Is Meeting the Renewable Fuels Standards Just a Pipedream?

October 20, 2010 |

By Biofuels Digest special correspondent Tim Sklar

Background

Having attended a number of Bioenergy conferences over the last four years, I have become very discouraged as to the trajectory bioenergy project development seems to be on. In the most recent conferences I have attended, it has been made abundantly clear that producing advanced biofuels in the quantities mandated by the Renewable Fuel Standards (RFS) by Year 2022 is unlikely.  Many of these conferences have provided explanations of what the major impediments to bioenergy development are, but not enough time is being spent in adequately addressing specific issues that are impeding bioenergy project development and there are very few meaningful ideas being proffered for overcoming them. If good ideas are not advanced soon, not only will meeting RFS be unlikely, such standards will revert to being just a pipedream.

Included in this commentary are illustrative examples of some of the ideas that should be worth exploring.  They are included in the hope that organizers of future bioenergy conferences will make sure that ideas on how to increase production of advanced biofuels are presented. It is also hoped that by vetting such ideas, it will lead to significant increases in bioenergy development activity and significant increases in production of advanced biofuels.

The illustrative examples that are included are summaries of ideas that have been presented in two articles recently published in The Biofuels Digest. The first summary provides a rationale for implementing development of a number of torrefaction facilities in order to produce significant quantities of torrefied bio-materials for use as a clean coal substitute in a large number of this countries coal fired utilities. The second summary provides ideas for providing incentives to stimulate large-scale private sector investment in torrefaction facilities.

Not covered in this commentary are the host of ideas that address how this country should best accelerated development of the hundreds of new bio-refineries that will be needed to produce RFS mandated quantities of advanced transportation biofuels. But some of the ideas that are presented in the illustrative examples should be relevant to development of these types of projects as well.

Bioenergy Conference Shortcomings

The shortcomings of many bioenergy conferences can often be attributed to the selection of topics that are normally covered and the lack of practical ideas that are put forward. In one such recent conference, four topics were addresses, namely:

  1. How to expand biofuels markets;
  2. Steps being taken by several power utilities to use biomass in the generation of power;
  3. How to provide more biomass that will be needed to meet RFS for advanced biofuels; and
  4. Technical issues facing bio-mass-to-energy projects.

What Was and Was Not Discussed

The panel that discussed biofuels market expansion made it clear that we are well behind the goals set by RFS and the prospects for generating mandated quantities by 2022 and previously projections were overstated. But none on this panel addressed any policy changes that should be implemented improve the situation.

The panelists from four utilities each described the initiatives their companies had and are undertaking to use biomass in the generation of power. These presentations were the most discouraging, as it proved what every one who is active in biofuels and bioenergy suspect. The utilities are at best, reluctant partners in embracing bioenergy as a significant contributor to power they generate. Although not articulated by any of the speakers, the reasons for this tepid attitude toward increasing biofuels use are obvious. There are no market incentives to embrace the use of biomass and no meaningful government mandates that this be done. More on this later.

The panel of agricultural research experts reported on progress being made in increasing bio-feedstock crop yields and potentials for increasing biomass production. But all of these experts appeared unconcerned that very little bio-feedstock is now being planted. Worse yet, they offered no ideas on how to encourage more widespread production of biomass.

Speakers from firms specializing bio-fuels technology and bioenergy process engineering raised some technical issues facing bio-mass-to-energy projects, while offering little insight as to which technologies are closest to being scaled up to commercially viable levels and what biofuels can now be produced at acceptable costs.

Conferences such as this one, are informative as to what is going on, but an opportunity was missed to inform attendees as to changes that could and should be made to foster substantial biofuels development.

Why the trajectory of bioenergy project development is so flat.

There is a consensus among biofuels development community that one of the easier biofuels pathways that could be developed, is one that makes use of torrefied biomaterials as a coal substitute in coal fired boilers. But comments made by the utility industry representatives at the recent conference went a long way to explain why so little torrefied biomaterials are being used by utilities in their coal-fired boilers.

The speakers from these utilities explained that their biofuels initiatives have been limited to test burns of various forms of biomass as a supplement to fossil fuels such as coal. They have been running trials with bio-crop materials, such a switch grass, miscanthus, corn stalks and corn stover, forest residue, wood chips, wood pellets as well as limited quantities of cellulosic MSW. They explained that each of these bio-fuels has issues not only with respect to their BTU values and cost per BTU.

Utilities also have to evaluate in test-burns, VOCs, ash produced and furnace contamination, for each bio-fuel being considered. All of the speakers contend that each biofuel under consideration has also to be assessed as to supply continuity, and the difficulty and cost associated with its gathering, transport, handling and storage.

These speakers also reported that their companies have been testing these materials at a limited number of plants and in most cases, the results they have obtained when using various bio-fuels have been marginal or inconclusive.

But when asked about using torrefied wood (TW) as a biofuel, one utility representative indicated that she agreed that extensive test-burns would not be necessary as it was her understanding that TW could be used as a substitute for coal, without any handling, storage, ash BTU value or VOC problems. She then explained that although utilities would be inclined to use TW as a clean coal substitute, they would not be willing to pay more for it than coal, on a BTU equivalency basis, nor would they be inclined to invest in torrefaction facilities to produce TW for them.

The explanation that was given for tying biofuels costs to coal was quite simple. If a utility’s management decided to pay more for TW or produce it at a cost that may become higher than coal under certain market conditions, they would in all likelihood not be able to pass through such added costs to their ratepayers, as most utility managers answer to public utility commissions and these commissions either delay approving rate increases or deny rate increases for long periods of time.

If this assertion is true, it is a real impediment and would have tragic consequences in fostering the widespread use of biofuels by utilities. The tragedy is that the utilities are best positioned to use biomass on a large scale and use of TW stands the best chance for having them reduce their short-term dependence on coal.

Ideas Worth Further Consideration

Idea #1: Use TW as much as possible in Generation of Electric Power

In an article titled “Torrefied Wood A Bio-Energy Option That Is Ready to Go” that appeared in January 2010 in The Biofuels Digest, a case was made for pursuing projects that could use torrefied wood to generate bioenergy on a priority basis. This article presented the following conclusions:

  • When compared to cellulosic bio crops, harvested timber, saw mill wastes, construction lumber wastes and waste paper, forestry wastes are currently, the most readily available source of cellulosic biomass for production of 2nd generation biofuels on a continuous basis.
  • Forestry wastes are in sufficient supply in many regions of the US and if torrefaction plants are located in these regions, torrefied wood could be produced on a continuous basis at reasonable cost.
  • When processed into TW, forestry wastes and other woody biomass need not undergo separate treatment for its various components in order to obtain high yields.
  • Torrefaction is a proven technology that is on the cusp of being scaled up to commercially viable levels. And torrefaction is significantly less capital intensive than producing liquid fuels through bio refining and the costs of producing TW on a commercial scale is relatively low.
  • TW can be produced at prices that allow it to compete with coal and TW can be used in lieu of coal or in combination with coal in boiler and power applications.
  • The opportunities for marketing TW in the US are fast improving, as the demand for a clean green fuels is increasing, due in part on more stringent environmental regulation and in part on increasing prospects that fossil fuel users will ultimately have to pay carbon taxes.

Idea #2: Mandate The Use of TW in Coal Fired Boilers and Institute a Program to Equalize the Added Cost of Using Biofuels Among Power Generators

In another articles titled “An Old Idea for a New Industry” that appeared in The Biofuels Digest, June 9, 2010, ideas were presented for supporting biofuels prices without taxes or subsidies.  This article explained why price floors are a prerequisite for attracting private sector investment in TW facilities. It then suggested a way such floors could be provided without carbon taxes, or direct government subsidies.

In mid-September the ideas contained in this article were formerly presented to officials at the US DoE’s Loan Guarantee Program (LGP) and they were receptive to having these ideas further considered within the DoE. They admitted that DoE/LGP was having trouble approving loan guarantees on bioenergy and biofuels projects, as the market risk associated with the biofuel produced was often deemed to be too high. They confirmed our view that there was no way the US Congress was ready to pass legislation to provide price floor guarantees for producers of biofuels, and that there is no possibility of Congress enacting legislation to provide subsidies to protect TW against falling coal prices. They also agreed with us that the excise tax relief that has been given to blenders of ethanol and biodiesel is still not sufficient to reduce market risks to acceptable levels.

But they were receptive to having the DoE and the Congress consider mandating coal fired utilities to use a minimum proportion of biofuel in conjunction with coal or pay a subsidy to power plants that use at least this mandated percentage while incurring higher costs.

More Ideas Needed

What is missing is consensus in what government policy should be in providing both incentives and enforceable mandates to increase to use of all bio-fuels, not just TW. Without such incentives and mandates, it is contended that the meeting of the renewable fuel standards by Year 2022 will remain a pipedream, not a realistic achievable goal.

Category: Fuels

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