Top 10 Scariest Challenges for the Biofuels Industry

They use various aliases — naysayers, pessimists, The Party of No, doom-and-gloom’ers, realists, skeptics, and so on. For almost every aspect of a biobased supply chain or technology, there’s someone available with 15 reasons why it can’t work.

Why feedstocks will never develop at sufficient yield, or why land will never be available and affordable; why processing technologies are doomed to fail, from front end processing to final-step fuel finishing; why policies are bound to fail, or why finance will never appear.

In recent months and years, focus has fallen on financing — or the lack thereof. But, generally, financing is a creature of risk, or perceived risk, and the cost of capital is a consequence of how solvable other risks are thought to be.

10. Indirect Land Use Change — ILUC

Briefly stated, indirect land use change is a theory that the very success of bioenergy causes land owners in distant lands to change their planting habits in ways that release sequestered carbon. For example, rising soybean prices would lead to rising soybean acreage in southern Brazil, which would drive cattle ranchers to convert forest land to pasture, causing forest owners to move into the Amazon where they would release carbon by cutting rainforest.

The danger in the theory is that it has proven impossible to construct real-world data sets, thus far, to track such a phenomenon — theorists have been generally relied on global equilibrium modeling that was not constructed with ILUC in mind. Meanwhile, ILUC has been enshrined as a penalty factor in biofuels in the EU, for the US Renewable Fuel Standard, and in California’s Low Carbon Fuel Standard.

Why a scary challenge? ILUC’s proponents have been generally able to steer the debate such that difficult-to-procure hard data us not required to enshrine ILUC into policy, but is required to remove it. “Guilty until proven innocent”, as some might term it.

Open to manipulation? Well, consider this. We reported that in Belgium, a leaked document circulating among the European Commission shows that proposed sustainability criteria for biomass would be much weaker than that for biofuels. The draft would not include ILUC accounting or accounting for loss of carbon resulting from the use of forests. GHG targets are set at 60 percent in the draft. The policy is expected for release this fall.


9. Policy Instability

“You have to have three things,” former Terrabon CEO Gary Luce told the Digest last year. “A, you have to be able to compete on price. B, you have to be able to attract commodity equity and debt. C, you have to have stability in the policy.”

Why does policy instability matter, and why is it a scary challenge? It’s the chicken and egg aspect. You can’t have stable policy without capital formation that delivers on policy goals. But you don’t get capital formation, in new technology sectors, without policy stability.

“Equity is not really the issue,” asserted Luce. “There is a lot of money on the sidelines available to work. We have got to build debt, it is really about debt formation. You need 40-50 percent debt on the early plants – and with debt it is all about the off-take contracts, and the protection from RFS2 sitting on top of those off take contracts. Later on, the debt component will be even higher as the technologies prove out, and the stability of RFS is confirmed.

“With debt investors, the question for them on RFS is real – “is this thing really going to go away, what is the time frame I can count on, to get the cash flows from this project to pay that debt down?”

“The market is going to clear on the equity side. But equity won’t go to the dance by itself.”

“The RFS2 debate, itself is now becoming a factor in creating instability. It doesn’t matter whether that is right or wrong. What matters is that the debate itself is creating a large set of uncertainties in the minds of investors. With the technologies that are out there, and the costs they have at scale, we know that the policy will be stable if the capital can be formed, because the sector will be powered by the difference it is making – the way it has transformed the cost and supply chain for fuel, and the way it has transformed the value of feedstocks.

As BIO’s Brent Erickson put it, “In addition to hurting consumers at the pump and harming the economy, the continued volatility in the oil markets undermines military readiness, putting our national security at risk…The technology being developed by [cellulosic and advanced biofuel] companies, in large part due to the regulatory and financial certainty provided by the RFS, is helping the U.S. economy by mitigating the impact high and volatile global oil prices have on all facets of the economy and reducing gas prices at the pump for American consumers.”


8. Runaway Feedstock Costs

It’s a common tale these days, as we reported last week in the Digest — used cooking oil biodiesel producer FL Biofuels has shut down due to rising feedstock costs and doesn’t have immediate plans to reopen. It was costing upwards of $3 per gallon to produce the biodiesel, without taking into account payroll and other overheads.

Why scary? Just a few years ago, used cooking oil was available at negative cost. You could collect as much as $25 per week, in the old days, to take waste cooking oil off a restaurant’s hands. Now, used oils are, as we see, priced north of 40 cents per pound. That’s more than soybean oil itself cost just six years ago when the problems of cost erupted.

As we wrote last week in the Digest, “the search has been on for a) low-cost sugars, b) gasification-based technologies that use a broader array of feedstocks, or c) novel feedstocks that are so odious and valueless that they can be aggregated at low- or even negative cost – such as flue gas, brown grease, rendering fats and oils, or municipal solid waste.

The solution? Take a page from gasoline’s story. That is, find a feedstock so abundant that the marginal cost of adding supply remains low even when demand rapidly increases.

For that reason, it is not surprising that technologists are turning to carbon dioxide and non-potable water — since they are available in such tantalizing abundance. The problem to date? Developing organisms that can turn CO2, water and sunlight into biofuels; and developing the engineering at scale.

We looked at the challenges in that field just last week in “Quantum Dots: a new nanohighway to renewable Fuels,” here.


7. Pests, Predators, Competitors, Contamination

If you’ve been hoping that algae solves all bioeconomy problems — specifically low-cost open pond algae technologies — welcome to the problem of crop protection.

Scarecrows in the corn fields, pesticides, herbicides, adding traits for resistance to drought or disease. Crop protection systems abound — but not much has been developed for algae.

Because of the way algae is grown and produced in most algal ponds, they are prone to attack by fungi, rotifers, viruses or other predators. Consequently, algal pond collapse is a critical issue that companies must solve to produce algal biofuels cost-effectively. The issue was identified as a key component in the Department of Energy’s National Algal Biofuels Technology Roadmap.

To address the problem, this past spring a team at Sandia National Laboratories and the Arizona Center for Algae Technology and Innovation debuted a suite of complementary technologies to help the emerging algae industry detect and quickly recover from algal pond crashes.

But if pestilence, disease and predation is not enough for you, consider the problems of contamination.

As we saw in the launch of Gevo’s first commercial plant at Luverne, it came down to strains of bacillus, a rod-shaped, single-celled bacteria with an insatiable appetite for dextrose, or corn sugars.

Microbial infections are a common feature of world-scale fermentation — especially in their commissioning period — they’re a common nuisance with ethanol plants, also, that have developed antibiotics and other strategies to combat them.

As Gevo CEO Pat Gruber observed, in talking with the Digest, “First step was, for us, to make sure we understood all the competitors that are chewing up the sugar, eating up yield. There’s no way to know until you do it, at scale. What matters is how you respond.”

Bacteria lurk. Picture the small white infection spots you see on a child’s inflamed tonsil when tonsillitis or strep throat strikes — and parents will know that those type of infections can go away and then suddenly strike again. Those are lurking bacteria that have found a happy home, hung up in a tube somewhere inside the body — lying in wait for the right conditions to appear, and then spring back into view.

It is not completely different with microbial contamination in fermentation systems — likewise, the microbes embed themselves in small infection pockets, and then rise up in numbers when the sugars start to flow.

“You are always going to have microbes, whether they come in through the air or water,” said Gruber. “But there is ‘manageable’, and then there is ‘outnumbered’.


6. Lignin

“You can make almost anything out of lignin,” goes the old biotech joke, “except money.” A huge percentage of terrestrial biomass is in the form of lignin, the substance that gives plants their igidity — and it’s been near-impossible to break down, to date.

“The main bottleneck is the pretreatment,” Wout Boerjan told Scirntific American this week, referring to the expensive process of cooking or otherwise softening the plant material so the sugars can be extracted and converted. “[The industry] wants to make their products in an inexpensive way.”

The search for ways around lignin have led researchers to non-terrestrial plants like kelp that don’t contain lignin, as well as wood-feasting microbial Vikings like Gribbles that bring all their own tools for breaking down wood into food.

It’s a microscopic worm that causes wood rot, at sea, for piers, jetties and rowboats. But the gribble has huge fans in the world of bioprocessing. The gribble’s trick? Doing all that conversion with its own, native, genetically-endowed portfolio of enzymes — and apparently, no help required from a fantastically complex team of gut-inhabiting, fellow-traveling microbes.

Elsewhere in the world of microbes, a group of researchers led by the University of Georgia’s Mike Adams have found another thermophilic bacterium with amazing properties — this time, finding a bacterium that can, without pretreatment, break down biomass, including lignin, and release sugars for biofuels and chemicals production.

This week, a Belgian research team is reporting the discovery of a way to shut off Caffeoyl shikimate esterase (CSE), which assists in the formation of lignin — and the shutdown has resulted in up to 36 percent less lignin formation in the model plant Arabidopsis thaliana. More on that here.


5. The Blend Wall

In the United States, passenger cars with 2001 or later model years are approved for 15 percent ethanol blends, while older cars are approved for 10 percent blends.

With US gasoline consumption (for 2011, according to the Energy Information Administration) reaching 134 billion gallons — it means that the US can blend about 20.1 billion gallons of ethanol into the gasoline supply before the ethanol toleration limit is reached. Ultimately.

But, because the average vehicle age in the US is 11.1 years, meaning that only half of US vehicles can utilize E15 blends (today, as older vehicles are retired, that number will change). Retailers and automotive organizations skittish about expanding E15 any time soon.

Now, biobutanol blends at 16 percent, and each gallon of biobutanol counts for 1.3 gallons of ethanol under the RFS — because of butanol’s higher energy density. Long term, if the economics are in line, this will be a powerful engine for circumventing the blend wall.

But biobutanol will not be in wide distribution until at least 2015. And drop-in advanced biofuels, while increasing in capacity, will also be in limited availability through next year.

What’s the industry to do? Well, there’s E85 ethanol.

Solutions? Here sayeth the Center for Agricultural and Rural Development at Iowa State University, “the ethanol blend wall” can be overcome and Renewable Fuel Standard (RFS) requirements can be met in 2014 and beyond through increased use of attractively-priced E85.”

Their analysis, titled “Price It and They Will Buy: How E85 Can Break the Blend Wall,” is available here.


4. Affordable Aggregation of Feedstock

In our “3 reasons why waste is king of renewable fuels” we wrote:

  1. The feedstocks are available at fixed, affordable prices — sometimes free, sometimes even transitionally available with a negative-cost tipping fee. And available in fixed, long-term supply contracts.
  2. The odious sources are generally already aggregated, for health or noxiousness reasons.
  3. They are less subject to considerations such as indirect land-use change that have plagued energy crops, and evoke few protects, if any, from environmental extremists.

Of course, the opposite is true of some other feedstocks — and of all the problems that beset biomass, there’s nothing more difficult to address than aggregation.

The problem? The impossibly high cost of sourcing sufficient biomass within, say, a 50-mile radius. After 50 miles or so – a little less, if small trucks are used, a little more if barges or rail are used — the economics of transporting raw biomass become impossible. Too much oxygen, too much water — the weight is a killer.

That’s one of the primary reasons why refineries in the bio-space rarely exceed 25 million gallons for projects based on agricultural residues, 50 million gallons for woody biomass, and 250 million gallons for waste or crop-based oils.

An interesting work-around that has gained currency in recent years has been the production of biofuels in what transport mavens call the hub-and-spoke system. In these scenarios, smaller biomass projects manufacture refinery intermediates rather than finished fuels. They are then shipped in a highly densified form to massive refineries where they are converted to finished fuels and chemicals.

We looked at the phenomenon in “Super-cali-thali-terpa-butyl-peta what? The hockey-stickin’, flash-mobbin’ growth in biobased intermediates.”

The hottest category is renewable sugars, which has attracted companies like Virdia, Blue Sugars, Proterro, Renmatix and Sweetwater Energy. Their challenge? Produce low-cost, high-performance renewable sugars that can be sold to synthetic biology companies like LS9, Virent, or Gevo, who convert sugars into an array of useful end products ranging from surfactant alcohols, base chemicals like isobutanol, or diesel, jet or alcohol fuels.

Intermediates have become a fashionable strategy for a couple of reasons. For one, they are getting better at what they do, and more of them are popping up. Take for instance, Waste Management, which is now getting deeply involved with Renmatix and renewable sugars. That way, they don’t really have to worry as much about, for example, picking processing technology winners.

Why hasn’t this been done all along the way? What are some of the down sides of intermediates? A big issue is stability.

Biofuels are a little like wine and champagne — their chemistry can continue to evolve, and in 6 months after sitting in a tank, what you may not have is the same in-spec material you started with. (That’s why, for example, champagne pops when you pull out the cork — it has been fermenting in the bottle and that releases CO2, which is what causes the pressure build-up).

Some molecules attract water, some oxidize. With renewable sugars, there are fears that bacteria will have a field day and gobble up the product if you try and transport renewable sugars via a pipeline — and who knows what you’ll end up with at the other end.


3. Watering & Dewatering

Dewatering — the bane of low-cost algae. As we covered in Crazy 8s: Algae’s 8 crazy-fast cores of innovation, “once you have made optimized algae, you generally either have to get the water out of the algae or the algae out of the water. First step is to do some concentrating to get the algae to, say, a 20 percent concentration, up from the 0.1 percent mix it might naturally achieve on its own.”

Now, Sapphire Energy revealed recently that it is producing crude oil daily from algae biomass cultivated and harvested at its Green Crude Farm.  Oil extraction is conducted through a patented method for converting wet algae to crude oil, which enables algae to be processed without the need for a timely and costly drying step.

In 2011, we highlighted 10 Hot Algae Extraction Technologies (and 5 Stealth Projects to keep an eye on)
But even if you discount the problem of dewatering, what about water itself? That is, water use — or, rather, freshwater. It can take quite a few gallons of rainfall to produce a bushel of feedstock — in cases where rainfall in insufficient, it will take groundwater.

So, what about getting beyond the challenges of freshwater availability?

We looked at this last December when we reported that Norwegian company Yara had teamed with the Qatari government on the Sahara Forest project that will use solar power and sea water to produce food crops such as tomatoes, cucumber, melon, fodder crops, freshwater, clean energy, salt, algae and for biofuel.The metrics? A commercial scale project of 4,000 hectares would supply enough power for the project and export 325GWh a year in addition to 7,500 tonnes of algae oil, and hundreds of thousands of tonnes of food and fodder crops.

On a broader front, we looked at Aquadudes: 15 saltwater-based energy technologies here to save the day, here.


2. Oxygen Content

Here’s the oxygen issue, biomass has it — as much as 60 percent by weight. But hydrocarbon fuels have none. So, in converting biomass to hydrocarbons, you lose an awful lot of biomass in the process.

“The problem with biobased technologies is that the biomass is not cheap enough,” says Alan Shaw, “nor is it readily available enough. Few companies have successfully scaled-up. You see so many of them starting out trying to make fuels, and now they are talking about very specialized niches, mostly in chemicals.

“Sugars are too expensive for products that are reduced in relation to sugars,” Shaw told the Digest. “For example, products that don’t need the oxygen that is contained in sugar. Those products lend themselves to natural gas. For those that are oxidized — for example, lactic acid, succinic acid, you can see the economics in making them from sugar — and that’s why companies like NatureWorks have been successful, and others will too who go in that direction. But not diesel.”

“The government rushed into investments, with no diligence,” Shaw added. “They are just not industrialists, in my opinion.”

The difficulty, he has explained, is the problem of making $275 per tonne sugar work in a $750 per tonne diesel market, when you lose 60 percent of the mass in the conversion, when the oxygen is blown off from biomass to make a hydrocarbon.

Reaction from industry? “I agree,” commented UOP general manager Jim Rekoske, whose company does a lot of the upgrading work from, say, renewable oil to diesel and jet fuel.

Shaw’s solution? Calysta Energy and NatureWorks announced an exclusive, multi-year collaboration to research and develop a practical, world-scale production process for fermenting methane — a potent greenhouse gas — into lactic acid, the building block for NatureWorks’ signature Ingeo product line, as well as lactide intermediates and polymers made from renewable materials. Thereby bypassing sugars altogether by picking up carbon via methane.

Elsewhere? There are the alcohol fuels, which do utilize oxygen, but there are infrastructure issues.

In the realm of alcohols — if there’s one technology we’re all waiting for, it’s the arrival, at scale, of isobutanol — a higher value fuel and chemical blendstock made from the same feedstock and at the same locations as corn ethanol, if you’re using Butamax or Gevo technology. (There’s also n-butanol made from cellulosic feedstocks if you are teamed up with Cobalt or Green Biologics).

Gevo, Butamax, and Green Biologics are working on these opportunities — though Butamax and Gevo have been more active to date with the U.S. corn ethanol fleet.

Biobutanol blends at 16 percent into gasoline under the same structural rules by which ethanol blends at 10 percent. And, generally speaking, an ethanol to butanol production will bring down the production capacity by 20%. So, if you build 20 billion gallons of ethanol capacity and converted it to butanol, you’d be producing 16 billion gallons of product which would safely blend into the current gasoline pool and existing vehicles. Without the oxygen problem.


1. Photosynthetic Limits

The ultimate challenge? Photosynthesis itself: the appallingly low rate at which plants convert sunlight to energy.

For example, corn checks in with a 1-2 percent efficiency rate. Raise photosynthetic efficiencies to 10-12 percent — and cost parity, food vs fuel, the cost of transporting biomass — issues begin to melt away.

Which brings us to the problem child, Rubisco, or by its full name ribulose-1,5-bisphosphate carboxylase oxygenase. Though obscure to the average citizen, it is not at all uncommon; in fact, it is the most abundant protein on earth.

It’s role: it is the enzyme that catalyzes the first step in the fixation of atmospheric carbon (for most plants, and also for cyanobacteria) — in short, it is a gateway to plant growth and carbon sequestration.

Though abundant, it is a slow, dim-witted enzyme if ever there was one. So slow that it fixes just three carbon molecules per second, and so dim-witted that it has trouble distinguishing between oxygen and CO2. Under many conditions, it will fix oxygen instead of CO2, in a process called plant respiration which causes carbon loss and robs the plant of growth opportunity.

There are two basic paths to meet the challenge. One, addressing photosynthetic efficiency through genetic engineering.

One problem? Hot and dry conditions. Turns out that more than 99% of plants, in sufficient conditions of heat and aridity, close down their little stomata pores — the portal for carbon to enter — to limit water loss. And, they stop fixing atmospheric carbon dioxide altogether and start fixing oxygen. The little devils.

It’s a problem ZeaKal has been addressing with its HME technology — they have found a means to increase the plant’s ability to store oil — and, ultimately, carbon — during normal production cycles — in a way that becomes accessible to the plant in the form of extra CO2.

Another route? Bypass photosynthesis altogether. Solazyme and others are going that route with heterotrophic microorganisms that derive their energy from consuming sugar — though ultimately, the sugar is photosynthesis dependent.

One alternative? Electrofuels. It’s an end-goal of ARPA-E’s Electrofuels project,which is scheduled to complete its first phase by years end. As the Electrofuels manifesto states:

“Most biofuels are produced from plant material that is created through photosynthesis, a process that converts solar energy into stored chemical energy in plants. However, photosynthesis is an inefficient process, and the energy stored in plant material requires significant processing to produce biofuels. Current biofuel production methods are also intensive and require additional resources, such as water, fertilizer, and large areas of land to grow crops. Electrofuels bypass photosynthesis altogether by utilizing microorganisms that are self-reliant and don’t need solar energy to grow or produce biofuels. These microorganisms can directly use energy from electricity and chemical compounds like hydrogen to produce liquid fuels from carbon dioxide (CO2).” In all, 14 Electrofuel projects are expected to complete this year under their ARPA-E grants.

And, last week we profiled the promise of quantum dot technology. With this one, it’s a technology that utilizes sunlight, CO2 and water. More importantly, when a photon, arriving on planet Earth after an eight minute journey from the Sun, happens to strike a quantum dot (instead of say, a plant’s light harvesting mechanism) — it produces one excited electron for every photon. There’s no limitation imposed by photovoltaic or photosynthetic efficiency.

Read more bioenergy news here.

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

Lead image: Challenges sign via Shutterstock

Previous articleChina Limits Solar Manufacturing, May Drive Consolidation
Next articleSolar Stocks Are Taking Off — Will They Keep It Up?

No posts to display