Vertibirds are GO: DOE OKs Vertimass drop-in biofuels technology, clears path to demo scale 

In California, Vertimass gained its intermediate technology validation with the US DOE’s Bioenergy Technology Office, which verified performance against negotiated milestones, provided progress on scale-up, and reviewed Vertimass’ estimated cost for their transformative catalytic technology. BETO verification effectively opens the door for Vertimass to move to demonstration scale of its technology for converting ethanol into gasoline, diesel, and jet fuel blend stocks and the chemical building blocks benzene, toluene, and xylene (BTX).

The technical backstory

Here’s the science starting point: if you dehydrate ethanol, you get ethylene, a hydrocarbon — and you are on the road to longer-chain hydrocarbon territory like kerosene, or jet fuel. Now, most technologies out there would consume roughly 2-2.5 ethanol gallons to produce a jet fuel gallon.

Vertimass uses a direct catalytic conversion process originally explored at Oak Ridge National Lab. Early-stage results out of the Vertimass labs and Oak Ridge suggest an average of 1.6 gallons of ethanol could produce up to 1 gallon of fuel-range hydrocarbons.

As CEO Charles Wyman explains, “The catalyst forms very little ethylene (~3%) but instead converts most of the ethanol into a variety of aromatics, alkanes, and alkenes that give this overall stoichiometry.  As a result, the maximum mass yield of hydrocarbon fuels is 28/46 x100 = 60.9%.  The volume ratio of ethanol input to hydrocarbon output depends on the mass density of the product vs. ethanol but should be about 1.6 volumes of ethanol/volume of hydrocarbon fuel on average for diesel, gasoline, and jet.

“Although some may be concerned with the loss of volume, it is important to remember that because the reaction is only slightly exothermic, no hydrogen or other magic ingredients are added, and water has no heating value/ So, the hydrocarbons produced contain most of the energy from the ethanol but in a more compact molecule better suited to jet and diesel applications. The key objective is to preserve the energy of the reactants in the products, while loss of mass can enhance the energy density as is vital for jet and diesel.  Overall, I don’t believe that there is a lower cost process for making fungible hydrocarbon fuels from biomass.”

And, the advantages are…

So, let’s sum up the potential advantages (yet to be demonstrated at scale):

1) single step conversion of ethanol into a hydrocarbon blend stock with high yields,
2) no hydrogen addition,
3) production of minimal amounts of light gases,
4) operation at relatively low temperature and atmospheric pressure,
5) ability to process 5 to 100% ethanol concentrations,
6) product flexibility to respond to changing market demands
7) catalyst durability.

Who would utilize Vertimass technology?

It’s a bolt-on technology for ethanol producers.

As COO John Hannon explains, “these systems can be added to existing ethanol producers’ facilities at fractions of the cost of a new facility while providing product flexibility that can adapt to changing market conditions. Producers can capitalize on the value this novel technology brings to the market.”

The Vertimass commercial challenge

Ultimately, they’re going to run into what Aemetis CEO Eric McAfee once described to me as the immutable “Natural Law of Alternative Commodity Markets”. NLACM states that “the value of any intermediate products produced in any process must be significantly exceeded by the value of the end product, or the end product will not be produced.” We looked at this in The Solyndra Effect, or why alcohol-to-jet fuel is a tough sell, here.

Let’s illustrate.

You take 1.6 gallons of ethanol, worth $2.46 on the market today, and you make 1 gallons of, for illustrative simplicity, one gallon of kerosene jet fuel, worth $1.47 on the market today. https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMA_EPPK_PWG_NUS_DPG&f=M

So, let’s start with that discouragement, and add a little sunshine back. Ethanol prices generally take into account their fuel value and value under the Renewable Fuel Standard and the California Low Carbon Fuel Standard. But kerosene prices — being fossil kerosene — do not.

So, consider that there’s some additional carbon value here. Let’s start with $1.79 for a D4 biomass-based diesel RIN and another $.67 from the LCFS. That would bring us to a total value of $3.93.

Looking good so far: Vertimass has cleared the first NLACM hurdle, courtesy of its high carbon value.

The EPA’s RIN-counting challenge

It sounds arcane to count renewable credits in sizing up a fuel technology, but God is in the details, as Mies van den Rohe was fond of saying.

The company is going to be in the middle of a big EPA mess regarding what to do about fuels generated from intermediates — and especially when those intermediates are corn-based ethanol.

The optimistic way that EPA could look at it is that you have a biomass-based diesel — yes, it’s made ultimately from corn (in the case of a corn ethanol bolt-on). But then, so is biodiesel made from corn oil, and that gets D4 RINs. So there is precedent to say, this is eligible for a D4 RIN.

But here’s the complication. The RFS wasn’t designed to encourage a massive expansion of corn ethanol beyond the 15 billion gallon mark — and for that reason, D5 advanced biofuel RINs are specifically forbidden to come from corn starch as a feedstock.  So, an EPA that wanted to screw with your mind might rule that ultimately all corn starch-based ethanol molecules, whether they are used for fuel ethanol or as an intermediate feedstock to make diesel or jet fuel, can only generate a D6 RIN, which currently is valued at 89.98 cents — so there’s value loss here.

But there’s another complication.

Remember, we started with 1.6 gallons of ethanol. So, do we get 1.6 gallons of D6 ethanol RINs, or 1 gallon of D4 biomass-based diesel RIN? Again, there’s value loss, because a gallon of diesel generally gets 1.7 RINs because of higher energy density. So, there’s just a little more value leakage if EPA rules that you get 1.6 D6 RINs instead of 1.7 D4 RINs.

But wait, there’s more.

Namely, Vertimass licensees would have to establish an EPA-approved pathway in order to generate RINs from this process at all. And EPA is going to insist on a good accounting system to make sure that RINs aren’t double counted (i.e., RINs for ethanol and then more RINs for diesel or jet).

But, ye Low Carbon Fuel Standardesians, there’s more  and just for you.

Currently, California doesn’t allow jet fuel to count for the Low Carbon Fuel Standard, so to the extent that value is maximized by aiming at California, there’s real value loss in making kerosene.

The Vertimass value proposition to ethanol producers

Ultimately, this process allows ethanol producers to get around the E10 saturation point, generally described as “the blend wall”, and it’s been a persistent headache for ethanol in recent years with EPA and with potential investors in cellulosic ethanol: namely, where are the gallons going to go?

In this case, you can send cellulosic gallons into the road transport markets, where you pick up $2.97 D3 cellulosic RINs, and convert corn ethanol into diesel (and, we hope soon, jet fuel) and send that into the California market.

When it comes to diesel, skies the limit for affordable diesel — sales are hopping, according to the word we have from outlets like Propel. And there’s no reason that, because the value is coming from carbon value as much as energy value, that the resulting diesel fuel can’t be priced competitively into the market.

So, an ethanol producer could add capacity at an existing facility at affordable prices, and find with Vertimass bolt-on tech that there’s an entry point into, for example, the 30 billion gallon renewable diesel US market, of which something like 4-5 billion gallons would be in LCFS territory such as California and Oregon.

The Bottom Line

Now, that’s real growth, and at the same time it would open up some potential headroom for cellulosic ethanol to distribute into the US E10 market.

As Vertimass Chairman Bill Shopoff noted, “By breaking through the ethanol blend wall, this technology opens the door for massive job creation ranging from corn and cellulosic feedstock collection and logistics supply, to plant construction and operation.”

More on the technology and company at the Vertimass website, here.