A mere “The Year in Rewind” as we reach the end of 2014? Not the intrepidSS Digest! Instead, we dust off our crystal ball and peer into tomorrowland.
As the sunset of 2014 gives way to the dawn of 2015, here at the Digest we resist the holiday temptation to look back over the challenges and highlights of the year gone by, and instead once again roll the dice as we list the Digest’s 10 Top Predictions for 2015.
1. The Year of Supercritical, and thermal conversion.
We’ve been hearing more and more about dissolving biomass, either to extract sugars or to extract an intermediate which can be used to make drop-in fuels. Renmatix has been a leader in supercritical, with a focus on C5 and C6 sugar production. Shell has discussed its RAPT and APTC technologies (, the latter is a two-step process in which the second step is, essentially, the Virent process). Meanwhile, Shell’s catalyst company, CRI, has taken the world-wide license for IH2 technology — a catalytic thermochemical process that has been estimated to provide a very cost-effective route, ~$2.00/gallon in 2012 dollars at 2000mt dry feed/day scale, to produce fungible liquid hydrocarbon transportation fuels from renewable resources. To complete the picture, the DOE has identified a Algal Hydrothermal Liquefaction Pathway (AHTL)as a technology path of choice as it pursues algal biofuels, writing “Algal Hydrothermal Liquefaction is a pathway model for conversion of whole algae, rather than the extracted lipids, to fuel and other products. Dewatered algae (20 wt% on an ash-free basis) is pumped to the HTL reactor. Condensed phase liquefaction then takes place through the effects of time, heat and pressure. The resulting AHTL products (oil, solid, aqueous, gas) are separated, and the AHTL oil is hydrotreated to form diesel and some naphtha-range fuels. The AHTL aqueous phase is catalytically treated to recover the carbon content and allow water recycle back to the ponds.”
2. Oil price recovering to $75.
Despite fears of $35 oil, the overall oil market will return to the $70s, as global oil demand grows “by 900,000 barrels a day, as the IEA predicts, to 93.3 million barrels per day. “While demand growth is still expected to gain momentum in 2015 from 2014, the acceleration is now looking more modest than previously foreseen, in line with the ever-more tentative pace of the global economic recovery,” the IEA said. The price drop, from a four-year stay north of $90, induces too much drop in marginal shale production — and if OPEC rolls back production anywhere near 2013 levels, that will tighten the market considerably.
3. Asia, Asia, Asia.
The trend lines from 2014 are unmistakable — “Asia is the new Brazil” as a combination of strategic investment, high natural gas prices, daunting CO2 emissions and abundant biomass put a bigger and bigger focus on the Far East. Though progress in India will remain spotty, China’s momentum, and that in Malaysia, will be hard not to notice, and we expect that countries such as Indonesia, Thailand and Korea will be more in the news mix.
4. Organic acids rock.
Though projects aimed at replacing hydrocarbons will struggle against the headwinds of low oil prices, projects that utilize organic acids (e.g. succinic, malic, adipic, dodecanedoic, glucaric, polylactic) will continue to utilize a high percentage of the original biomass (after bioprocessing), and are more likely to remain cost competitive during 2015.
5. Scandinavia rises.
Most attention that goes to Europe is focused on the technology development side, because so many important companies and researchers are based there. But we see an increasing number of projects being developed in Scandinavia, where there is plenty of affordable biomass and where energy and economic development ministries see biomass as a way forward to meet renewable energy and emissions targets. Think Norway and Finaland especially for deployment.
We saw a lot of activity by REG this year — completing the acquisition of the Geismar renewable diesel project, acquiring LS9 and moving into the EU in Q4 — we see more consolidation in 2015 as many companies with great technologies will conclude that it is better to become a part of a commercial-scale enterprise than continue to fight to finance first commercial projects in tough financing times. In particular, we see the potential for combinations in cellulosic conversion technologies, biobutanol, sorghum, algae, aviation biofuels, and renewable chemicals — and we would not be all that surprised to see an advanced genetics company rolling up in feedstocks such as guayule and jatropha.
7. Aviation advancing.
After several years of testing and certification, we see the first commercial-scale facilities breaking ground in 2015 with production beginning in 2016. Attention will be closely paid to Emerald Biofuels, Fulcrum Bioenergy and Red Rock Biofuels, which will benefit from US financing via the Defense Production Act.
8. Big ups, downs for butanol.
We expect a big year for biobutanol — at least more one player unveils its timeline for commercial scale, and we would not be surprised to see a groundbreaking on a new plant. But we also expect to see at least one “name brand player” disappear, either through a merger or acquisition of the underlying IP assets — as the market simply will not yet support so many development-stage companies, and expected opportunities in the Brazilian market have proven more elusive given the economic challenges in the Deep South and the oil price environment.
9. Mandates stabilize in 2015.
Despite predictions that the US RFS2 and the EU’s mandates will be overturned, or curtailed, we see lower oil prices taking pressure off gasoline market demand and deflating some pressure off blend wall concerns and “RFS is broken” arguments. At the same time, lawmakers will find they have other legislative priorities in 2015, particularly in the US, and will await a new legislative landscape in 2017 and a new US president — to seek comprehensive redefinition of renewable fuel standards. Especially as legislators see tougher conditions for selling other alternative fuel technologies into the market as gasoline competes more vigorously with plug-ins and CNG, and hybrids look less thrilling on the economics in a world of sub-$3 gasoline.
10. New loan guarantee wave.
We expect to see a new wave of loan guarantees from the US Department of Energy — as news of the massive loan portfolio profits realized through its LG program, and it’s below-market-average project default rate — begin to counter polarized political opinions formed by the collapse of Solyndra. Ultimately, the hard data will trump the hype — the challenge for biofuels will be to prove that the risks are manageable for first-of-kind technologies. In the last wave of LGs, only one biofuels project (Abengoa) snagged a finalized LG (though POET-DSM among others, we understand, could have had one), and one reason is that the projects earn quite low (CCC or worse) Fitch ratings.
For our 2014 batch of predictions, we give ourselves 8.5 marks out of 10.
We gave ourselves a full mark for predicting the end of the stand-alone ethanol/DDSs plant, the continuation of momentum for the Great Green Fleet despite Congressional dyspepsia, the rise of M&A activity, the shift to licensing strategies, the focus on Asia, Brazil and the US as hot deployment markets, the rise of sorghum, and no action on repealing or amending RFS2. We gave ourselves a half-mark on a good year for E85 (Had a great first half), the rise of renewable chemicals (we correctly pointed on butadiene, but there was less action on the 3-carbon front than expected). And while we correctly spotted the trend on closed algae bioreactor systems, the market did not see a shift back to attention on larger-scale production later in the year — we did not hear as expected from some of the bigger ventures on actual project plans.
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