Should the Renewable Fuel Standard be Scrapped, or Revised?

Speaking at the Platts Next Generation Biofuels conference, which opened in Chicago yesterday, Ellerbusch said, “It is generally expected that there will be a 45-50 percent increase in demand for transportation fuels in the next 20 years.”

“Nothing has changed,” she said, referring to the growing potential of a shortfall between global oil supply and demand, or the specter of rapidly escalating oil prices or proved reserve depletion rates. She commented that BP sees biofuels as one of the critical sources to fill this demand.

The Renewable Fuel Standard costs the government nothing, she noted, and added that “four years of RFS2 for cellulosic biofuels [in what was intended to be a 15-year mandate] is not enough.”

$2 billion in BP investment, in response to RFS passage

Ellerbusch said that, in response to the demand signals for biofuels such as the Renewable Fuel Standard, BP has committed $2 billion in its own capital to biofuels development and increased its headcount in biofuels from “from 20 people in London, 5 years ago, to 4,000 people working in biofuels today. “We are fully committed, at BP, to creating this industry.”

As signs that the BP strategy would be successful, and that the Renewable Fuel Standard had done its intended work, Ellerbusch cited BP’s objectives of $1 per gallon production cost and 60 percent reduction in greenhouse gas emissions, and profiles BP’s new 20,000 acre biofuels farm in Highland County, FL. The Highlands county facility will have a production capacity of 36 million gallons per year, when it reaches full production by 2014.

Turning her eye toward industry, Ellerbusch issued a challenge to the advanced biofuels industry: “The industry needs to come together and understand what’s in front of us and what we need to do about it. The industry is at a critical point in its development,” she said, where coordinated action was necessary to face the challenges in front of it.

“Delta Strike Force”

The theme of coordinated action and response to the industry’s critics was taken up in an address to Platt’s attendees by John McKenna, Managing Director, Hamilton Clark & Co. McKenna challenged the industry to come together and develop a volunteer-based “Delta Strike Force” that would “put together a learned response” to some of the flawed findings of the National Academy of Sciences’ recent report criticizing the viability of the Renewable Fuel Standard targets. McKenna said that the findings were the result of a lack of understanding of some of the real world experiences of Kior, Mascoma, POET and other companies.

USDA touts 9003 program success

Judith Canales, Administrator, Rural Development, U.S. Department of Agriculture, said that there was a need for ongoing government support for leading edge technology to support President Obama’s vision of “innovating our way to a clean and secure energy future.” As recent successes, she pointed to advanced biofuels projects such as Coskata, INEOS Bio and Sapphire Energy that had been partially funded through $300 million in loan guarantees issued under USDA’s section 9003 Loan Guarantee Program. Those section 9003-supported projects will provide up to 150 million gallons of advanced biofuels production, along with 20 megawatts of renewable electric power.

Other speakers on the first day of the Platts conference, which focused on a theme of “Developing and Financing Commercial-Scale Production,” highlighted recent advances in yields from biomass as well as cellulosic biofuels processing.

Rising biomass yield potential from new miscanthus, switchgrass

Don Panter, senior vice-president for BioEnergy seed at Mendel Biotechnologies, said that the company expected to achieve biomass yields of 10-16 tons per acre per year with its “Power Cane” seeds, and said that the company expected to have 400,000 acres under cultivation by 2016.

Overall, RFS targets would require the development of up to 160 million tons of biomass, said Spencer Swayze of Ceres, and said that yields of up to 25 tons per acre for advanced terrestrial crops could drive the cost of feedstock production to $10 per ton, and that at 20 tons per acre, the biomass targets could be met with 8 million acres of new cultivation.

POET’s system for cellulosic feedstock aggregation

Scott Wieshaar, Vice President of Commercial Development for POET, profiled the company’s Project Liberty in Emmetsburg, Iowa. He said that the company ultimately expected to access 1.5 tons of additional biomass per acre harvested by its network of 11,000 farmer investors, working from a radius of 35 miles around each of its 27 ethanol plants. He said that those levels preserved soil sustainability, and added that what they were asking farmers to do was to make a second pass with a combine.

Key to POET’s success — a just-in-time supply chain, that relied on the farmer to store biomass on site and bring to the refinery on a scheduled that maintained 2.5-3 weeks of material in inventory at the company’s 22-acre storage facility. Weishaar added that POET works in four year contract cycles with farmers, using staggered contracts to assure continuous delivery.

POET has indicated that it expects to add up to 25 million gallons in cellulosic ethanol capacity per 100 million gallons of conventional corn ethanol, or a total cellulosic capacity of 425 million gallons from its current fleet, The company has targeted an overall capacity of 3.5 billion gallons in conventional and cellulosic biofuels production.

Platts Next Generation Biofuels conference, Developing and Financing Commercial-Scale Production, will conclude today at the Intercontinental Hotel in Chicago.

Reporting by Bill Lundberg, special to the Digest.

This article was originally published on Biofuels Digest and was reprinted with permission.