Bioenergy in 2016: Powered Up, Hoping to Run

Bioenergy refers to the many kinds of woody, cellulosic and organic hydrocarbons that may be used directly or manipulated into a fuel product. Forest lumber, for example, can be placed on a campfire or in a furnace or boiler, or it can be transformed into fuel pellets. Corn, switchgrass and other crops grown for energy can be distilled into ethanol. Organic wastes placed in a biodigester become methane gas. As an energy source, the bioenergy sector includes a diverse mix of materials that can become an equally diverse set of energy products – liquids, solids and gases. (See end of story.)

Taking Stock of 2015

As 2015 closed, bioenergy held some strong positions. The Paris climate negotiations focused the world on moving away from fossil fuels. The European Commission was preparing legislative initiatives for member-states’ energy and climate plans, to be presented early in 2016. The U.S. EPA finalized its Clean Power Plan and, critically, updated the Renewable Fuel Standards.

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OWS anaerobic digestion biogas plant in Brecht, Belgum. Credit: American Biogas Council.

Challenges persisted, too, of course. Record supplies of fossil fuels kept prices low — a hard reality for bioenergy. In the U.S., some high-profile projects, such as building refineries for renewable jet fuels, were delayed. In the EU, the “accounting” framework to document and certify CO2 reductions is incomplete. There are opportunities for bioenergy to thrive in 2016 but advances and expansion still face head-winds.

In the U.S., it would be hard to overstate the importance of US EPA’s renewable fuel standards (RFS), updated November 30. RFS policy impacts a broad range of bioenergy projects. Here’s a closer look at some top issues in 2016

Biogas: Proven Technology, Ready to Move

Companies in the biogas sector were closely tracking the RFS, and overall were in support of EPA’s final fuel volume numbers. This sector is ready to deliver more, however, said Patrick Serfass, Executive Director of the American Biogas Council. To move to that next level, though, industries want still higher RFS volumes.

Biogas qualifies as an “advanced cellulosic” fuel. For 2016, the RFS requires 230 million gallons of that fuel category, a big increase over 2014 (33 million gallons) and 2015 (123 million gallons).

Serfass said that at least 500 million gallons of transport fuel could be produced in 2016 if EPA does two things:

1.   Approves projects under the biogas-electricity-electric vehicle pathway, i.e., using biogas as the fuel to generate electricity which is then directed to power a vehicle charging station; and,

2.   Recognizes a higher “equivalence value” for biogas. Equivalence value is an energy factor set in comparison to ethanol, on which the RFS credits are based. Biogas has greater energy “density” than ethanol. A car will travel 4.3 miles farther down the road on a gallon of biogas than the equivalent quantity of ethanol.

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Grasses such as these can be harvested for bioenergy. Credit: CenUSA Bioenergy.

With EPA’s approval, bioenergy projects can generate Renewable Identification Numbers (RINs). RINs document and track actual fuel production and as such are what determines the commercial value for bioenergy projects. Fuel companies must use the RIN system to confirm their purchase of required volumes of biofuel for blending into specific products, e.g. gasoline. Therefore, RIN-generating projects draw the companies who need the alternate fuels. RINs get the companies in the game, there’s no other way around it.

On other fronts in 2016, Serfass said that five states – VT, MA, CT, RI and CA – have plans for organic recycling and he expects state programs to expand. Recycling mandates are critical. A biogas project can be left high and dry if school, hospital or other institutional administrators experiment with food waste recycling but then decide otherwise because traditional disposal, say, to a landfill, becomes cheaper. Mandatory programs establish a predictable and constant supply of material for the biogas facility, a critical factor that helps bioenergy companies create long-term business plans.

Overall there is big potential for biogas in 2016 because the technology is proven. Expansion will depend on new, but well-defined, approaches within existing public policy.

Biomass: Decisions Needed on CO2 balance/benefits.

Biomass holds an interesting position in the bioenergy portfolio. Wood, after all, is probably the oldest fuel, from heating caves to making charcoal for early blast furnaces. In 2016, wood, wood products and agricultural wastes will remain widely used in industrial boilers. The biomass industry generates 15 million megawatt-hours (MWh) of electricity annually according to the Biomass Power Association. Importantly, in December, a final Congressional tax deal included a two-year extension for the biomass energy Production Tax Credit (PTC).

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The Woodville Renewable Power Project is a 49.9-MW wood fueled biomass plant in Texas that began commercial operation in September 2014. Credit: Gemma Power Systems.

Will biomass break out as a go-to fuel in 2016? Not likely. Big new markets, particularly utility-scale electric generation, are not ready. But 2016 could see progress on an important policy front — clarifying how biomass is calculated and credited for CO2 emissions reductions.

Electric utilities are interested in using biomass for power because is has the advantage of providing baseload renewable energy generation, unlike solar and wind. Further, biomass is plentiful, particularly in some locations such as Maine and New Hampshire, as well as Florida, Oregon and Washington, where existing biomass plants already sell power to local electric grids.

However, utilities are waiting for EPA to conclude its CO2/biomass document: the “Framework for Assessing Biogenic Carbon Dioxide for Stationary Sources,” first proposed in 2011. Utilities, and other industrial users, need this document, particularly as states begin to implement the selected CO2 control policies mandated by the Clean Power Plan. CO2 emissions will be set, and enforced, within the CPP, hence the need for an agreed-upon accounting of biogenic emissions. Trying to settle this analysis is a global effort.

Steven Rose is a Senior Project Manager at Electric Power Research Institute (EPRI) who’s work focuses on the economics of land-use and bioenergy as it relates to domestic and international climate change policy. Rose, who was a conference participant in Paris, pointed out that biomass combustion combined with carbon storage and sequestration leads to the tantalizing possibility of negative CO2 production. Again, though, that depends on how energy and emission inputs and outputs are defined and limited.

Unfortunately, it’s not likely that EPA will conclude the framework this year. An updated draft was released in November 2014 and reviewed by EPA’s Clean Air Act Science Advisory Board but no official progress has been made since then.

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In 2014 Amyris partnered with Brazilian airline GOL to fly the industry’s first commercial flight with farnesane, a renewable jet fuel. Credit: Amyris

Bioenergy could advance on other fronts in 2016. Ben Bell-Walker is head of Technical Affairs for the U.S. based Biomass Thermal Energy Council (BTEC), a trade association that promotes biomass for heat and thermal energy applications. BTEC also views EPA’s framework document as critical. Further, it seeks progress on federal legislation such a tax credits for certain biomass projects. BTEC also said that various U.S. state proposals could advance in 2016. Some states, for example, have proposed allowing BTUs to generate thermal renewable energy credits similar to RECs for megawatts. Some New England states have passed legislation that mandates thermal RECs be used to meet a portion of the states Renewable Portfolio Standard.

Finally, BTEC is working with western states for better utilization of forestry waste, efforts that would complement new federal forestry bioenergy programs.

Overall, the biomass industry will be mostly status-quo in 2016. Nationally and internationally, in order for the the industry to scale-up, it needs further regulatory work among many agencies.

Biodiesel – Tough Competition from Fossil Giants

About 1.7 billion gallons of biodiesel were produced in 2014 in the U.S., according to the National Biodiesel Board (NBB). European plants produce about 6.1 million tonnes annually, according to the European Biodiesel Board.

American biodiesel companies had a rough 2015. European companies were tepid, recently struggling with issues about agricultural land used for fuel crops. In a regulatory sense, Europeans await the EU’s proposals for carbon reductions, documents expected in early 2016. Opportunities will get clearer then.

Joe Jobe is the President/CEO of the U.S. NBB. Jobe said that final 2015 numbers will likely show record volumes but terrible margins. Ultra Low Sulfur Diesel prices were very low. Producers were hurt by EPA’s long RFS delay. Tax policies worked against them: the $1-per-gallon tax credit lapsed four times in the last six years.

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The many uses of biomass. Credit Avello.

2016, however, could possibly be “one of the best years in our industry,” Jobe said. The RFS expands biomass-based diesel volumes to 1.9 billion gallons in 2016 and 2 billion gallons in 2017 and, encouragingly, EPA is already working on 2018 numbers. Jobe said if RFS and updated tax policies can work as intended they would drive “the expansion of cleaner burning, renewable fuels into the marketplace.”

State projects and leadership are important, Jobe said, particularly in California where biodiesel producers benefit “substantially” from grants generated by the state’s cap and trade program.

Finally, Jobe sees expanded markets: as volumes grow biodiesel will be in fuel blends for marine, railroad and non-road customers.

In conclusion, in 2016 the biofuel industry has a good chance for growth. Importantly, bio-diesel is a drop-in fuel. Tax and regulatory policies are familiar and don’t need to be re-built from the ground up.

Ethanol: Demand from Command

In the U.S. EPA’s final 2015 RFS numbers were a body-blow to the ethanol industry which depends on RFS numbers at a scale unlike any other biofuel producer: ethanol would provide 14.5 billion of the 18.1 billion gallons of renewable fuels. The 2016 volume was the same as 2015 — in other words the industry will not have a chance for growth. Ethanol, at current scale, does not have many other markets beyond the mandatory RFS market. If this market doesn’t expand by RFS fiat, producers have little recourse.

There are many reasons for ethanol’s shaky standing. Petroleum companies and ethanol producers struggle with the 10 percent “blend wall,” each exchanging charges that a higher fraction is or is not safe in vehicle engines and will or will not harm the overall economy. In addition some environmental groups charge that ethanol is too contradictory regarding air quality benefits — for CO2 and ozone. For its part, EPA wrote that the 2016 volume would still serve to draw product into the fuels market and serves as a predictable policy number for manufacturers.

Overall it appears that 2016 will be status quo for ethanol.

Jet Fuels: Waiting to Put More on the Runway

The aviation biofuel industry is still emerging and two big projects will be important to monitor in 2016. Red Rock Biofuels and Emerald Biofuels are DOE partner companies slated to start refinery construction in 2016. These biofuels are proven to work in aircraft and military/naval applications but significant production is still on the horizon.

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  • Biomass fuels – Wood, wood products and forest and agricultural wastes.
  • Biogas – Fuels similar to natural gas (methane).  Biogas may be deliberately generated, in biodigesters, for example, using waste food or manure.  Biogas is also a byproduct, sometimes unwanted, at sewerage facilities and landfills.
  • Biofuel liquids – Ethanol, biodiesel and aircraft and marine fuels.

Lead image: Woody biomass. Credit: U.S. Department of Agriculture.

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Tom can be reached through his website: www.regulatoryclarity.com .

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