form of algal biodiesel and the total energy content of algal biomass are compared to energy inputs required for water management. The analysis indicates that, for current technologies, energy required for water management alone is approximately seven times greater than energy output in the form of biodiesel and more than double that contained within the entire algal biomass.

Seven times greater?

Ouch. Like any model, this one began with a host of assumptions. Importantly, the model did not assume that algae farmers would be using fresh water, but did assume algae would be grown in open ponds (except for the inoculation vessels). In fact, the main problem is not the water itself, but the need to move it around from place to place.

First water from various sources (saline, fresh, reclaimed from the facility) needs to be obtained and pumped into the inoculation area and the algae pond. More water would be added to compensate for algae removed, evaporation and other “leaks” from the system. Evaporation would concentrate salts in the pond, and may require compensating amounts of fresh water for “blow down.” Cleaning after each growing season would require removing the water and replacing it.

In addition, energy would be required to remove water from the harvested algae, and then to return that reclaimed water to the system. The researchers also included in the model the embodied energy of the plastics used to contain the algae in ponds (and the lifespan of the plastics).

There is no way, of course, to compare the assumptions in the model to any particular firm’s proprietary growing system. But I did pose the question of water energy to the companies I spoke with that use open ponds.

Cellana’s CEO Martin Sabarsky said, “Water is a big issue. It’s an issue for biofuels generally. You have to deal with it on the backend too. We’ve developed and are continuing to optimize cost effective technology to handle water issues at the back end including dewatering. “

And Sapphire President Cynthia Warner commented, “It is true that to optimize the process and get costs down, you have to minimize water movement, maximize efficiency. Using sophisticated equipment is key.”