Industry Market Trends
As Cellulosic Biofuels Take A Big Leap Forward in Italy, U.S. Will Reap Benefits
November 8, 2013
When it comes to cellulosic biofuels, 2013 just might be the year "they said it couldn't be done." The technology, infrastructure, and know-how needed to develop biofuel from non-food crops and agricultural residues has been lagging expectations. Problems ranging from process optimization to supply chain issues have plagued numerous efforts to bring the technology out of the lab and into commercial scale production. The Environmental Protection Agency (EPA) reduced the original 2013 target in the Renewable Fuel Standard from 1 billion gallons to a mere 6 million. Then the Ineos Indian River BioEnergy Center in Vero Beach, Fla., began shipping biogas made from waste. It will soon be producing 8 million gallons of ethanol a year. That was followed last month by an announcement of the world's largest advanced biofuels facility in the Italian city of Crescentino. This is a strategic partnership of the Italian company Beta Renewables and the Danish biotechnology company Novozymes. The plant uses wheat straw, rice straw and arundo donax, a high-yielding energy crop grown on marginal land, to produce ethanol. The plant will use Beta Renewables' proprietary Proesa process to produce 20 million gallons of bio-ethanol per year, while generating 13 MW of electricity and recycling 100 percent of the water used. Proesa was developed as a second-generation process to extract fuel and other chemicals from the sugars found in ligno-cellulosic biomass in such a way that is competitive with $70-per-barrel petroleum. The technology won the ACHEMA Innovation Prize for biotechnology last year. Unlike corn ethanol and distilled spirits, non-food ligno-cellulosic sugars cannot be fermented using yeast to make alcohol. Instead, the lignin must first be separated from cellulose and hemicellulose and then broken down into simple sugars. The U.S. produced only 20,000 gallons of cellulosic fuel last year, but that is about to change. Beta Renewables has also partnered with Canergy and Chemtex to develop a cellulosic plant in California's Imperial Valley. Construction is scheduled to begin early next year and the plant is expected to produce 25 million gallons of fuel per year when it become operational in 2016. The intent is to use sugar cane grown in the surrounding area and the same Proesa technology being used in Crescentino. The success of this project depends on whether Canergy can deliver attractive returns to Imperial Valley cane growers while meeting the cost targets established by Beta Renewables. The cellulosic ethanol is expected to meet the criteria for both the EPA's Renewable Fuel Standard (RFS) as well as California's Low Carbon Fuel Standard. Beta Renewables' CEO Guido Ghisolfi told Reuters that he expects the biofuels industry to surge in 2015. He estimates that this year the U.S. and Europe will produce 30 million gallons, five times the allotment required by the revised RFS. Half of that will come from the Crescentino plant. He expects six or seven plants to be operational globally by the end of next year and collectively produce as much as 100 million gallons. The CEO predicts that "the boom year will be 2015 with 15 to 20 plants producing hundreds of millions of gallons." One of them will be a 20-million-gallon facility in North Carolina that a Beta and Chemtex partnership expects to be up and running by 2015. One reason for these optimistic projections is that demand has been very strong, particularly from countries such as Australia, Brazil, China, Japan, India, and New Zealand. Cellulosic ethanol will not only improve the availability of biofuel, but also reduce the pressure on the food supply that some have claimed is exerted by corn ethanol. Furthermore, its use will improve process efficiency since more parts of the plant can be used. When waste products are used, such a forestry residue, the efficiency is even higher and greenhouse gas emissions can be lowered to the point of being negative. Capital is available and the technology has been proven. The unanswered question, said Ghisolfi, "is the availability of the biomass." Biomass is heavy and bulky. Transporting it long distances is expensive. That is a major hurdle for cellulosic development in the U.S. Ghisolfi projects that Brazil and Southeast Asia will be at the forefront of cellulosic development. He expects to see plants added in Germany, Italy, Spain, Britain, and France, each tailor made for a specific type of feedstock. He also, "wouldn't be surprised to see investment flowing to Poland, Belarus, Serbia, Ukraine, and Russia by the end of this year or early next year." In the U.S., such advances as the portable pre-treatment facilities developed by Sweetwater Energy will help address some of the supply chain issues that have hounded the industry. Sweetwater's modular system was first developed in 2006 with the idea that farmers could produce ethanol at their farms. The system has evolved into a sugar production capability that can be moved to where the biomass is. Once sugar has been extracted, it is far easier to transport than the biomass. Ghisolfi is not alone in his assessment of the revised cellulosic timeline. Javier Garoz Neira, the CEO of Spanish company Abengoa Bioenergy, said in a recent interview, "...it's mature enough in 2014, which I think is going to be the pivotal year for this industry to demonstrate that cellulosic ethanol is a reality. "Mechanical completion will be done by the beginning of Q1 2014. There will be a ramp-up to produce cellulosic ethanol, let's say four, five, six months maximum, so by the second half of 2014, I'm extremely confident ...that Abengoa Bioenergy will be ... putting that ethanol in the market." He also predicted that prices would be comparable with corn ethanol within two years.