Making the Case for Woody Biomass Based Biofuels and Bioenergy: a special Biofuels Digest Report
By Biofuels Digest special correspondent Tim Sklar
Overview
The Pickens Plan and most other plans being promoted for helping the US substantially reduce its dependency on foreign oil, include as part of any solution, an increased use of renewable energy. But the emphasis has been on extensive use wind power and solar power and not on the use of biofuels. Widely recognized by those familiar with renewable energy issues are those that have plagued 1st generation biofuels such as corn based ethanol and biodiesel. These fuels use feedstock that is also used in food production and this increased demand on corn and soybeans is believed to have had an inflationary impact.
With respect to corn based ethanol, there is agreement among energy analysts that US corn based ethanol production is finite, and will probably never exceed 15 billion GPY, and an additional 21 billion GPY of 2nd generation biofuels (cellulosic ethanol and other advanced biofuels) will have to be produced from cellulosic biomass to meet the EISA mandate for 36 billion GPY of biofuels by Year 2022.
Cellulosic biomass includes such biomaterials as: woody biomass, including wood waste; cellulosic municipal solid waste; and bio-crops, such as swithgrass, corn stover, miscanthus, kenaf, bagasse, and other and agricultural wastes.
The purpose of this article is to make the case for developing biofuels and bioenergy from wood waste as a first priority as this form of biomass is already available in abundance and the processes exist for converting wood waste into clean coal, synthetic gas, ultra clean diesel and green jet fuel, in addition to cellulosic ethanol.
This article also quantifies the amount of biofuel that could be produced from wood waste, the investment that would be required, and the jobs that would be created, if this resource is fully exploited. It discusses alternative processes that could be used and their various configurations. And it addresses the impediments to project development and strategies for overcoming these impediments.
The Case for Woody Biomass Based Biofuels and BioEnergy
There are a number of good reasons why U.S. energy policy should set as a priority, the development of biofuels and bioenergy from woody biomass.
First and foremost, the existing forest resources in the US are substantial and there is an abundant supply of unused or underused woody biomass in our timberlands that could be used to produce 2nd generation biofuels.
Second, the technology for economically converting woody biomass into biofuels has been demonstrated on a pilot scale and there are already several commercial scale biorefinery projects being completed throughout the world in which woody biomass can be used.
Third, there are a number of 2nd generation biofuels processes that will be able to convert woody biomass into higher value fuels, such as clean diesel and jet fuel, as opposed to lower value cellulosic ethanol.
Fourth, woody biomass, and in particular wood waste, can also be used to generate power as a low cost boiler fuel, as a clean-coal alternative to coal fired utilities, as a source of gas that can be used in gas turbines to generate power, or as a substitute for natural gas used by certain industries.
Finally and more importantly, if an aggressive public and private partnership is undertaken to develop 2nd generation biorefineries and the forestry and logging industry is provided sufficient financial incentives, wood waste could contribute 9.7 billion gallons per year, or 45.7% of the mandated 21 billion gallon per year of 2nd generation biofuels. This potentially significant contribution is an important reason why this energy alternative ought to be embraced in US energy planning, not marginalized or ignored.
Our Abundant Forest Land and Timber Land
Through its latest Census of Manufacturers, taken in Year 2002, U.S. Census Bureau prepared statistical abstracts for various industries. Using their latest statistical abstracts the Forestry and Logging Industry (NAICS Code 113) and Timber Based Manufacturing (NAICS Code 322) included data recently gathered by USDA on “Forest Land”, “Timberland”, and “Timber Removal”. Timber Removal is identified by type, namely “softwood and hardwood growing stock” and “softwood and hardwood pre-commercial thinnings”. Timber Removal is also categorized by end use, namely, “pulpwood”, “other logs and products” and “fuel wood” (a.k.a., “logging residue”). In determining the amount of woody biomass that could be obtained in the form of wood waste, data representing logging residue and pre-commercial thinnings were used.
The following is a summary of relevant data included in these extracts.
• In 2002, there were over 11,000 firms with a total of 69,500 employees engaged in forestry and logging operations, with an estimated $2.27 billion annual payroll.
• In 2002, there were approximately 17,000 firms with a total of 555,900 employees engaged in wood products manufacturing, with an estimated $18.23 billion annual payroll.
• In 2002, there were approximately 22,000 firms with a total of 1 million employees engaged in pulp, paperboard, converted paper products and paper manufacturing, with an estimated $21.56 billion annual payroll.
• The total value of shipments of wood products manufactured in 2002 was in excess of $89 billion and the total value of shipments of pulp, paperboard, converted paper products and paper manufacturing manufactured in 2002 was approximately $154 billion.
• The annual value added by wood products manufacturing workers was $102,776 per employee, and the value added by paper manufacturing workers was $250,558 per employee.
Based on this data, it is clear that forestry, logging and timber related manufacturing is a significant part if the U.S. economy.
It follows that in order to support forestry, logging and timber related manufacturing of this magnitude, forest and timberland resources in the US would have to be abundant. USDA data included in the Census Bureau statistical extracts supports that expectation. For instance, US forestlands cover 749 million acres, of which 541 million are used to supply timber. There are 356 million acres of timberland owned by private interests, with the remaining 185 million acres owned by federal, state, county and local units of government. And nationwide, timberland acreage was estimated to be 72% of total forest acreage, annual timber growth in excess of 23.9 billion cubic feet, and annual timber removals in excess of 16 billion cubic feet.
It was also found in analysis of this data, that 1.6 billion cubic feet of this amount harvested was logging residue and another 1.2 billion cubic feet of the amount harvested was from pre-commercial thinnings. In other words, 2.8 billion cubic feet or 17.5% of the total timber removals could be potentially diverted to higher value added end uses such as in producing biofuels and bioenergy.
A recent study performed for the South Carolina Forestry Commission indicated that the logging residue and pre-commercial thinning yield averaged 1.06 green tons per acre and that the annual harvest of growing stock averaged 20 million cubic ft per acre. Using these conversion factors, it was then estimated that on a nationwide basis, considering both hard wood and soft wood, an average cubic foot of wood weighed approximately 241 lb and when applied to the 2.8 billion cubic feet of wood waste harvested each year, approximately 317.2 million green tons could be produced from harvested logging residue and pre-commercial thinnings. And by using the assumption that the moisture content of for wood waste averages 50%, it was then calculated that 440.5 thousand dry tons per day (“dTPD”) of wood waste could potentially be diverted to make biofuels.
In order to determine how much biofuel could be produced from of this woody biomass each year, it was estimated that 441 mid-sized biorefineries would be needed and that they could potentially produce 9.7 billion gallons per year, or 45.7% of the EISA RFS mandated 21 billion gallon per year of 2nd generation biofuels.
Bioenergy Potentials From Wood Waste
Woody biomass obtained from wood waste can also be used directly as a major source of bioenergy for power generation and to support processes that require steam. It is now being used as a boiler fuel in instances where it has a lower cost per BTU than coal, the fuel it would normally replace. However, there are drawbacks. Wood waste that is harvested has to be ground and dried before it can be used as boiler fuel. It also produces ash, tar buildup in furnaces, and its combustion releases other pollutants.
A more promising technology is evolving called torrefaction, whereby green chipped wood waste is subjected to high temperatures under pressure in a torrefaction unit, moisture in the material is driven off and a high carbon content char is formed. Torrefaction also produces gases from partial combustion and these gases are used to fuel the torrefaction unit. The torrefied wood char that is produced is then formed into torrefied pellets or briquettes that are low in sulfur. This clean-coal like material has a BTU content that is slightly less than coal and can be substituted for coal in coal fired boilers without modification. In addition torrefied pellets do not collect moisture when stored and can be transported and stored at less cost than wood waste. And there may be a way to economically use torrefied wood for processing into a syngas that can then be liquefied into biofuel. But this option will require added research and development, before torrefaction can be undertaken on a commercial scale.
And in certain instances, where there are industries that use natural gas or in utilities that now generate power using natural gas turbines, it may be economic to generate synthetic gas from wood waste using gasifiers. But this option is situational and depends on rates users are willing to pay for syngas versus the costs to produce it.
Selecting the Right Technology
If cellulosic ethanol production is desired and if a variety of cellulosic materials are to be used as the bio-feedstock, then processes to be used would include those that break down the materials into cellulose, and hemicellulose components and then extract sugars for conversion into ethanol, using fermentation. This biochemical processes is also described as the “2-Staged Acid Hydrolysis with Fermentation” process. 2-Staged Acid Hydrolysis is performed using concentrated acid to break down woody biomass and dilute acid, if waste paper is largely being used. The 2-Staged Acid Hydrolysis with Fermentation is a proven process for making cellulosic ethanol. This process tends to be less costly to build than alternative processes, but when woody biomass is being used, this process will only make ethanol and a significant amount of lignin as a bi-product. Lignin that has less value, is not converted into biofuel, but is normally used to fuel the biorefinery process.
Under development are enzyme-based processes that are designed to convert biocrops such as swithchgrass into ethanol. The enzymes are used to breakdown the cellulosic materials so that sugars can be extracted and converted into ethanol via fermentation. Unfortunately, these are batch processes that are still slow, and enzymes employed limit their output. But this technology offers potential of being more economical than other processes and much research and development is already underway to improve the performance of the enzymes being used.
The most promising technology for processing woody biomass into biofuels is known by many names such as: “Two-stage Thermal Conversion”; “Thermo chemical Bio-Oil”; “Anaerobic Thermal Conversion with Syngas Catalysis” or “Gasification with Gas-to-Liquids Conversion”. Basically, this process is well suited for converting woody biomass of all types, into a set of higher value Fischer-Tropsch (“F-T”) liquids that can then be used as a very clean diesel fuel or as a diesel blend stock when combined with petroleum based diesel. These plants can also be configured to maximize F-T naphtha output that can be blended with F-T diesel into a “green” kero-jet fuel. Because the Gasification with Gas-to-Liquids Conversion process converts all of the woody biomass to syngas, there is no lignin component to dispose of or reuse. Some of the syngas is used to dry the woody biomass prior to its introduction into the gasification process. Some is used to supplement natural gas needed to operate the partial steam reforming gasifier, some to produce superheated steam to in the helical reactor to produce clean syngas, and some to provide heat to the F-T fixed bed reactors. Biorefineries that use Gasification with Gas-to-Liquids Conversion processes are significantly more expensive to build. However, the higher amortization of plant capital costs is often offset by a higher biofuel yield and higher prices that can be obtained for F-T liquids, clean biodiesel and green jet fuel.
Selecting the Right Configuration
Many 2nd generation biorefineries, especially those that use a Gasification with Gas-to-Liquids Conversion process, can be made much more profitable if they are configured to generate ancillary revenue from the sale of excess steam, waste gases and heat that they produce. In some configurations, the excess steam and syngas is used to co-generate green power for sale to the grid. In other configurations, 2nd generation biorefineries can become much more economical than stand-alone biorefineries, if they are partially integrated into strategically located host facilities such as pulp and paper mills, and food processing plants, and if they are able to realize a fair return on the steam, power and heat they provide these host plants.
The “Chicken n’ Egg Syndrome”
2nd generation biorefinery project development is difficult primarily because no prospective party-in-interest wants to make an initial commitment unless they know that other parties that are vital to the project’s success have already made their commitments. This “not me first” attitude is to be expected, as these types of projects are start-ups involving newly formed consortiums, installing technology and serving a new market.
As biofuels project developers we are always confronted with the problem of obtaining meaningful commitments from parties who have initially expressing interest in participating in development of biofuels or bioenergy projects.
Those that are able to supply the wood waste will not provide written assurance that they will commit to providing the supply requirements at prices that are reasonable.
Those that can supply the technology will often not make a written commitment to licensing their technology at a reasonable royalty and assure project sponsors that the technology they provide will perform as represented.
Engineering firms that express interest in being EPC contractors are often unwilling to provide detailed descriptions of the responsibilities they will assume, commit to meaningful EPC estimates, or give performance guarantees.
Utilities who will be supplying power to the proposed biorefinery will often not commit to rates they will charge for power and they often will not agree in advance to pay fair value for co-generated power that the biorefinery is configured to produce.
And if partial integration is being considered, potential host companies will often express an interest, but not make any meaningful commitments as to plant location, investment required and value to be paid for steam, power and heat they plan to consume.
Likewise, companies that express interest in acquiring the biofuels that the biorefinery is being designed to produce are often not willing to provide letters of interest, memoranda of understanding, let alone provisional contracts to purchase specific quantities under reasonable pricing formulas and terms.
Often, project sponsors will avoid making seed capital commitments to underwrite pre-feasibility and feasibility studies needed for finding financing and attracting project participants.
And as should be expected, equity providers, lenders and loan guarantors will not consider project financing without assurances from other parties-in-interest as to their respective commitments to the project.
Overcoming the Chicken n’ Egg Syndrome”
Biorefinery projects cannot easily be developed until the “Chicken n’ Egg Syndrome”, can be broken. To do this, project developers must get parties-in-interest to come forward and make commitments early in the project development cycle. This can best be accomplished through “deal structuring”, whereby the project developer offers proposals to each of the prospective participants so that each has “skin in the game” and each is offered opportunity to share in the success of the project.
For instance, suppliers of wood waste could be offered incentives to become part owners in a biorefinery, by supplying wood waste at cost plus a modest margin over the period of incubation, say 5 years. In return, they would receive shares of stock in proportion to the present value of the discount given over this same period. And if the biorefinery is able to generate substantial free cash flows, the suppliers would receive dividend distributions in proportion to shares they had received.
Likewise, EPC contractors and equipment suppliers could receive shares of stock, based on discounts given. Host plants who provide biorefinery sites and supporting infrastructure could be given shares in conjunction with value of land leased and leasehold improvements made. And as suggested previously, government advances could be sought in return for preferred shares to facilitate financing of the project.
However, market risk will still be present, as major biofuels customers will insist on not paying more than fair market prices for biofuels they receive. And some may require price discounts in order to cover any added costs they incur in handling the biofuels, in blending operations, in transportation cost differentials they incur, and in added inventory holding costs they expect to incur.
Accordingly, project sponsors of new 2nd generation biorefineries should seek to have government floor price subsidies during the incubation period, so that assurances of market risk mitigation can be offered to potential project investors. Likewise, early qualification for government loan guarantees and FFB loans should be sought in order to facilitate obtaining of equity commitments from hedge funds and other institutional investors.
Summary and Conclusions
The case made for undertaking a major initiative to foster the development of a large number of biofuels and bioenergy projects that use woody biomass includes the following main arguments:
• That we have vast forest resources and abundant supplies of unused or underused woody biomass already available;
• That the technology already exists for making biofuels from this material;
• That fuels other than ethanol could be produced using some of these processes;
• That woody biomass could also be used to produce bioenergy, replacing coal and natural gas; and,
• That biofuels produced from wood waste could provide 45.7% of the mandated 21 billion gallons of 2nd generation biofuel.
Also discussed are prospects:
• For increasing woody biomass as a source of bioenergy;
• For selecting the right technology for making specific fuels from wood waste and biocrops; and,
• For selecting the right configuration to maximize return on investment.
In addition, a number of ways are suggested to overcome the “Chicken n’ Egg Syndrome” that impedes successful development of biorefinery projects.
Tim Sklar
Sklar & Associates
Biofuels Project Developers
sklarincdc@aol.com
Free Subscription to the Daily Biofuels Digest e-newsletter
Subscribe FREE to the world's most-widely read biofuels daily. Enter your email in the box below,
Related Stories
Hot Topics
The Hottest 50 Companies in Bioenergy
Latest algae-to-energy news
Latest jatropha news
Latest Waste-to-energy news
Entry Information
Filed Under: Policy
Post a Comment | Trackback URL
You must be logged in to post a comment.
