Friday, January 14, 2011

Biofuels developers get a taste for waste (discussion on FT merits & drawbacks)

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Biofuel Watch - Biofuels developers get a taste for waste (discussion on FT merits & drawbacks)



4.1.2011 (Biofuels Digest)

Yesterday's story on the partnership between Solena and Qantas — which will investigate the prospects for a waste-based Fischer-Tropsch processing plant in Australia to produce aviation jet fuel — elicited a lot of strong commentary from the readership on the potential for Fischer-Tropsch technologies. And brought out some very strong feelings about waste.

On F-T, one reader wrote:

"Expansion of FT? Hardly. Its the narrowing of FT to the only feedstock source that makes sense to monetize with this incredibly expensive technology: garbage. Biomass from whatever cellulose pathway one picks is far more cheaply converted using other means. Its why Shell backed out of Choren. Ask them why, and if they are choosing to be candid, they will tell FT is just plain too expensive for cellulose biomass–there are other ways to convert cellulose.

"As for co firing coal and biomass in an FT plant. We will achieve warp drive before that ever makes sense, owing to the massive point source demand required by a single theoretical coal-biomass FT plant. That and there are other ways to convert coal into fuels less expensively as well.

"Solena correctly identified that the only place FT makes sense is to convert garbage, for which the business case is driven by large garbage tipping fees–i.e. someone pays you to take the feedstock. Nobody pays you to take coal, nat gas, or woody biomass, and therein lies the silliness of FT as a pathway for those feedstocks. Now the problem lies with this question: can Solena, who've yet to build anything, actually deliver at anywhere close to the cost they claim?"

On the issue of waste, a reader writes:

"There is something totally unreal about this issue. Using a garbage as a source of raw material is predicated on the material having a high gate fee. What absolute nonsense!

"There are already three companies taking the residual material (the biomass) from Municipal Solid Waste at a small fee of €uro 35-00 per tonne and using this to make the biofuel ethanol successfully with acid hydrolysis. And they can produce this ethanol at €00–25cents per litre (US $00–32cents per litre.) And with the capital costs being paid off within 5 years from commissioning the very idea of retaining a treatment fee is almost a nonsense.

"Returning therefore to the article the notion that spending $309 million on a 16 million gallon facility is totally out of [line]. With aviation fuel selling for nearly the same as gasoline (€00–90 cents a litre//US $1–125 cents a liter) making 16 million gallons (60 million liters …and selling that for a measly $68 million (even with a gate fee) and then allowing for cash pay-back does not stack up."

Let's go through some of these issues.

1. Where does municipal solid waste rate as a feedstock – the hottest, mid-hot, problematic?

MSW is hot. No matter how you feel about jatropha, algae, forest waste, ag residues, beef tallow or dedicated energy crops – and they all have their advantages in carbon, scale, or cost – there's just nothing that is nearly as sustainable, affordable, reliable, and available – meeting the basic SARA criteria for a biomass feedstock of choice.

The downside. MSW is a mixed world of everything from biomass to refrigerator parts, and no two loads are exactly alike. Some technologies can't handle the variation.

The upside. Cost is the factor we hear about the most – especially about how much can be obtained as a tipping fee and how long that can last. But, in our view, the main advantage is the aggregation that is already done, and the public support behind finding alternatives to landfill. There's no food vs fuel in MSW – its Fuel vs Mount Garbage in somebody's backyard, and municipalities that are facing the construction of alternative landfill space are, to put it mildly, aggressively looking at biomass processing technologies.

2. Can Fischer-Tropsch technologies make money without relying on tipping fees and negative-cost feedstock?

Good question. One of the commentators referred to Shell's understated exit from the Choren project. At this stage, the two major developers of Fischer-Tropsch technologies on the biofuels scene are Rentech and Solena. Both are producing jet fuel, prospectively, from waste biomass – although Rentech's Rialto project is slated officially to produce 35 MW of power and 640 bpd of renewable diesel.

Rialto's total cost: $430 million, for a project that will produce around $62 million in annual revenue from power and fuel at today's prices (this excludes the value of CO2 sold from the plant). Our conclusion: only super low operating costs could support projects at these scales and waste is likely the right option. But Rentech's Natchez project (producing 30,000 barrels per day of renewable fuels, or 15,000 in an alternative configuration) offers opportunities for scale — and will require biomass sources far beyond what tipping-fee feedstocks such as municipal solid waste can provide.

Bottom line: For near-term, small-scale projects, think MSW and other negative-cost feedstocks. But at scale, biofuels will require broader sources, and can be expected (with affordable capital costs) to make low-cost feedstocks work as well as negative-cost feedstock works at small scale.

http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=comm&id=news/avd/2011/01/10/15.xml

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