A major biomass deal between Pacific Ethanol and Chromatin heralds a trend towards advanced biofuels in the US ethanol fleet.
Is the Bioenergy Project of the Future here? Who’s doing what, where?
5 Paths to Advanced Biofuels in play now.
As we highlighted this week in the Digest, Chromatin and Pacific Ethanol announced that they have entered into a multi-year agreement to produce, deliver and use locally grown sorghum in the production of ethanol. The agreement covers up to 30,000 acres of Chromatin sorghum to be grown over multiple years and supplied to Pacific Ethanol.
READ MORE about the Chromatin-PEIX deal
It follows on from news earlier in the month that Chromatin is enrolling growers in its 2013 Grain Sorghum Program including seed options, contract terms, agronomic and grower protocol information.
READ MORE about Chromatin’s 2013 program
Harvested grain sorghum will be delivered to participating ethanol plants for biofuel production, including Pacific Ethanol in Stockton, Aemetis in Keyes, and Calgren in Pixley.
Why sorghum, why now, why California?
Why grain sorghum? Though yields are lower than corn — the EPA has approved a pathway, combining sorghum and the use of biogas to replace fossil fuel inputs — that qualifies ethanol produced in this way for D5 advanced biofuels RINs. In this way, producers can access higher prices — and work their way around the 15 billion cap imposed on traditional corn ethanol in the Renewable Fuel Standard.
We highlighted the strategy and the potential returns in BioInvest Digest, in “The New Milo-naires: Corn, milo and the Biofuels Market’s Invisible Hand. California’s ethanol plants have special costs and challenges in obtaining corn — and special advantages when it comes to accessing California-grown sorghum and imports from Argentina via the coastal ports.
READ MORE about the Milo-naires
You can expect that, for now, Pacific Ethanol and other producers like Aemetis will import milo (sorghum) from Argentina to expand their advanced biofuels production.
The California-grown numbers are relatively small to start — overall, the long-term contract between Pacific Ethanol and Chromatin will yield around 4 million gallons of ethanol for the 60 million gallon plant, depending on the sorghum yields. (A UC-Davis study reported that yields in the region ranged between 2 and 5 tons per acre – here).
The Bioenergy Project of the Future
But it is more than a start — it is a trend. We’ve seen it in Brazil, where a number of sugarcane ethanol production facilities have begun to work with companies such as Solazyme and Amyris to expand their product line from sugar and ethanol to include an array of fuels, chemicals and tailored renewable oils.
We have also seen cellulosic biofuels gain traction in Brazil, especially in work that Raizen is undertaking with Iogen and Petrobras with Blue Sugars. Also, biobutanol has gained a foothold in a deal between Rhodia and Cobalt that is aimed down Brazil way.
Some time ago, we highlighted a shift in the Bioenergy Project of the Future series in the Digest. At the time, we said that Job #1 for any investor, in constructing a future around advanced biofuels, was simple: “buy an ethanol plant.”
READ MORE about the Bioenergy project of the Future:
Today in the US, there are four main pathways from the traditional ethanol fleet to advanced biofuels that are gaining active traction. They are:
1. Feedstock shift. Conversion from corn to grain sorghum and biogas.
2. Feedstock mix. Supplementing corn sugars with cellulosic sugars supplied by specialty suppliers of renewable sugars made from cellulosic biomass.
3. Retrofit. Converting from production of ethanol to production of isobutanol.
4. Co-locate. Adding on co-located, but stand-alone, cellulosic ethanol production to add capacity at a traditional corn ethanol plant.
5. Co-product. Utilizing CO2 produced as a by-product of ethanol fermentation to produce algae for the fuel, feed and nutraceutical markets.
In all, there are at least 22 traditional US corn ethanol plants engaged (publicly) in some level of conversion from first-gen ethanol to an advanced biofuels strategy — representing 1.463 billion gallons in current ethanol production capacity.
Who’s Converting? – A Digest Overview
Here’s a Digest table outlining the who, what and where.
The Bottom Line
There’s more on the way. For example, POET has indicated that it expects ultimately to add cellulosic ethanol capacity at its entire fleet of plants, representing more than one billion gallons of additional capacity.
In short – the move is on. We expect to see more conversions — and more pathways, as the existing US ethanol fleet makes the Bioenergy Project of the Future a living reality.
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