Renewable Isobutanol: It’s Time for a Truce

By James Evangelow & Sam Nejame, Special to the Digest

If an advertising professional were writing the copy, renewable isobutanol would be called “The new and improved ethanol”. It overcomes essentially all the major deficiencies of ethanol as a fuel and can be produced in an ethanol plant. However, relentless litigation, waning interest in biofuels in general and meager investment are killing it.

Why isobutanol’s superior physical properties matter.

One of ethanol’s greatest drawbacks as a fuel is its high volatility. The nation’s base gasoline supply changed with the introduction of ethanol oxygenate. Inexpensive light ends were removed to produce the costlier Reformulated Blendstock for Oxygenate Blending (RBOB) to compensate for ethanol’s high volatility in the finished blend. Butanol, on the other hand, has very low volatility, allowing blending without the need for RBOB and freeing the refiner to obtain higher margins for heavier cuts.

In addition, the molecule has nearly 20 percent higher energy density than ethanol. In fact it is sufficiently close to gasoline that it can be used at any blend ratio, even at 100 percent, obviating the need for Flex Fuel Vehicles. Testing this theory, physicist David Ramey, drove from Blacklick, Ohio to San Diego, California using 100 percent butanol in an unmodified 1992 Buick Park Avenue. The vehicle completed the trip without incident and achieved a 14 percent INCREASE in fuel mileage compared to 87 octane gasoline.

Butanol blends present other economic advantages to refiners and consumers.

California has the most stringent air emission standards in the country. As a result, California spec gasoline is specially formulated and not available outside the region. In 2012, a perfect storm of pipeline issues, refinery outages and potential market manipulation spiked gasoline prices in California to close to $5 per gallon for an unprecedented period of time. Had biobutanol been readily available for blending in neighboring states and piped to the California market this problem could have been averted.

Transportation and storage of butanol also has important advantages over ethanol.

Ethanol is extremely hygroscopic, making it corrosive to steel. For that reason, it cannot be transported by pipeline. Butanol’s much lower affinity for water make pipe distribution and refinery blending viable creating more favorable “cost in use”. Lower pipeline transportation cost plus the ability to tailor butanol blends at the refinery offset some of butanol’s higher price. Further, butanol has been approved for blending into marine gasoline, where ethanol is banned, reducing emissions of criteria pollutants on our waterways.

Butanol adoption would vault us over “the blend wall” and create benefits for farmers.

Because butanol has lower oxygen content than ethanol, EPA allows up to 16 percent butanol gasoline blends, compared to 10 percent for ethanol. If butanol were to completely replace ethanol in gasoline blends, national alcohol volume requirements would increase by 60 percent. Couple that with a 20 percent reduction in the nameplate capacity for retrofitted ethanol plants producing C4 instead of a C2 alcohol, and the blend wall would disappear without reducing the demand for corn. In fact, additional capacity would be needed along with feedstock supply. It’s important to note that the US now produces many billions of gallons more ethanol than when the food v. fuel debacle raged in 2008 and corn prices have dropped precipitously. Why? Because corn prices are pegged to the price of oil.

So why hasn’t biobutanol taken off and replaced ethanol?

Followers of renewable fuels well know the two major players developing isobutanol technology: Butamax, the DuPont/BP joint venture and Gevo. Not so very long ago things looked promising on all fronts as Gevo raised an impressive war chest, built innumerable strategic relationships and signed large off-take agreements. Meanwhile, Butamax created an Early Adopter Group with close to a billion gallons of installed capacity itching for retrofit. Both companies toured the corn belt, made friends and raised expectations.

Then in 2012, Gevo started up the world’s only isobutanol facility and promptly fell on its face – contaminations required a long shake down, tighter cleaner pots and pans, larger separations equipment and lots of additional capital. Capital that got more expensive and harder and harder to come by. Today, things have improved but only one of Gevo’s four fermentation trains is running isobutanol.

Theoretically Butamax has all the money and time to get it right, but a double oreo of big company political miasma has limited progress to a single corn oil separation unit for one ethanol producer. Current Butamax isobutanol production is zero. That’s not a lot to show for a nine year old JV.

Clearly no one expected this to be easy. To put the concept of a new biofuel of any sort in perspective, consider this: humans have been fermenting ethanol for thousands of wine soaked years. Industrial fermentation on the other hand is one hundred years old; and we’ve only been fermenting Isobutanol at any scale for ten years. Despite the improvements in the understanding of genetics, pathway engineering, etc. starting up and scaling an entirely new process remains a daunting task, ask anyone who’s melted heterogeneous catalyst at a petrochemical plant or started a brewery.

Both Gevo and Butamax share many similarities. Both use modified yeast, both utilize proprietary separation technology, both have built significant patent portfolios and both seek to license their technology to global ethanol producers. Perhaps it’s not surprising then that their patent portfolios overlap. What is surprising is that litigation over isobutanol intellectual property has gone to the US Supreme Court and still ownership somehow remains unresolved. Without a doubt this has hindered market development for isobutanol and despite what the parties will tell you the battle looks like it will continue to drag on. What has been lost in this battle is that they need each other to succeed.

Any way you slice it both companies are running out of time. Gevo’s finances have decayed to the point where it’s operating a skeleton crew, had to conduct a reverse stock split to remain on the NASDAQ and its last public financing was tiny, inadequate at even current burn and subject to arbitrage. Survival is questionable. On the other hand things at Butamax may not be much better. BP appears less and less committed to renewables, as primary oil prices have fallen. It recently auctioned off its cellulosic biofuels business (announcement soon) and Butamax executive CVs are reportedly on the street, leaving one to wonder if other non producing assets are to follow.

It’s easy to say it’s time for Gevo and Butamax to make peace, cross license their technologies, and work together to develop the market before it dies, but after all that’s happened between them it’s difficult to see how they can play nice on their own. Clearly, the Gevo technology works, it just needs an investor with patience and maybe some tweaks to management. While have no idea what the Butamax technology readiness level is, they sure have built quite a patent portfolio.

What has been lost in this battle is that they need each other to succeed. Consumers, refiners and ethanol producers are just less likely to accept isobutanol if there is only a single technology provider. Many issues remain, but one thing is for certain is something big doesn’t change soon isobutanol will join the list of other great ideas that never made it. We might as well call Butamax, Betamax and the Gevo-lution, DEVO-lution.

James Evangelow is President of Chemical Strategies, a consulting firm
focused on renewable and petroleum based chemicals and fuels. He is one of the world’s most sought after consultants in the field of synthetic and bio-based ethanol. He can be reached at [email protected].

Sam Nejame is CEO of Promotum, a management consulting firm focused on
technology commercialization. He has extensive experience in the field of petroleum and bio-based fuels and chemicals. He can be reached at [email protected].