14 More Answers for your Burning Questions about biofuels, renewable chemicals, the new agriculture, and biobased products

December 24, 2015 |

BD-TS-122515-cover-smAt ABLC and other conferences this year, you’ve been asking, and the experts have been answering. Here are 17 of the most popular questions that get asked. 

Policy and messaging

Q. How have the US elections and the regulatory situation in the US impacted development of biofuels for other countries, particularly Latin America?

A. Not much impact from the 2014 US elections, so far — too soon to tell. There’s far more impact from the EPA’s proposals for volumes under the Renewable Fuel Standard. Generally, cellulosic ethanol proponents are aghast because they believe that investor interest will dry up in cellulosic if they perceive that ultimately alcohol fuels will be capped at or near a 10% limit, setting up a catastrophic competition between conventional and cellulosic fuels which, on cost, the cellulosic providers are likely to lose. They wanted an additive standard where corn ethanol was capped at around the 10 percent mark and then cellulosic fuels were mandated at higher levels — with rising RIN prices giving opportunities to companies to discount high-ethanol blends and thereby “break the blend wall”. The EPA< so far, doesn’t look like they are going for it.

Policy uncertainty in the US has certainly increased interest in developing projects outside the US earlier than some technologies expected.

Q. Does the corn ethanol industry really need the Renewable Fuel Standard to prosper?

A. To prosper, yes. To survive in some form, probably not, even in the short term, and certainly not in the long-term, according to CEOs like Green Plains Todd Becker.

Q. Are there other states and provinces, besides Iowa, working on renewable chemical production credits?

A. Minnesota just passed its landmark credit program. Iowa’s legislature didn’t pass its renewable chemical tax credit — more for procedural and tactical reasons than any lack of popularity of the provision, and Iowa Governor Terry Branstad told The Digest he expects the credit to pass in 2016.

R&D

Q. Given the common interests and goals in terms of policies, approach, etc, why are there so many different trade organizations? Why not combine under one umbrella?

A. It’s a question common to many industries. Diversification is usually driven by a perception that an incumbent is not able to devote the resources or focus for an emerging group of companies, such as renewable chemicals. And, sometimes there is a strong divergence of opinion on substantive policy goals — such as approach to the RFS, or targets for future ethanol blend levels. Right now, the organizations regularly work together on the areas or agreement and that provides depth of resources on big issues while allowing individual organizations perhaps to chase down issues such as TSCA reform where there is less urgency in the broader community. So the system works pretty well right now.

Q. Why does the media give so much visibility to anti-biofuels stories such as indirect land use change?

A. In media, “if it bleeds, it leads”. Controversy, and upending “received wisdom” is common and popular. It’s also true that on subjects such as indirect land-use change, anti-biofuels storylines are getting published in (and then promoted by) peer-reviewed and prestigious publications such as Science — so the question sometimes should be directed to the peer-reviewers rather than the media.

Stories that question the need for mandates are often popular because, in general, the public is suspicious of mandates; look at the long controversy over adding fluoride to the water supply. Third, the public is pretty unfamiliar with agriculture these days, and a number of silly stories get legs in the same way and for the same reasons that “Ancient Aliens” is a big hit series.

Finally, the gold-rush deployment speed of first-gen technologies created expectations that clearly second-gen deployment speed has failed to live up to. Apple had problems in the 1990s when the go-go speed of its early years gave way to a creaky development pace, only solved when it returned to light speed in the early 2000s.

Feedstock

Q. What is the most challenging task in setting up a corn stover logistic network?

A. Getting grower buy-in. There are pioneers and early adopters, for sure, but key to developing a successful biomass strategy is getting feedstock as close to the plant as possible, so that the costs can be kept low. That means getting 30% or more of the feedstocks within 30 miles, and that means patiently working through the numbers, timing, and process, not only with the “believers” but with the “skeptics” as well.

Q. Corn stover and switchgrass are most often mentioned by companies aiming for cellulosic ethanol production. What are the top alternatives? What about, for example, biomass from cassava?

A. Feedstock comes down to plant location, cost and technology readiness in most cases. DuPont, for example, focused on corn stover in Iowa not because they can’t work with other feedstocks but because stover is abundant and through Pioneer Hi-Bred they have established deep grower relationships. In the future, projects will focus on other feedstocks — such as in Brazil where bagasse is the feedstock of choice for GranBio and Raizen. Beta Renewables is using arundo in North Carolina, and biomass sorghum is getting traction in the US and Brazil. Cassava is a key crop in Africa — those residues will be important for projects developed there.

Production technologies

Q. When will cellulosic ethanol expand to Asia — India, China or elsewhere?

A. DuPont landed one just recently. Expect more announcements shortly. One hurdle is the aggregation of feedstock within the smaller-farm system in place in Asia. But the bigger question is simply the technical viability of the projects — as log as cellulosic technologies remain in elongated commissioning periods, business development prospects will be limited.

Q. What was the cost for Abengoa’s Hugoton cellulosic ethanol plant?

A. Public reports have focused on an overall project investment of $500 million, but that may include the costs of Abengoa’s entire commitment to date, including pilot, demonstration and R&D costs, $97M in public support through a DOE cost-sharing grant and a $132.4M loan guarantee.

Q. Did KiOR underestimate something in its financial strategy? How could Khosla have avoided this loss, apart from not investing in the technology at all?

A. Our understanding is that KiOR had developed a technical solution to problems seen in its first commercial, but lacked the capital to go forward. Some of the capital problems may revert back to a  falling stock price, which made it expensive to raise equity in the public market. Whether the IPO was a good idea or not goes back to decisions about whether there was capital available to deploy the technology without going public – impossible to rewind history on that one. Opinions differ. We expect to see a second chapter with the KiOR technology.

Q. Does incremental cellulosic ethanol produced have to be segregated from non-cellulosic in the case of bolt-on technologies  — or can there be a paper allocation of the mixed ethanol.

A. Paper.

Downstream: products and markets

Q. Are consumers or other buyers aware of the BioPreferred label? Is there any empirical evidence that consumers really would like to pay more for biobased products?

A. Not yet in a big way, and no. Having said that, it all comes down to marketing. People aren’t aware of anything unless you promote, promote, promote. And, marketers have to learn to sell on performance benefits, rather than sustainability, which is thought of as a “reason not to buy” rather than “a reason to pay more”, so green affects market share more than price.

Q. What are the best suggestions for easing the blend wall. Or, is the expectation that drop-in fuels will eliminate concern about blending limits?

A. What we have is an E10 saturation point. Whether that represents a blend wall depend on your view about the use of E15 and E85. The most important “blend wall” strategies, aside from getting more E15 acceptance and E85 pumps are: more flex-fuel vehicles (whether they use E15, E30 or E85), more isobutanol plant conversions (that shift the blend wall way out), more drop-in fuels, more aviation fuels that can be used for RFS compliance and blend at 50% or higher ratios, and more biodiesel (biodiesel is well short of a saturation point and more vehicles are being manufactured to support B20-B99 every day).

Q. Most automotive OEMs recognize there is a much more optimized way to use ethanol in a mix with petroleum or other advanced biofuel components — studies have shown an optimal blend around 25-30% enables the development of higher-performance and more efficient internal combustion engines?

A. CAFE standards are a two-edged sword. The bad news, they are expected to reduce the US market for gasoline and therefore the blending pool for renewable fuels. The good news, reaching the targets will require innovation in engine efficiency that may well include more use of ethanol. Simply stated, higher octane levels allow for higher engine compression ratios, and that leads to more engine efficiency. E30 ethanol levels have been mentioned as a point where you get the best trade-off of engine efficiency vs the cost and range associated with ethanol as a fuel molecule.

 

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