State of the Advanced Biofuels Industry, 2012: The Digest Primer

Intrigued by the prospects for advanced biofuels, but lack the time to wade through a 200-page industry forecast? Our 15-Minute “state of the industry primer” presented this week at World Biofuels Markets, may be just the right size.

Yesterday at World Biofuels Markets in Rotterdam, delegates crammed into the standing-room only session on advanced biofuels, one of seven concurrent sessions at biofuels’ grandest annual get-together.

There, the 200 session delegates heard the latest advanced in technology and commercialization from LS9, Virent, Neste Oil, Haldor Topsoe, Novozymes, Joule, Sud-Chemie, Inbicon, BioGasol. Iogen, TMO, ZeaChem, Kiverdi, and Envergent.

“Biofuels continue to grow in importance as the rising price of oil impacts every aspect of the global economy, so today’s sessions covering the latest in aviation, sustainability, and investments were critical to finding solution to our global energy needs,” said Claire Poole, Event Director, Green Power Conferences, organizer of the conference. “The level of discussion and debate already throughout the show is a sign of how important these issues are, and why there is so much interest and revived investment in new energy solutions.”

To open up the advanced biofuels session, Green Power asked the Digest to give a short overview on the state of advanced biofuels. In today’s Digest, we’d like to share the highlights from that 15-minute tour on planned capacity, feedstocks of choice, inflection points for commercialization, projects currently in development and construction through 2015, and 23 key hot projects to watch for 2012 and 2013.

We’ll have more coverage later this week on the latest from the companies presenting at WBM, as well as beginning our series of previews on companies, feedstocks, molecules of choice, and technologies that will be under the microscope at the Advanced Biofuels Leadership Conference, which runs April 2-5 in Washington DC.

Download the slide deck

Like to download the 6-slide deck and avoid the eye test occasionally imposed by web page sizes? It’s available right here via the Biofuels Digest SuperContent service.

1. Global Targets

We presented this slide to the delegates, showing the projected 1300 biorefineries that would be required (at an average size of 50 million gallons per project) to meet the known, existing mandates around the world (e.g. US, EU) and known targets for countries such as Brazil and China that do not have mandates.

This figure includes first-generation biorefineries – but, even given the substantial fleets of first-generation ethanol and biodiesel plants already in place, more than 700 new biorefineries will be needed by 2025 to meet targets (unless capacities, per project, expend significantly beyond known parameters). Bottom line – a whole lot of buildin’ going on.

2. 207 Projects currently in development

We presented this slide, which cribs from the Advanced Biofuels Project Database which the Digest maintains, to show not only the capacity under development in advanced biofuels, but the wide varieties in geography, feedstock, technology and product. The full database, in the latest 2.04 release, can be downloaded for free in spreadsheet form via the Digest’s SuperContent service, here.

Total announced annual capacity under development – nearly 20 billion liters or 5 billion gallons, at an average annual capacity of 100 million liters (28 million gallons). Bottom line, the projects are, on average, smaller now than will be needed in the future – the result of a lot of demonstration and pilot projects – but there are plenty of them. Taken as a whole, they represent a comprehensive distribution of technologies and feedstocks that gives confidence that a broad enough portfolio is under development to ensure that winners will emerge from the race for scale.

3. Inflection points

We presented what investors generally tell us are their four key criteria for financing advanced biofuels at scale:

• Credit worthy feedstock supplier, 15 year terms, US$50/tonne (cellulosic) 
 $0.15 per pound (renewable sugars)
• Demonstration of technology at scale
• Credit worthy offtake partner, 10-15 years
• Parity with $80 oil, unsubsidized, on comparable BTUs

4. Feedstocks of choice

We presented this slide to show the distribution of certain agricultural feedstocks – based on the USDA’s Billion-Ton Update. Now, the USDA is looking at agricultural feedstocks (i.e. no algae), and at the US alone – so the percentages expressed in the first band should be taken as a reflection of US feedstock distribution, not a true global figure. Also, the USDA is projecting out development of energy grasses and canes that may or may not pan out. However, the Billion-Ton Study is excellent at suggesting both the volume and variety of potential feedstocks. In the case of the Billion Ton Study, this would be enough available, sustainable biomass to support 3 times the fuel production required under the Renewable Fuel Standard, using known processing technologies.

The second band we presented is a Digest estimate on the current costs associated with key feedstocks, from the negative costs associated with municipal solid waste all the way to the $1000+ per ton costs of micro crops such as micro algae. These costs are certain to change, and are based in some cases on a very small sample of projects utilizing the feedstocks, so should be taken as a general indication of the state of play.

This band, for example, explains why so many waste and wood-based projects are getting through in first commercial project development – low feedstock cost. Other factors such as cost impact the state of development – such as whether the feedstocks are already aggregated or easily recoverable, and whether the locations line up well with potential project sites.

5. 23 Projects to Watch in 2012-13

Will the industry, in fact, stand up at all, or stand up in the expected capacities, and do so in the expected timelines. By the time 2013 is over, the success or failure of these 23 projects will tell us a lot.

These are not the only projects being constructed during this time period – there is an ongoing set of pilots, demonstration and small commercial projects underway, and more will come – we selected these because they represent the signature commercial-scale projects for which we have relatively firm project dates. Will these be financed, built, and operate at the expected capacity.

If none of these are completed as expected – well, all best are off for advanced biofuels as an industry. If all of them stand up – a renaissance in fuel technologies is clearly underway. Our expectation is that around 80 percent of these will pan out as expected – some may be delayed, or run at reduced capacities owing to unforeseen scale-up problems. Any figure in the 50-80 percent range in terms of on-time, as-planned deployment – will indicate that advanced biofuels may have, project to project, some rocky start-ups, but taken as an industry is a force that will have arrived.

We also note that virtually no two projects are alike in terms of feedstock, processing technology and fuel – only Gevo, which plans two commercial projects in this list, and the group of companies planning to produce cellulosic ethanol using enzymatic hydrolysis.

In all, five countries, 12 feedstock strategies, 12 processing technologies, 8 product sets representing 649 million gallons of capacity – an astonishing array by any estimation that will definitively answer the question “where are the gallons?”

More from World Biofuels Markets 2012

Other highlights from Day 1 included presentations and updates on dedicated energy crops such as jatropha, a panel of “Hot Technologies & Processes” in Advanced Biofuels, and the unique Green Power Academy which provides industry newcomers with hands on learning about a variety of green industries. Concurrent with the biofuels streams, today’s co-located Bio-based Chemicals and Biopower Generation conferences focused on integrating bio-based chemicals with today’s market, and took a look ahead at cogeneration of bio and traditional power.

Looking forward, the conference agenda for Day 2 and Day 3 include timely topics facing the industry including the food versus fuel debate, biofuels policy, emerging markets, waste to fuel, and algae. The final agenda and additional information on this week’s conference is available here .

Updates from the World Biofuels Markets are also available on Twitter @wbmnews, or through the LinkedIn World Biofuels Market NEWS