Which biofuels players are getting traction now? The Diamond Dozen

In a world filled with companies of promise and companies of promises, the Diamond Dozen are expected to dominate the advanced biofuels capacity landscape through 2017.

Who are they – and why are they early-movers?

Tomorrow, nominations open for the 50 Hottest Companies in Bioenergy and the 30 Hottest Companies in Renewable Chemicals and bio-based products. The truism will likely hold that big things sometimes come in little packages – and some of the smallest companies will be widely considered to be the hottest.

But – advanced biofuels is moving well beyond the lab, or pilot or demonstration scale. Today, the average project is up to 21 million gallons, and the average company (that has at least one announced project) is expected to develop 43 million gallons in capacity by 2017.

But the 80/20 rule generally applies. 85 percent of the projects we expect to see by 2017 will be developed by 20 percent of the companies tracked in the Advanced Biofuels Project Database.

Now, some of that has to do with the fact that some technologies will come along faster – and, for, some, we simply have more visibility than for others. For example, we have Sapphire Energy pegged for only slightly over 1 million gallons through 2017, but the company is expected to launch its first 100 million gallon project in 2018.

In other cases, there are companies that are expected to grow through technology licensing rather than as an owner-operator – so, companies such as Dupont and INEOS Bio do not figure highly in rankings by capacity but they are expected to be a major player in the licensing arena.

(Also note: several prominent companies, among them Butamax, do not provide long-term guidance on capacity at this time. For the fast-growing isobutanol sector, the Digest has based its 2017 view on the capacity within existing early adopter groups.)

Hot technologies, by category

With those caveats, we can still see some clarity emerging in terms of which companies are expected to reach large scale by 2017. Primarily, we see five technology platforms moving in to the leading capacity positions by then: retrofit isobutanol conversions, cellulosic ethanol bolt-ons, natural gas plays, renewable diesel project utilizing hydrotreating of animal residues, and thermocatalytic conversion of woodchips into drop-in fuels, and advanced fermentation using engineered microorganisms.

Of the top 12 companies, by capacity, representing 3.9 billion gallons of capacity (or, 65 percent of all planned capacity tracked by the database through 2017), we see the breakdown as follows:

Isobutanol conversions: 1.07 billion gallons (Butamax, Gevo)
Thermocatalytic conversion of woodchips: 833 million gallons (KiOR, Rentech, Ensyn/Envergent)
Renewable diesel; 709 million gallons (Neste Oil, Diamond Green Diesel)
Natural gas plays 631 million gallons (Sundrop Fuels, Coskata)
Advanced fermentation: 460 million gallons (LS9, Algenol)
Cellulosic ethanol: 225 million gallons (POET-DSM)

The Diamond Dozen

The Diamond Dozen companies themselves
(capacities are in millions of gallons, by 2017 – source: Advanced Biofuels Project Database).

Existing feedstocks rule

Overwhelmingly, one trend is clear: all of the projects expected to reach significant scale by 2017 features a feedstock that is already aggregated, or already in existence and easy to aggregate. Novel feedstocks such as energy grasses or canes – that’s a sure ticket to small-scale or the very long term.

Take the existing US corn ethanol fleet, for example. Three companies are expected to build 1.2 billion gallons of advanced biofuels (Butamax, Gevo and POET-DSM) over the next five years using corn starch, cobs and stover.

Then there’s the existent wood basket – which forestry companies have long since demonstrated an ability to grow, harvest and aggregate on a sustainable basis.

Animal residues and palm oil (already aggregated) represent another 709 million gallons, and then we have more than 600 million gallons from natural gas. Even the advanced fermentation technologies expect to use existing supplies of sugars and CO2.

The message is clear. The bottleneck in advanced biofuels – the underlying problem in the “Where are the gallons?” equation – lies in the feedstocks. There are. these days, plenty of technologies available that can generate 70-130 gallons per ton of biomass at what, according to their analysis, will be at competitive prices to $100 oil.

Available, aggregated $55 per ton biomass – now, that’s a different story. There not only appears to be a shortage of it, but there are formidable competitors in the form of power companies that are available to bid the price up.

Novel feedstocks

The USDA and DOE have done enormous work in identifying 1 billion tons of potential biomass in the US that will not compete with the existing food supply. But much of that consists of the potential to plant large acreages of marginal land with energy grasses. The development of projects to date tells us that feedstock potential has been discounted down to almost zero by the marketplace – for now.

In short – novel technologies to make a fuel from novel feedstocks – that’s been a bridge too far for the market to embrace. Existing feedstocks – that’s been do-able even in these nefarious economic times – as was the case with the first generation of biofuels, utilizing existing food crops. Taking on agriculture and building an above-ground oil field – to date, only a handful of companies have taken on the challenge, a lot of them in the algae field with extended timelines and an elevated degree of risk.

The only company that has ultimately embraced the new agricultural opportunities, to date, and has embarked on a strategy to build a new supply chain around novel energy crop feedstocks – and brings capital and specificity as well as ambition to the party – is BP Biofuels. For all the rest – its been a case of use what’s out there for now, and hope that energy crops will emerge. That hope appears to be something that, if realized, will be realized in the next decade more than this one.