ZeaChem and the Renewable Fuel Standard

In Colorado, ZeaChem reported they have begun core facility operations at their Boardman, Oregon biorefinery.

The core will initially produce 250,000 gallons of the intermediate chemicals acetic acid and ethyl acetate, which are high-value products for applications including paints, lacquers and solvents. ZeaChem will sell bio-based chemicals to commercial and industrial customers seeking renewable and cost-competitive alternatives to petroleum-sourced chemicals.

“We came in on schedule and significantly under budget,” reflected ZeaChem CEO Jim Imbler, speaking with the Digest. “We had a guaranteed maximum price, but in this case we received a rebate check. One of our long-term VCs said to me ‘I’ve seen a lot of things, but I have never seen a check come back.’ It came down, we think, to the choice we made to use known processes, known vendors.”

Next step? The company will be constructed by the DOE-backed process “bookends” that will add the conversion of ethyl acetate into ethanol, which is backed in part by a $25 million DOE-integrated biorefinery grant. The company also is expected to undertake thereafter the addition of its alcohol-to-jet process, which will produce renewable jet fuel from alcohol, as well as adding a C3 platform that will produce higher-value 3-carbon chemicals such as propylene.

The project, which uses high-density hybrid poplar trees from Greenwood Reources, is based on a long-term binding term sheet signed with GreenWood Tree Farm Fund last June. ZeaChem will integrate feedstock from a portion of GTFF’s residual fiber with local agricultural residue suppliers to achieve feedstock costs 50% less compared to Brazilian sugar cane and 80% less, compared to corn based processes.

The Greenwood project, in part supported by the USDA, will provide 7,000 acres of coppice trees for the project.

ZeaChem will construct its first commercial plant, with a 25 million gallon capacity, at the same location, adjacent to the Columbia River in Boardman, which is a logistics and transportation hub for the Columbia River system through the Port of Morrow.

The news of ZeaChem’s start-up comes at a time of significant blow-back for the cellulosic biofuels movement and sector, after the EPA waived down the scheduled 500 million gallon mandate for cellulosic ethanol, first proposed back in 2007 when the current Renewable Fuel Standard was developed, down to 10.45 million gallons for 2012.

The protest over cellulosic biofuels mandates: National Petrochemicals & Refiners Association

Even the minimal mandate attracted howls of protest from the National Petrochemicals & Refiners Association president Charles Drevna, who said, “Once again, EPA has acted unwisely to make a bad law worse with regulations not based on reality and science. Once again, refiners are being ordered to use a substance that no one is producing in commercial quantities — cellulosic ethanol — and are being required to pay millions of dollars for failing to use this non-existent substance. This makes no sense.”

“This new rule is another reminder that the Renewable Fuel Standard needs to be modified to prevent harm to American consumers and the American economy. Government mandates like EPA’s new regulations calling for enormous increases in the annual production of advanced biofuels in the United States are unrealistic and impractical, and not in the best interest of American consumers."

“Instead of imposing an unreasonable biofuels mandate, which would raise energy costs and impact fuel supplies, government should allow consumer choice and the free market to determine the mix of energy sources to best meet our nation’s needs.”

“The standard is not achievable or sustainable economically or environmentally. The American people shouldn’t be required to spend billions of their hard-earned tax dollars to prop up renewable fuels that are plagued with problems, unpopular with consumers, and unable to survive on their own in the free market.”

The Renewable Fuel Standard, revisited

The Renewable Fuel Standard has two main components — the corn starch ethanol pool and the advanced biofuels pool.

A qualifying advanced biofuel meets a 50 percent reduction in greenhouse gas emissions, is produced at an EPA-approved facility, and is made from a qualifying biomass.

A number of fuels qualify here. Biobutanol, for example. Brazilian sugarcane ethanol, or biodiesel — in addition to cellulosic biofuels. In this way, Congress created a number of ways to meet a mandate, should one pathway prove more technologically or economically difficult than originally expected.

Within the advanced pool there are two sub-categories, they can be waived at any time by the EPA. Those are biomass-based diesel and cellulosic biofuels. Those are highly targeted pools designed to help foster a market for highly-desirable molecules.

If cellulosic biofuels come up short, however, that sub-pool is simply waived down and obligated parties can buy and blend other qualifying fuels.

In this way, Congress signaled what it wanted while creating a mechanism for flexibility should the future not pan out as planned.

The ethanol-equivalent adjustment

As most know, biodiesel, renewable diesel, renewable gasoline, biobutanol and other fuels contain more energy than ethanol, and generally the yields when produced from biomass are, accordingly, lower. So, these are rated in “ethanol equivalent gallons.” For the purposes of counting volumes towards the mandate, one gallon of biobutanol is rated as 1.3 gallons of ethanol, a gallon of biodiesel is rated at 1.5, and a gallon so renewable diesel at 1.7.

That’s important to keep in mind. For example, the 36 billion gallon mandate for 2022, which includes 15 million gallons of corn ethanol and 21 billion gallons of advanced biofuels, could be met with as little as 12 billion gallons of renewable diesel (in addition to the corn ethanol pool).