Renewable Energy

Next Generation Biofuels: Five Challenges and Five Positive Notes

Posted by Robert Rapier on July 2, 2010 - 7:14am
Topic: Alternative energy
Tags: algae, biofuel, biomass, cellulosic ethanol, ethanol, next generation biofuels, us department of agriculture report [list all tags]

The U.S. Department of Agriculture (USDA) has just issued a report detailing the outlook and challenges of next generation biofuels. I provided some input during the drafting of the report, which hopefully was of some use. Here I select five pessimistic projections and five optimistic projections from the report.

The report is: Next-Generation Biofuels: Near-Term Challenges and Implications for Agriculture

Here are five findings from the report that promise to strongly influence the country’s direction on next generation fuels.

1. Production and Capital Costs

 

 

“Estimated production and capital costs for next-generation biofuel production are significantly higher than for first-generation biofuels.” The report quotes costs for a 100 million gallon biochemical conversion plant (e.g., cellulosic ethanol) at $320 million, and the costs for a 100 million gallon thermochemical conversion plant (e.g., gasification and conversion to liquid fuels) at $340 million. The report states that this is “more than three or four times those for corn ethanol plants.”

2. Biomass Feedstock Costs

 

 

The report suggests that the presumed costs for purpose grown biomass have likely been underestimated. It cites POET, for instance, as assuming a $40 to $60 per ton price for corn cobs. But the report states

the range of prices may underestimate the cost of increasing biomass yields on marginal lands and the incentives required for harvesting, gathering, and delivering bulky material to the biorefinery

and

dedicated energy crops would need to compete with the lowest value crop such as hay which has had a price exceeding $100 per ton since 2007.

In a previous essay I identified this as one of the bad assumptions many biofuel producers today are making: That biomass costs will be low or even negative in the future as demand ramps up.

3. Algae Conversion Costs

 

 

The report repeats the mantra that you have heard from me many times:

Production cost estimates (net of capital costs) for growing and converting algae to fuel are significantly higher than for first- and next-generation biofuels, ranging from $9 per gallon to $35 per gallon.

As I have noted before, I think people confuse the ease of growing algae with the ease of growing it commercially and turning it into fuel.

4. Support for Cellulosic Ethanol May Be Short-Lived

 

 

The report suggests that support for cellulosic ethanol may be short-lived:

Given the limited market for ethanol as a gasoline additive (due to the E10 “blend wall”) and as a gasoline substitute (because of slow development of the E85 market), developers and investors may turn away from cellulosic ethanol in favor of production of another class of next-generation biofuels, petroleum substitute fuels. These so-called ‘drop in’ fuels can be used as gasoline or diesel substitutes in current vehicles without limit and distributed seamlessly in the existing transportation fuel infrastructure.

The report further states

There may be a shift in favored technologies underway. Several companies planning to be operational with some of the larger plants in the next several years plan to use thermochemical approaches or other processes that produce biobased petroleum-equivalent.

My position on this is clear: I believe that thermochemical approaches are more scalable and less energy intensive than most biochemical approaches.

5. Scale

 

 

Fiberight is forecast to be the leading cellulosic ethanol producer for 2010 – with a production capacity of 130 barrels per day. To put that into perspective, the very small oil refinery I used to work at in Billings, Montana had a capacity of 60,000 barrels per day.

The bits I extracted are all themes that I have addressed here many times. In a nutshell, they relate to the fact that many would-be next generation fuel producers are making unrealistic assumptions about things like feedstock costs. Thus, where they project falling costs based on their optimistic projections, the USDA report forecasts that their biomass costs will be much higher than expected.

Here are five positive notes from the report:

1. Renewable Diesel Plant Capacity

 

 

“Next-generation U.S. biofuel capacity should reach about 88 million gallons in 2010…” This is primarily a result of the expected start-up of a next-generation renewable diesel plant. I have reported on this technology before, as well as the efforts of first-generation biodiesel producers to slow it down and protect their own interests. My guess is that unlike the ConocoPhillips project that was killed after Congress voted to deny them the full tax credit, this project will receive the same tax credit as a conventional biodiesel producer. On a level playing field, I believe the hydrocracking approach is superior to first generation biodiesel, but our political leaders will need to stop playing games with the tax credits in order for next generation diesel to realize its potential. (For a complete explanation of the different kinds of renewable diesel, see my Renewable Diesel Primer).

2. Competitive Race

 

 

Companies are taking a number of different approaches to coming up with next-generation solutions, increasing the chances that a dark horse will arise as a contender: “There are about 30 next-generation companies in the United States developing biochemical, thermochemical, and other approaches, and experimenting with a variety of feedstocks, some of which are directly linked to agriculture..”

3. Open for Business

 

 

The first next-generation plants are expected to come online in 2010: “Range Fuels and Dynamic Fuels are expected to complete the first commercial next-generation biofuel plants in 2010.” I have certainly given Range Fuels a hard time over their public statements – especially in light of recent reports which this USDA report also flagged:“According to the EPA, however, the plant’s initial capacity has been reduced from 10 million to 4 million gallons per year and initial output will be methanol.” However, readers should not mistake my position as hoping that they fail. To the contrary, I hope they succeed, because we are going to need a lot of successes. I am just skeptical that they will achieve commercial (unsubsidized) success, and unhappy that they sucked up a lot of taxpayer funds based on their initial promises that clearly did not materialize.

I would further note, however, that Range Fuels and Dynamic Fuels may be the first U.S. plants that could be classified as next-generation commercial plants (although as I have pointed out, we had commercial cellulosic ethanol plants in the U.S. by 1920), but such plants do already exist overseas. Neste Oil, in fact, has built several plants based on the same sort of technology that Dynamic Fuels is employing. There are also other overseas companies doing gasification (the Range approach) that are further along than Range is.

4. Algae Research

 

 

Just as there are many different approaches to next-generation fuels, there are many companies taking many different approaches to producing fuel from algae: “More than 30 U.S. companies currently are experimenting with different approaches to producing algae-based fuels.” Some of these approaches are unconventional: “Although the majority of algae-to-biofuel companies are focusing on producing algae oil for traditional biodiesel production, some companies are using algae to produce ethanol (Algenol), or petroleum-equivalent fuels (UOP and Sapphire).”The challenge of course will be to drastically reduce production costs, but the potential is too great to ignore.

5. Production Costs Decrease

 

 

Both production and capital costs for cellulosic ethanol are falling. The report noted “POET recently reported it had lowered production costs for cellulosic ethanol, including capital expenses, from $4.13 to $2.35 per gallon in a year as of November 2009 at its South Dakota pilot plant.” The report further notes that estimates for a 100 million gallon cellulosic ethanol facility have fallen from the $650 million to $900 million range (2004 estimate) to $320 million (2009 estimate). However, the report notes that these estimates should still be considered speculative, since“there are no actual cost data for commercial operations since none are yet operational.”

As a body of work, I highly recommend you read the USDA report if you are interested in the status of next generation biofuel facilities. It is a sober, objective assessment of the challenges and opportunities that lie ahead as next generation fuel technologies continue to develop.

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Solutions

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FOCUS ON THE SOLUTIONS 
To move beyond denial & a sense of powerlessness about the climate-energy emergency, we need to understand, integrate  and advocate for the solutions. Such a healthy response reflects the understanding "if you're not part of the solution, you're part of the problem". In this section we offer some video presentations of coherent solutions & strategies,  presented by scientific leaders in the fields of sustainable energy, agriculture & ecology. Below you can find short descriptions of the material.

1: Lester Brown: Take Action Now as a Planetary Citizen 
Today we face such dangers as a potentially social fracturing along generational lines if, for example, climate breakdown in the Arctic is determined to be irreversible - with all that implies for 7 metres of sea-level rise. The founder of the Worldwatch & Earth Policy Institutes  discusses our responsibility to act now to save civilization.

2. Amory Lovins: Climate change, Peak Oil & Energy Autonomy
The co-founder & chief scientist of Rocky Mountain Institute discusses the interrelationship of climate & energy paths. Whether we care about prosperity, energy or environment, we should be doing exactly the same things about peak oil and about energy. What are they?

3. Lester Brown: Plan B 
Brown outlines his celebrated Plan B, a groundbreaking & comprehensively researched plan to stabilize climate, stabilize population, eradicate poverty & restore the Earth's damaged ecosystems. It no longer seems inevitable that we will add another 3 billion to world population by 2050, whether through an accelerated  move to smaller families, or through rising mortality rates...

4. Amory Lovins: Natural Capitalism - the Next Industrial Revolution
In this substantive 90 minute lecture at UC Berkeley, Lovins describes the necessity, features & implications of a new form of capitalism that values not only money and goods, but 2 other crucial factors from the real world. This "natural capitalism" would be a new way of doing business as if nature and people were properly valued.

5. Lester Brown: The Market Must Tell the Environmental Truth
When the British government asked Sir Nicholas Stern to investigate the future costs of climate change, he described it as "the greatest market failure in history". Unacknowledged costs of fossil fuels have created the truly enormous cost of climate change for ourselves, the planet and future generations. The market must be made to tell the truth.   

6. Amory Lovins: We Must Win the Oil Endgame
The old story about climate protection is that it's costly or it would have already been done & government must make us do something painful to fix it. The new story is that it's not costly but profitable because it's cheaper to save fuel than to buy fuel. Meanwhile the endgame called Peak Oil approaches... 

7. "Reinventing Fire": Nuclear Power - Fix or Folly?
In this 2009 panel discussion, Amory Lovins, Robert Rosner & Peter Darbee discuss the relevance, cost and effectiveness of nuclear power versus Renewables like Wind or Solar-PV (where it can still lay claim to superior "baseload" capacity), or Energy Efficiency & Micropower (where it is  clearly economically uncompetetive).

8. Ray Anderson: A New Industrial Revolution
Anderson is an unlikely-looking radical, yet probably the most visionary figure in American business. As chairman of carpet manufacturer Interface, he transformed the company he founded into the world's first industrial firm devoted to sustainability in the strictest sense: "taking nothing from the Earth that is not rapidly and naturally renewable, and doing no harm to the biosphere."

9. Daniel Goleman: Ecological Intelligence in Practice
Speaking to the Google campus, Goleman, a Buddhist meditator, psychologist and the best-selling author of Emotional Intelligence (1995), discusses the possibility & necessity of developing intelligence about  our ecological impacts through information systems. Such systems, now well developed likeGoodGuide.com, could save us from ourselves.

10. David Korten: From Plutocracy to Deep Democracy
The US constitution institutionalized the power of white men of property. Just after WWII, an egalitarian social contract existed. In the 1970s, the corporate elite re-asserted itself against that emergent middle class democracy. Bush II embodied this plutocratic, rather than a democratic, nature of the country. So what would "deep democracy" actually look like?

11. Wind Power Leading New European Electricity Generation
Europe installed 10,000MW in 2009 (peak output equivalent to 7 or more new nuclear plants). This was the 2nd year in a row that Wind topped the ranking of all new power plant installations in the EC. The European Wind Power market grew 20% last year despite the global economic crisis, and accounted for 40% of all new electricity generation.

12. The Next Level of Highly Efficient Thin-Film Solar PV
The trillion-dollar electricity industry is a powerful incentive for newsolar PV technology. Nanosolar's amazing process prints thin-film solar PV cells onto metal foil rolls (50,000 PV cells per roll, continuous-flow). A robotic production line works 24 hours a day, producing solar PV cells with equivalent generating capacity to a nuclear power plant every year.

13. High Voltage Direct Current: Bringing Renewable Energy to Cities
HVDC transmission can carry 500MW of electricity in 1 undersea or underground cable, as in a grid linking large-scale offshore windfarms into the grids of partner countries round the North Sea & Baltic. On land, HVDC can be buried underground along existing rights-of-way like motorways, avoiding ugly AC transmission towers as well.

14. European Utilities & Offshore Wind Power: A Mature Relationship
Interview with the scientific directors of a couple of large German utilities about deployment, installation and integration of large-scale offshore wind farms into their portfolio of electricity generation technologies. This is an example of "where the rubber meets the road" for the future of urban civilization. 

15. Plug-in Hybrid Electric Vehicles 
Displacement of petroleum with electricity is a complement to any serious effort to conserve, by improving vehicle efficiency. As a strategy for energy autonmy & climate protection, plug-in electric and plug-in hybrid-electric vehicles (PHEVs) offer a "holy grail"- renewable energy rather than fossil fuel can become the major power source for road transport. The batteries of a national fleet of PHEVs could act as a storage device for intermittent wind-power; the vehicle-to grid or V2G concept.

16. Bhutan: On The Wings of Light
The Himalayan Buddhist kingdom of Bhutan is famous for its conservation policies and articulation of the principle of Gross National Happiness instead of conventional growth economy formulations like GDP. These 2 videos record the context and progress of a project to install solar PV lighting in one of the country's beautiful central valleys. 

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The depth and richness of new content this year will be well appreciated!  following is just some of the exclusive content prepared by Positive Spin for this year's event.

• Jane Goodall: United Nations Messenger of Peace, and Founder of the Jane Goodall Institute.  We will showcase a celebration of the life and work of Dr. Jane Goodall on her 75th birthday, looking back at fifty years of dedication to animal welfare and primatology
• Mary Robinson: former United Nations High Commissioner for Human Rights and former president of Ireland
•  Sergio Duarte: UN Undersecretary-General for Disarmament
• "We Unite":  a report on how Indian women are using micro-loans to better their lives
• "Dance for Life": story on the United Nations Population Fund's "Dance for Life" program
• Olga Speranskaya: recipient of the Goldman Environmental Prize 2008
• "Brother to the Dreamer: Behold the Dream": a documentary detailing the life and controversial death of the Rev. Dr. Alfred Daniel Williams King -- younger brother and an important strategist to the Rev. Dr. Martin Luther King, Jr.
• Wanze Eduards and Hugo Jabini: environmental activists and Goldman Environmental Prize recipients for organizing efforts led to a landmark ruling giving indigenous and tribal peoples control of their natural resources.  (see: Indigenous and Tribal Peoples Rights)
• report on Brazil's innovative techniques and strategies to save the rain-forest.

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