A low-cost, low-risk path to meeting US biofuels targets

February 1, 2012 |

Freaking out over USDA estimates that 400 new biorefineries are needed to meet RFS goals, by 2022?

Ah, grasshopper – the costs and construction needs are far from that dire. It’s all a matter of utilizing the existing fleet and known technologies.

Nine years from now, in early 2022, the US Renewable Fuel Standard will have reached its intended target, 36 billion gallons of biofuel blended into the US domestic auto and truck fuel supply.

Four years after the passage of the legislation, and a year after the Standard took effect following the EPA’s rule-making efforts, a scenario is beginning to become clear as to how that standard can be met.

The challenges?

Well, there have been three grand ones.

First, the development of economically feasible technologies. Second, the financing and construction of new capacity, including any bolt-ons, restarts or retrofits of existing capacity. Third, the distribution of the fuel, whether through existing blending waivers (e.g. E10 ethanol or B10 biodiesel), expanded waivers (e.g. E15 ethanol), higher blends through flex-fuel car manufacturing (e.g. E30, E85), or drop-in fuels.

Work is underway on all three fronts – all have proven supremely difficult.

36 billion gallons, the easier way

Now, there’s no requirement of law of economics that mandates the scenario that we will present below. What it does represent is, we believe, the lowest-cost, lowest-risk path to meeting the RFS based on what we have learned to date regarding the three Grand Challenges.

1. 12 billion gallons of corn-starch based biobutanol.

Given that we already have some 14 billion gallons of installed corn ethanol capacity in the US, this ranks as “not much of a surprise”, given that the RFS limits corn starch based fuels to the 15B cap.

But the RFS does not mandate ethanol. We believe that the fleet can convert to biobutanol by 2022. They would do so, to produce higher value molecules, and working around the E10 “blend wall” which limits the US to around 13.5 billion gallons of ethanol via blending at the refineries.

Isobutanol sells for around $1400 per tonne, n-butanol for around $1500 per tonne, compared to corn ethanol, which sells at around $700 per tonne.

Overall, this capacity has an RFS value of 15 billion gallons of ethanol-equivalent fuel (biobutanol, because of its higher energy density, counts as 1.3 gallons of ethanol equivalent fuel for RFS purposes) – and so will thereby max out the corn portion of the RFS.

2. 3 billion gallons of agricultural residue-based biobutanol, using the existing corn ethanol fleet.

Why 3 billion? POET tells us that you can add about 25 percent to existing corn ethanol capacity by having farmers from the same geography bring in their baled cobs and corn stover, while leaving enough biomass on the field for soil quality purposes.

Now, because this is biobutanol, it counts for the equivalent of 3.9 billion gallons of ethanol-equivalent under the RFS.

3. 6 billion gallons of algal-based biofuels or solar fuels, utilizing the existing corn ethanol fleet.

Why algae, or solar fuels (such as Joule Unlimited proposes to make)? Well, with 5 billion bushels of corn, you have around 90 million pounds of concentrated, clean carbon dioxide to feed to your organisms. That’s enough to make more than 6 billion gallons of fuel – and why vent it, or sell it to Coca-Cola as a low-cost ingredient?

Now, it may sound completely exotic to produce algae in the upper Midwest where a lot of ethanol capacity resides. But BioProcess Algae has its groundbreaking today, for a algal-based fuel system that does just that – uses the CO2 (and process heat) from the Green Plains corn ethanol plant in Shenandoah, Iowa.

This has the equivalent of up to 10.2 billion gallons under the RFS.

4. 2 billion gallons of biodiesel, using existing US capacity.

How simple is this – there is already 2 billion gallons of biodiesel capacity available in the US, according to best industry estimates. You just restart all the capacity that was built at some time.

This has the equivalent of 3 billion RFS gallons.

Where are we, using the existing fleet, bolt-ons and retrofits? We’ve arrived at 32.1 billion gallons of RFS-qualifying capacity, without building a single greenfield plant. It’s all come within existing Bu16 and E10 gasoline blending waivers.

From here, we can import sugarcane biobutanol, or build new cellulosic biobutanol or drop-in fuel capacity. Let’s look at the non-import scenario.

5. 3 billion gallons of cellulosic biobutanol, utilizing new capacity, or 2.3 billions gallons of renewable diesel.

Now, we have around 200 million gallons of renewable diesel capacity and about 100 million gallons of cellulosic biofuels currently in construction, or open. Planned capacity by 2015 is more than 1 billion gallons between the existing drop-in and ethanol projects. That counts for around 1.5 billion RFS gallons.

So, we need some more. Around 1.8 billion gallons of cellulosic biobutanol, or 1.4 billion gallons of renewable diesel. Figure around $12 per gallon of capacity, and 30 to 45 new biorefineries, costing an additional $19.2 billion.

The feedstock? Well, the US generated 150 million tons of biofuels-ready (i.e. not plastics, glass etc) municipal solid waste in 2009. At 100 gallons per ton, you have way more than you need, right there.

This has the equivalent of 3.9 billion RFS gallons.

Total it up: 36 billion gallons, no E15, no blender pumps, no 400 new refineries, no kidding

Total it up, you have 36 billion gallons. The biobutanol portion is 21.6 billion gallons, or 16 percent of the US gasoline supply – fits within the biobutanol waiver.

There is no need for a single blender pump, E15, or a prayerful hope that E85 would for some reason catch fire with the public.

New construction, beyond existing construction? Less than 2 billion unplanned gallons between 2016 and 2022, or around 300 million gallons per year. Which is to say, a slow-down from the current build-out rate for greenfield capacity.

The rest is bolt-on capacity, retrofits and upgrades.

You collect around 20 million tons of MSW, and take in the stover and cobs from existing planting.

It’s not the only path to the RFS, but it is certainly not all that hard to imagine how all of the above could come to pass. All the technologies above are already past pilot and heading for demonstration-at-scale, or commercialization. The money for new construction? Well, it’s less than was expended in the build-out of the original corn ethanol fleet.

The money for bolt-ons and retrofits – generally, we understand that biobutanol conversions provide payback for ethanol producers within 3 years, and can be financed against their existing balance sheet.

Print Friendly, PDF & Email

Tags: ,

Category: News Analysis, Top Stories

Thank you for visting the Digest.