There was a strong sense at the 2013 BIO World Congress on Industrial Biotechnology, held in Montreal this past June, that the future of biofuels is looking bright. Stephen Gatto, then CEO of Myriant, told attendees, “The era of…
There was a strong sense at the 2013 BIO World Congress on Industrial Biotechnology, held in Montreal this past June, that the future of biofuels is looking bright. Stephen Gatto, then CEO of Myriant, told attendees, “The era of commercially viable renewable fuels, chemicals and energy is here now.” Jim Lane, editor of Biofuels Digest, went further, suggesting that biofuels and other renewable energy sources would be an absolute necessity in the future; at current usage, he said, by 2050, we’ll need five times the energy that we use today. Steve Hartig, general manager of POET-DSM Advanced Biofuels, further said that there is only 50-100 years left of fossil-fuel economy.
Apparently the oil industry has taken note as well. Jean-Michel Gauthier, a petroleum industry analyst, comments that research spending by petroleum companies into alternative fuel and energy sources is at an unprecedented level.
But in the shorter term, where does the biofuel industry stand in Canada and in North America?
A key concern with biofuels has been the food vs. fuel issue, where first generation ethanol made from corn competed directly with food crops and arable land use. Second generation, or advanced biofuels, made from non-food sources of cellulose largely circumvent these concerns. Advanced biofuels are seeing a rise in popularity, with several North American facilities beginning commercial operation this year. Despite increasing presence and some policy support, it remains to be seen whether or not North American second generation biofuels can compete economically with global sources, or even with first generation corn-based ethanol. This is especially pertinent to advanced biofuels made partially or wholly from woody biomass.
Renewable fuels policies provide a boost
Both Canada and the U.S. have energy policies that support the biofuel industry. The Canadian government has the Renewable Fuels Regulations, which requires that all fuel produced in, or imported to, Canada contain a certain percentage of renewable fuel. The U.S. government has the Renewable Fuel Standard (RFS), which requires that a certain volume of renewable fuels be blended into gasoline. Jack Saddler, professor of forest products biotechnology/bioenergy at UBC, noted that in the current hydrocarbon market, it would be tough for biofuels to compete with petrochemicals without “initiator” policies like the RFS and Canada’s Renewable Fuel Regulations.
Recently, however, both policies have been subject to potential amendments and revisions that could weaken the biofuel industry in each country. An early draft of the 2014 RFS has biofuel requirement numbers cut by significant amounts. A proposed amendment to the Canadian policy suggests lowering the percentage of renewable fuel required for heating fuels, which constitute a substantial portion of the market.
Nevertheless, U.S. policy does support the industry. Dr. Robert Graham, CEO of Ensyn, stated that the RFS program is critical in promoting growth and development in the industry. He noted that Canadian policy is less effective, and that the industry in Canada and in general would benefit from a Canadian policy aligned to that of the U.S. Ensyn’s primary product, Renewable Fuel Oil™ (RFO™), does not require RFS or similar incentives to be profitable, but regulatory incentives like RFS create demand, drive innovation, and help level the playing field, according to Graham. Jamie Stephen, managing director TorchLight Bioresources, cautions that long-term business sustainability should not be based entirely on policy incentives due to the uncertainty of regulations.
It’s hard to beat ethanol
The nature of the ethanol commodity market makes competition against first-generation ethanol difficult. Only a handful of North American companies have reached, or will reach, commercial levels of production of second-generation ethanol from woody biomass in the near future. According to the Advanced Ethanol Council, a group that promotes advanced ethanol fuels and technologies, these are: BlueFire Renewables, Mascoma, Zeachem, and INEOS Bio. BlueFire and Mascoma follow a traditional enzyme fermentation route to ethanol, Zeachem uses a proprietary combination of fermentation and gasification, while INEOS Bio gasifies biomass and ferments the resulting syngas. Another company, Kior, uses woody biomass, but produces cellulosic gasoline and diesel, not ethanol, using a system similar to fluid catalytic cracking (FCC).
According to Jamie Stephen, the production cost of cellulosic ethanol produced from woody feedstocks can be two-and-a-half to three times higher than first-generation ethanol. This is related to capital costs, feedstock costs, feedstock recalcitrance, inter-tree variability, and feedstock shipping distances in Canada, among other things. In the Canadian context, companies would have to achieve economies-of-scale, and count on policy support for domestic production to compete with lower-cost imports and first generation ethanol. These issues affect pathways dependent on sugar fermentation and the production of ethanol; a thermochemical pathway such as Ensyn’s, producing a cellulosic fuel, avoids some of these problems.
Ensyn’s RFO™ can be used directly as heating fuel or for power generation, and can also be processed into a variety of other products, including “drop-in” transportation fuels, which are economically competitive with petroleum-based products. With strong partnerships in the oil and gas industry, Ensyn sees conversion to liquid fuels as the best option in the biomass-energy space. One of Ensyn’s key initiatives is an innovative process in which Ensyn’s RFO™ is converted to undifferentiated transportation fuels (gasoline, diesel) by feeding RFO™ into commercial oil refineries, leveraging on existing refinery infrastructure. Graham says this process would convert biomass to drop-in transportation fuels in a cost effective manner, and avoids the blending challenges associated with ethanol. Liquid fuels, for Graham, have great advantages over solids and gas fuels, and can take advantage of the infrastructure already in place, both in terms of transportation to market, existing refineries, and vehicles that run on them.
From biofuels will come biochemicals
Jamie Stephen raises the issue of regional competition for forest feedstocks as a concern for biofuel project developers. Once the biofuel infrastructure and production is in place, however, Saddler suggests that, in the same way the chemical industry evolved out of the oil sector, the forest products-based biorefinery will evolve out of the bioenergy/biofuels sector. Like the petrochemical industry – where chemicals, plastics and polymers are worth more than energy and fuels – the forest-based biorefinery will likely find that a large part of its value will come from a smaller percentage of the products, such as biomaterials and biochemicals. The consensus opinion is that the future of forest biorefining overall is certainly in these value-added co-products, and biofuels are likely to be one of them.
Several North American producers are making progress on bio-based chemicals. Renmatix hopes to drive down the cost of producing sugars from woody biomass with a new process, and has recently partnered with the Finnish pulp and paper company UPM. GEVO now produces commercial levels of isobutanol, which can be a fuel additive and is a component of jet fuel. Myriant and BioAmber also focus on the chemical industry, producing succinic acid, and not biofuels. Neither currently use woody biomass.
These issues all bring to mind the forest products industry’s recent discussions of how best to integrate biorefi
neries into the existing spectrum of forest products. It is likely that the various bioenergy options, such as combustion, combined heat and power (CHP), gasification and pyrolysis, will first be integrated and used within mills. Witness the Nexterra gasifiers used by Kruger Products and Tolko in British Columbia. Pyrolysis companies such as Ensyn claim that their processes are well suited for integration into current wood processing sites while using low value or “waste fiber” streams without competing for primary fiber use.
Aviation fuels show promise for woody biomass. Speaking at BIO, Geoffrey Tauvette, director of fuel and environment at WestJet, notes that his company has reached the limit of current technology to achieve reductions in greenhouse gas (GHG) emissions. “Biofuels are the option that allows us to continue to grow,” he says. For airlines, biofuels reduce reliance on fossil fuels and may reduce price volatility. Tauvette claims that Canada has the tools to succeed – biomass, research and university network, and proximity to markets of U.S and E.U. – but that the aviation industry needs to communicate with government to get their help.
In addition to use in biofuels, woody biomass could play an increased role in the overall energy industry by increasing electricity production. Ensyn has a strategic partnership with a global leader in diesel engine technology and an engine is being commercialized that can run on Ensyn’s RFO to produce electricity. Turboden produces CHP plants that use the organic Rankine cycle with biomass, woody or otherwise, as a fuel source, burned directly. GE Jenbacher gensets can generate electricity from syngas produced by the gasification of woody biomass. Pulp mills in Canada already produce green energy for sale back to the grid (albeit with steam turbines), a low risk strategy, according to Stephen.
Fighting fossil fuels
The likely low price of fossil fuels due to fracking, shale gas, oil sands extraction, etc., will all make the development of biofuels and the biorefinery concept a difficult challenge for the forest products sector. Policy changes, volatile fossil fuel prices, the commodity pricing of ethanol, and feedstock issues are all key variables. Although UBC’s Saddler agrees that the outlook is not as optimistic as some technology providers might like, he thinks the need for more environmentally acceptable and sustainable biorefinery-derived products will ensure the long term success of biofuels. The development of strategic partnerships between the chemical or oil companies that know the markets and the forest-based companies who know how to sustainably grow, collect and process the feedstock would appear to be a key strategy for the evolving forest-based biorefinery industry.
As predicted by reputable bodies such as the International Energy Agency (IEA), biofuels and bioenergy will play an increasing role in the world’s energy mix, as carbon emissions and their effects on climate change become increasingly apparent. The IEA and the U.S. Dept. of Energy predict that second-generation ethanol and cellulosic fuels will continue to increase in the market. Advanced biofuels and the range of products that can be derived from a biorefinery approach to wood/forest residue will continue to be an attractive opportunity for the Canadian forest product industry, making good use of its advantages of access to fiber, research, industrial knowledge and existing infrastructure.PPC
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