Aemetis nabs exclusive California rights to LanzaTech’s advanced ethanol tech

March 24, 2016 |

BD-032416-Aemetis-LT-smIn California, news arrived that Aemetis has acquired 12 years of exclusive rights in California (based upon achieving certain milestones) to LanzaTech’s technology for the conversion of agricultural waste, forest waste, dairy waste and construction and demolition waste to ethanol in California. The LanzaTech gas-to-ethanol technology enables Aemetis to convert these local California biomass wastes to advanced ethanol.

Aemetis is the first licensee of the LanzaTech technology in North America.

The 2017 project

The first phase of the adoption of the LanzaTech technology by Aemetis will be an eight million gallon per year processing unit related to the Keyes plant, which under the agreement is planned to be built by the end of 2017. The agreement provides for an expansion to 32 million gallon per year process unit, as well as licenses for units that would be installed at other existing ethanol plants.

Flipping the feedstock economics at Keyes

“The 60 million gallon per year ethanol plant in California owned and operated by Aemetis currently uses approximately 20 million bushels per year of feedstock, consisting primarily of corn and milo supplied from the Midwest,” stated Eric McAfee, Chairman and CEO of Aemetis.

“By utilizing wastes from forest, dairy, orchard, vineyard, corn, rice, wheat and CDW sources that are local to our plant, we plan to reduce feedstock costs from more than $150 a ton to receiving tipping fees for waste feedstocks. This technology enables Aemetis to produce advanced ethanol that is valued up to approximately $3 per gallon more than traditional ethanol.”

California tipping fees and waste volumes

According to CalRecycle, “green waste” tipping fees average $39 per ton of waste, and California processes 4 million tons of green waste per year. The complete report on California waste is here.

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California: Looking to do better with green waste

In 2015, CalRecycle reported:

In California, the 4 million tons of green waste going to landfills annually could go to higher and better uses. Recent legislation expands organics recycling, and the California Air Resources Board (ARB) 2014 Scoping Plan Update has noted green waste recycling’s potential to reduce greenhouse gas emissions. Redirecting this recyclable material away from the landfill can play a key role in determining whether California meets waste recycling and greenhouse gas reduction goals in the future. Given this background, it is important to understand how the fees charged for green waste vary by facility type. Twenty-two landfills (about 15 percent of landfills) are co-located with compost facilities.

How much green waste would an Aemetis advanced ethanol plant use?

At a nominal 70 gallons per ton of biomass, think in terms of around 115,000 tons of biomass to support an 8 million gallon plant, or around 460,000 tons to support a 32 million gallon plant.

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The financing of such a facility

For debt, there’s every reason for Aemetis to pursue a Section 9003 federal loan guarantee. But we also would expect an applicaiton for project support to the California Energy Commission, using funds from obligated parties purchasing waivers under the California Low Carbon Fuel Standard.

Flipping the market price economics

Aemetis says that the current price of advanced ethanol in California including federal, state and tax credit incentives is approximately $4.60 per gallon, compared to corn ethanol at about $1.60 per gallon.

Here’s a recent slide from former Beta Renewables COO Michele Rubino, from our March Madness webinar last week on cellulosic ethanol’s prospects in California, supporting $3.47 of that $4.60 price.

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And, there’s this slide from Iogen’s Brian Foody showing a $1.73 price per gallon for a cellulosic waiver credit, a price support which conventional ethanol cannot access — combined with $0.80 in added support from the LCFS, that would give cellulosic ethanol a $2.53 per gallon advantage over concentional ethanol in 2017.

Reaction at LanzaTech

“As a leader in low carbon fuels, Aemetis is ideally positioned to demonstrate the benefits of utilizing cellulosic waste and residues,” said LanzaTech CEO Jennifer Holmgren. “This project will leverage the existing infrastructure in a 1st generation biofuel facility enabling the economic production of advanced biofuels.

“Upgrading traditional ethanol plants to produce advanced ethanol using the LanzaTech Process represents a major breakthrough for the biofuels industry, allowing large scale adoption of low cost, low carbon energy crops, ag wastes and MSW that would otherwise require disposal in expensive landfills. This first example will enable us to further demonstrate the breadth of LanzaTech’s carbon recycling platform and create new opportunities in California.”

The ethanol industry in the US is comprised of about 210 plants producing approximately 15 billion gallons per year of traditional ethanol. Under the federal Renewable Fuel Standard (RFS), up to 16 billion gallons per year of advanced ethanol may be produced under RFS mandates enforced by the EPA.

Further Readings

We reported elsewhere today that Edeniq and Aemetis have entered into a License Agreement under which Aemetis will deploy Edeniq’s Pathway cellulosic ethanol technology at its 60 million gallon per year ethanol production facility located in Keyes, California.

8 Slide Guide to Aemetis.

5 Minute Guide to Aemetis.

8-Slide Guide to Lanzatech.

5 Minute Guide to LanzaTech

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