What’s My Feedstock Worth? A primer for measuring bio-value

What’s it worth? It’s the cry of a thousand fortune-hunters combing garage sales and close-out auctions this spring. Whether you are owner or seller, you need to know the underlying value of a feedstock in the advanced bioeconomy — and that is not the same thing as its current market price.

In fact, what makes a feedstock useful in the advanced bioeconomy is the spread between price and value — if the cost of valorization (the money you spend to capture that value) is less than that spread, you’ve got a winner, and you can play in the biggest commodity market of all, the fuels market. Otherwise, you’ll be looking at niche markets.

Sure, it’s easy to point to today’s Brent crude oil benchmark price of $50 and say, that’s what my feedstock is worth, at least in the fuel markets — but there’s a little more to it than that. Here are the steps to determining value.

The fuel value

Step 1: the organic fraction

A convenient starting point is a ton of feedstock, or 2000 US pounds.

Every bioeconomy has an organic fraction, and you start there — eliminating the weight of any trace metals, water, plastics, dirt and so on. The amount you eliminate could be trivail (e.g. bone dry crop) or major (unsorted, sloppy-wet muncipal solid wasteI.  So, you’ll end of up with anywhere between say 800 and around 1990 pounds of usable material. (Note to readers: in this step, we include any plastic material in your feedstock, such as MSW — it may not be something you can biologically do anything with, and it may not be renewable, but plastic is organic material and it does have a fuel value.)

Step 2: the Cs, Os and Hs

Now, you divide that organic material into its three components — oxygen, carbon and hydrogen, by weight. to use a simple example, a table sugar is C6H12O6 and is 53.3 percent oxygen, 40 percent  carbon, and 6.7 percent hydrogen. (Note to readers: For the purpose or calculating ratios and percentages, use a value of 12 for carbon, 1 for hydrogen and 16 for oxygen)

Ok, here is where it gets a little tricky.

Step 3: Adjusting for the carbon: hydrogen ratio

You can keep all your Cs and Hs so long as the ratio of carbon to hydrogen is between 4:1 and 6:1. If you have too much carbon, you have to shed that value. You probably won’t have too much hydrogen, but if you do, shed that until you either get up to that 4:1 ratio or down to 6:1.

Step 4: Adjusting for maximum oxygen

You can keep all your Os, so long as the ratio of oxygen to the remaining Cs and Hs is 40 percent or less. Anything higher, and you have to shed that value.

Step 5: Convert those feedstock pounds into theoretical fuel value

Now, to convert your remaining feedstock pounds into fuel value, multiply the remaining hydrocarbon pounds by 0.15, and the oxygen pounds by 0.32. (Note to readers: We’ll get into the explanation of why those numbers, and not others, later on  — they’re going to seem non-sensical to some of you For now, let’s just do the math).

An example: the fuel value of table sugar

Let’s use a real-world example to illustrate. We’ll start with a ton of table sugar. That’s all refined organics, so we don’t have to eliminate any non-organic material. We noted the 53.3/40/6.7 ratio of oxygen, carbon and hydrogen, above. So, we have 1066 pounds of oxygen, 800 pounds of carbon and 134 pounds of hydrogen.

Looking at steps 3 and 4, our carbon to hydrogen ratio is fine, but we have to shed 444 pounds of oxygen to get the oxygen ratio down to its maximum value of 40% Now to step 5. So, we have 1556 pounds remaining in out original ton of table sugar feedstock, and we can convert that into $339 — and that’s the value of our feedstock.

Right away we see the problems

You might have paid something like $6.48 for a 10 lb bag of C&H table sugar recently, which if you multiply it out cost you $1296 for that ton, and that’s one good reason no one will ever convert retail table sugar to a fuel. Wholesale sugar can make sense in selected markets, but never retail.

That’s NLACM in action — the Natural Law of Alternative Commodity Markets, which states that you will never convert a feedstock if the converted molecule’s value is less than the feedstock’s original value. That’s one of the reasons that ethanol producers don’t generally make jet fuel — even though you can make excellent jet fuel from ethanol – they make more producing two molecules of ethanol than one molecule of jet fuel, from the same amount of feedstock.