Wednesday, December 21, 2011

[biofuelwatch] Making cellulosic biofuels out of wood chips and grass just loses money

One of the possible sources of so-called "sustainable" biofuels for aviation is cellulosic biofuel – derived from plant material like wood chips, woody waste or various grasses. Several companies have been given large government grants in the USA to work on this, but it has proved to be too costly and fraught with problems. Tar production in the equipment is a problem that has proved hard to solve, especially at scale. One company has now failed and had to auction off its assets. Another is turning to corn (= maize) as that can make money, though the realise it competes with food and so affects food prices.


To Survive, Some Biofuels Companies Give Up on Biofuels
----Companies such as Gevo hope to become profitable by turning corn into chemicals.


Gevo, a prominent advanced-biofuels company that has received millions in U.S. government funding to develop fuels made from cellulosic sources such as grass and wood chips, is finding that it can't use these materials if it hopes to survive. Instead, it's going to use corn, a common source for conventional biofuels. What's more, most of the product from its first facility will be used for chemicals rather than fuel.

As the difficulty of producing cellulosic biofuels cheaply becomes apparent, a growing number of advanced-biofuels companies are finding it necessary to take creative approaches to their business, even though that means abandoning some of their green credentials, at least temporarily, and focusing on markets that won't have a major impact on oil imports. This is hardly the outcome the government hoped for when it announced cellulosic-biofuels mandates, R&D funding, and other incentives in recent years.

Cellulosic biofuels still cost much more to produce than either corn ethanol or gasoline. One reason is that startups have had trouble raising enough money to build the large-scale commercial plants needed to lower costs. That's in part because their technology is unproven, and in part because there's no guaranteed market for cellulosic biofuels yet.

Additionally, government mandates that were meant to help create a market for cellulosic biofuels have so far been ineffective; it's typically cheaper for the fuel providers affected by the mandate to purchase credits rather than biofuels. And finally, supply chains for cellulosic materials aren't yet well developed, so companies face a challenge when they try to lock in reliable access to them.

Gevo's strategy addresses all these problems. Besides relying on corn in order to overcome supply challenges, the company is reducing capital costs by retrofitting existing corn ethanol plants rather than building new ones; the retrofit of the first plant, in Luverne, Minnesota, will cost about $40 million, a fraction of the hundreds of millions it costs to build a new plant. And rather than making ethanol, Gevo is making butanol, which can command a higher price—especially for use as a feedstock for the chemical industry. Gevo expects that it can make butanol from corn—a readily available feedstock—for significantly less than it costs to make it from petroleum.

Gevo plans to start operations at Luverne within the next six months or so and hopes to produce 17 million gallons of butanol per year there. Most of it is destined for Sasol Chemical Industries, which will sell the butanol to make chemicals.

Butanol can be converted into a wide range of chemicals for making plastics and other products that are now made with oil. Gevo already has an agreement with a major maker of synthetic rubber, and last week it announced a partnership with Coca-Cola to develop plastic bottles made entirely from plants.

Gevo is not entirely abandoning the fuels market, however. It has an agreement with a distributor that can sell the butanol for use in small engines and marine engines, two applications where ethanol doesn't work well. It's also making 11,000 gallons of jet fuel from its butanol for the U.S. Air Force, which wants to test it for use in planes. That contract will cover the cost of a 10,000-gallon-per-month jet fuel demonstration plant, says Pat Gruber, Gevo's CEO.

The use of corn for fuels and chemicals is controversial, in part because growing and processing corn releases significant amounts of greenhouse gas, and in part because using corn for fuel may affect food markets.

Gruber says the impact on food supplies and prices is mitigated by the fact that the protein in corn is still available for use in animal feed. He even makes the case that using the sugar from corn to make fuel rather than soft drinks could help the obesity problem in the United States.

"Suppose we're in a world where we're making huge quantities of fuels and displacing petroleum. We could come to the point where we're running in a conflict of food versus fuel," he says. "We should use only excess carbohydrates to make fuels." Even so, eventually the company plans to use nonfood sources. "The feedstock in the U.S. right now is corn starch," he says. "That's the right feedstock for us. In the future it will be cellulosics."


see also

Cellulosic Aviation Biofuels 30.9.2011


Reuters 30.11.2011

Advanced Biofuels Industry Hunkers Down for Hard Times



The Death of Range Fuels Shouldn't Doom All Biofuels
(Advanced Biofuels USA)
December 15, 2011
by Kevin Bullis (MIT Technology Review)

This month, Range Fuels, one of the first companies in a wave of startups that promised cheap biofuels made from sources such as wood chips rather than corn, shut its doors for good and was forced to auction off its assets.

The company failed for many reasons, but the biggest seems to be that its technology proved too expensive, something that experts say shouldn't be a surprise, since it was similar to other technologies with well-known problems.

Range Fuels benefited from being an "early mover" in the field, says David Berry, a partner at the venture capital firm Flagship Ventures. "It got a lot of attention, and so it was well positioned to raise a bunch of money. The reality was, the technology couldn't quite keep up with the attention," he says. "That led to the company's demise."

Range Fuels, which had planned to turn wood chips into ethanol, received substantial attention in 2006, after President Bush declared in his State of the Union Address that the United States was "addicted to oil" and pointed to "cutting-edge methods of producing ethanol, not just from corn, but from wood chips and stalks, or switchgrass."

By the following year, Range Fuels had received a $76 million grant from the U.S. Department of Energy and had broken ground on a commercial-scale plant in Soperton, Georgia. That plant was designed to produce 20 million gallons of fuel a year at first, and eventually 100 million gallons.

At the time, Range Fuels said its plant could produce fuel by 2008, but it still wasn't finished in 2009, when it received an $80 million loan guarantee from the U.S. Department of Agriculture to help with construction. In addition to government funding, over its history, the company received over $150 million in venture capital.

The Range Fuels plant produced some methanol in 2010, but it operated at a loss, and it was shut down in 2011. By December 2011, the company had received just over $40 million of the full grant awarded by the DOE (the rest was to come at the next phase of construction). David Aldous, the CEO of Range Fuels, says $37 million of the loan guarantee is outstanding.

Range Fuels's technology is similar to a process that's long been used to convert coal into liquid fuels. It starts with a gasification step that uses heat, pressure, and steam to turn wood chips into a combination of hydrogen and carbon monoxide known as syngas. The company then used catalysts to make a combination of methanol and ethanol. It claimed that by using a proprietary catalyst, and some smart engineering, it could make the normally expensive process more economical.

As early as 2007, energy experts were raising red flags about the technology (as Technology Review noted here). Researchers at the National Renewable Energy Laboratory in Golden, Colorado, said that their attempts to scale up similar technology had revealed a number of problems.

…One possible problem, says Helena Chum, a research fellow at NREL, is tar formation during the gasification step, something that has plagued similar attempts at gasification by Georgia Pacific and other companies. "Even if it's a small amount in experiments, when you go into industrial production, it becomes an enormous amount to deal with," Chum says. The problem was known to researchers, she says, "but technology developers sometime ignore research results in trying to move fast."

Chum says other problems can arise from gasifying biomass—including the presence of inorganic impurities and irregular proportions of the gases formed, which requires modifying catalysts and processes, all of which can be expensive and time-consuming.

Some sources have suggested that the culture at Range Fuels caused the company to downplay the significance of technical challenges as it rushed to scale up the technology. Chum says that's common. "Usually developers are optimistic, so they go with very short time frames. Even if companies have people on the staff that say it will take longer, the investors don't want to wait a long time, and sometimes neither does the government," she says.

Aldous says the biggest problem Range Fuels encountered was securing enough money to address the technical challenges it faced, especially in the midst of a recession. He says the company could only get enough money to build the plant in stages, and that the partial plant had to operate at a loss.

The system for feeding biomass to the gasifiers, which Range Fuels bought from a supplier, could only provide enough to supply one of the company's two gasifiers, while the other stood idle. "This meant we were losing money with each gallon we produced; the supplier needed a few months to redesign their system, which is why we mothballed the plant," he says.

By early 2011, even Vinod Khosla, the prominent investor who provided seed funding for Range Fuels and who had written enthusiastically about the company during its early days, was criticizing the company's basic technology. "In our view, the traditional path of chemical catalysis of syngas to fuels (be it ethanol or Fischer-Tropsch synthesis) appears economically challenging," he wrote in January. "Technologies like Range that started with chemical catalysts will need to switch over to these newer fermentation techniques."

Commenting in a recent e-mail to Technology Review, Khosla noted, however, that it is typical for many of the companies pursuing a new technology to fail. "The nature of the venture race is that the best technology (lowest cost, highest performance, etc.) in each technology does very well, some do okay, and many fail because their technology was not good enough," he says.

Chum agrees. "We shouldn't call the failure of one company the failure of a field," she says.


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Biofuels are a wide range of fuels which are in some way derived from biomass.

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