Category → Incentives
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.
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.
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.
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.
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.
The Solyndra bankruptcy debacle may haunt U.S. support for renewable energy for a long time. It’s been four weeks since news broke that the CIGS-in-a-tube operation would shut its doors, and the debate and recriminations seem to be growing louder with each passing day.
Congress and the press are asking some probing questions. Was the company and its technology properly vetted by the Department of Energy? Was political or other pressure applied to the process to make it go faster? More broadly, some are asking if the administration’s plans for clean energy are just a waste of money.
C&EN’s Jeff Johnson reported on these questions from a Sept. 14 Congressional hearing about Solyndra. He points out that the Solyndra loan – issued back in 2009 – was the first loan to come out of a program created by Congress during the Bush administration. While Congress looks in to the particulars about the Solyndra application, it would be difficult to argue that the loan program itself was too speedily implemented.
The New York Times reported from a House subcommittee meeting on Sept. 23 that Solyndra officials took the Fifth Amendment to avoid having to answer questions about the company. Members on both sides of the aisle were displeased with the firm, but Republicans were especially harsh, the paper reports.
Representative Michael C. Burgess, Republican of Texas, linked the Solyndra bankruptcy to current negotiations about the Federal Budget. The House had voted to cut loan guarantees for electric cars. As quoted in the Times, he explained:
“Yes, we took that money back,” Mr. Burgess said. “If the D.O.E. is going to be chumps, the very least we can do is corral what they’re doing.”
While you were at lunch, the nascent cleantech manufacturing industry in the U.S. collapsed.
Actually, that’s not quite true, but it is true that Solyndra will file for bankruptcy. This is a big deal – Google News lists 85 news outlets covering the story. Solyndra is famous for its stylish, glass tubular, CIGS-powered, solar rooftop modules. And for raising vast amounts of venture capital. And for getting a $535 million Department of Energy loan guarantee. And for filing for, and later cancelling, a planned IPO in late 2009.
Solyndra’s success in raising money was an early indicator that venture capitalists had turned to so-called cleantech industries, taking some of the shine off of internet and technology-based start-ups. It was the first company to benefit from the DOE’s loan program, part of the 2005 Energy Act.
But cleantech — particularly solar — has been looking a bit less shiny lately. Earlier this month, Evergreen Solar filed for bankruptcy protection, and its filing shows that the firm does not plan to emerge in anything like its current form. Evergreen also received government largess, getting more than $50 million in support from the state of Massachusetts.
Both Solyndra and Evergreen had proven technologies and they had the financial resources to scale up their manufacturing. Compared to many segments of cleantech, this sounded like a pretty good risk for investors. However, both technologies were based, at least in part, on solar module designs that minimized the use of polysilicon. That was smart at the time, because polysilicon supplies were very tight, and shortages threatened to choke the life out of (traditional) solar manufacturing. That was back in 2007-8. But by the end of 2008, chemical makers made plans to ramp up their manufacturing of polysilicon. The stuff was fetching record prices, after all, and it’s made from sand.
Beginning in 2009, polysilicon manufacturers like Hemlock Semiconductor (owned in part by Dow Corning) and Wacker Chemie began doubling, tripling, quadrupling etc their polysilicon capacity. Billion dollar plus-sized polysilicon plants in the US also won government support. By late 2009 there was an overabundance of polysilicon and an oversupplyof modules in inventory, crushing prices.
Firms like Solyndra and Evergreen had raised money and started scaling up manufacturing right as solar modules became a commodity. Chinese manufacturers at that point had their eye on making solar modules for close to $2 per watt. It was not a good time to have a technologically distinct – and more expensive – solar product.
In 2010-2011, European countries – especially Spain – cut back on solar subsidies. Germany has trimmed them as well. All solar makers were busy cutting costs amid strong competition, especially from China, and selling into a market with constrained demand.
Looking at the subject from a distance, it seems that polysilicon makers and their ambitious and steep increases in capacity are what doomed the non-polysilicon players. Materials suppliers, not just of polysilicon, but of also of polymer backing sheets, UV protecting films, and metal pastes, are doing very well selling into the photovoltaic market.
But government bets on cell manufacturing technology have not paid off. It is not clear yet how much of the loan gurantee Solyndra leveraged into actual financing. Still, Congress will likely have a great deal to say about lessons learned from Solyndra.
There is a giant hurricane threatening the entire East Coast. And the economy is in shambles, regardless of what Ben Bernanke promises to do at the Fed today. But this week I’ve been thinking about something a lot smaller – plastic shopping bags. Or more particularly, the demise of the single-use plastic shopping bag.
It seems that the minister of the environment of Italy, Stefania Prestigiacomo, imposed an outright ban on single-use, non-biodegradable plastic shopping bags, beginning on Jan.1 of this year. I learned about this because we here at C&EN were wondering what would cause a bunch of bio-based chemicals firms to want to put manufacturing plants there.
Earlier this week, Genomatica, a bio-based chemicals maker, said that it would enter a joint venture with Italian bioplastics firm Novamont. This follows a string of similar announcements that have made Italy a hotspot of bio-based chemical production. In May, compostable plastics firm Cereplast announced it would build a 100,000 ton per year facility in Assisi. In the same month DSM and Roquette said they would build a commercial-scale succinic acid plant in Cassano Spinola.
Back here in the U.S., wrangling about plastic bags is done on a local, not national, level. San Francisco – as usual – led things off with a ban in 2007.
Washington, DC, the hometown of the ACS, took a more subtle route that I believe was really based on old-fashioned moral suasion. The DC council learned the trash that made the Anacostia River such an eyesore was, inlarge part, plastic bags. Starting in early 2010, regulations were put in place requiring a 5 cent fee for plastic bags at any retail outlet selling food. The fees collected would go to help clean up the river, as would the decrease in plastic bag use.
I’m not the only one thinking about plastic bag bans this week. Over on the Greenbiz blog, Leslie Guevarra asks if these regional efforts are gaining any ground. And she points out that the media have been tracking efforts by the American Chemistry Council – the main trade group of the chemical industry – to push back against bag bans and fees.
Have bag bans or fees made their way to where you live? If so, how has that impacted your behavior and that of your neighbors? Do you think these kinds of laws work? If no rules are in place were you live, have you noticed if people have become more likely to decline a bag or bring their own bag out of awareness of environmental/litter issues?
Yesterday Poet Energy announced that it has a conditional DOE commitment for a $105 million loan guarantee for the cellulosic ethanol plant it plans to construct in Emmetsburg, Iowa. That’s two days after I posted (below) that the company was waiting on just such an outcome. Thanks for reading my blog, Steven Chu!
Poet has been working with DOE to secure more funding for this plant, which will be co-located with an existing corn ethanol plant owed by the company. In 2007 it received a grant from DOE that was supposed to help out through the first years of design and construction. It appears that the details for that plant haven’t changed – it will produce 25 million gal a year from corn cobs, leaves, husks and some stalks. It is scheduled for completion in 2013.
Following these projects requires a fairly strong memory. When I first wrote about the project in 2009, it was to see what had happened since the 2007 grants were issued. Poet’s project was looking like a pretty sure bet. But clearly the loan guarantee was a necessity – Poet was originally going to have the plant running this year, but was waiting on more financing.
What’s interesting is what the company has been doing in the meantime. A few numbers give you a sense of the scale of a cellulosic ethanol plant. Poet built a 22-acre holding area – called an integrated stackyard – just to store the biomass delivered by farmers. The collection has begun – 85 farmers brought 56,000 tons of biomass to the site last year. That’s less than one-fifth of what the plant will use up in one year.
Farmers will glean about 20-25% of the waste biomass from their fields to feed the mill. Each acre would provide 1 ton of biomass. To provide the yearly allotment for the plant would require 300,000 acres of harvested corn farmland. Poet has been working with soil scientists to study the impact of the gleanings on soil quality – and so far have found it to be “consistent with good soil management.”
Another Independence Day has come and gone, and it seems the U.S. is no closer to figuring out the role that cellulosic ethanol might play in promoting energy independence. At least, that is the theme expressed in a recent article in the Des Moines Register.
Dan Pillar outlines the strikes against the industry: EPA continues to down shift its expectations for cellulosic ethanol production – from a 2005 goal of 100 million gal this year to, last month, 6.5 million gal for the year. Large biorefineries – comparable in output to corn-based ethanol - were supposed to come online this year, but have not, Pillar notes, due in large part to concerns by financiers over the future profitability of ethanol.
One example of a project on hold is Poet, a leading corn ethanol producer that is still waiting on a loan guarantee from the Department of Energy for its cellulosic operation. And politically, ethanol has been increasingly unpopular. The corn version has been blamed for increasing the cost of corn, and long-treasured subsidies are eyed for the chopping block. And the next-generation cellulose players might lose support in Congress as budgets get trimmed. One program that is at risk would help pay farmers to gather corn stover and corn cobs to feed Pilot’s plant.
Cattle farmers, already incensed at the rising cost of feed corn, are also not pleased at the possibility of losing access to harvested corn fields for grazing. Meanwhile, strategies for economically providing the “waste” agricultural materials to cellulosic ethanol plants have long been a logistical hurdle for making the next-gen ethanol plants economical.
Is cellulosic ethanol having problems financially, politically, and logistically, all at the same time? Perhaps, but though plans have slowed – and some may be in limbo – one big loan guarantee may tip the balance. Meanwhile, DuPont Danisco Cellulosic Ethanol said last week that it had acquired land for a commercial scale refinery in Nevada, Iowa, to be fed by corn stover. While it gets ready for construction, DDCE is working with Pioneer Hi-Bred, DuPont’s seed company, and Iowa State University to figure out how to work the corn stover harvesting, storage and transportation side of things.
While the U.S. reviews its nuclear energy policy, countries that turn away from nuclear will have to deal with an uptick in CO2 emissions.
Japanese Prime Minister Naoto Kan said earlier this month that the country will promote renewable energy rather than bring more nuclear reactors online. And Germany has placed a moratorium on nuclear power generation. Today’s Wall Street Journal has a useful summary of an International Energy Agency report that has quantified the increase in CO2 emissions that will result in Germany.
The story explains that “the shutdown of Germany’s nuclear plants will take out about 50 terawatt hours of low-carbon electricity a year” and says that the country will likely replace it with fossil fuel-derived power that will produce 25 million metric tons a year of CO2 emissions. Germany is subject to the EU’s emissions trading scheme, so it will have to offset those emissions. One way to do so, says the report, is for the country to substitute electricity from natural gas plants for those that use coal (or trade for permits with another country that does so).
But it’ll take a lot of swapping, the Journal finds. “An extra 90 terawatt hours of gas-fired power would be needed, replacing 40 terawatt hours of power from coal plants to offset the entire 25 million tons of CO2.”
Of course countries that want to replace nuclear power – either a little or a lot – will be looking to renewables. It’s not clear yet whether – and how much – governments will spend on incentives to increase the renewables infrastructure if nuclear is less a part of the portfolio. In January, for example, Germany started to cut back on feed-in tariffs for solar power.