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Is cellulosic biofuel ready for prime time?

By   /   June 15, 2015  /   News  /   No Comments

Photo from Flickr Commons

WAITING TO GROW: Companies are trying to turn things like corn stalks and husks into large quantities of cellulosic biofuels to meet the requirements of the Renewable Fuel Standard.

By Rob Nikolewski │ Watchdog.org

The U.S. Environmental Protection Agency wants the amount of cellulosic biofuel the federal government requires from refiners and importers of gasoline and diesel under the Renewable Fuel Standard to jump by more than 500 percent by next year.

But critics say the fuel has long been been overhyped by the EPA and doubt whether cellulosic can meet the agency’s targets.

“I’ve heard the same thing for years: We’re just six months away (from a breakthrough), we’re right around the corner,” said Charles Drevna, former president of the American Fuel and Petrochemical Manufacturers, a group critical of cellulosic biofuel mandates. “Well, that’s a pretty damn wide corner because I haven’t seen much yet.”

Brooke Coleman, executive director at the Advanced Ethanol Council, counters by saying the industry is at an inherent disadvantage compared to oil companies and is ready for prime time.

“Once cellulosic biofuel breaks through on a commercial scale, there is no going back,” Coleman said.

Cellulosic biofuel is produced using renewable, organic and nonfood material such as switchgrass, wood chips and corn stalks.

Supporters insist cellulosic holds great promise and on May 29, the EPA released its long-awaited Renewable Fuel Standard and called for big increases in the fuel source between 2014 and 2016:

cellulosic biofuel volumes by epa - from epa renewable fuel standards proposal

The numbers represent just a small percentage of the more than 16 billion-gallon requirement the EPA mandates for total renewable fuel each year, but the spike in cellulosic from 33 million gallons in 2014 to 206 million gallons next year represents a 524 percent increase.

Can those lofty targets be met?

That’s what Watchdog.org asked the EPA, but did not receive a response to an email.

“It’s an easily reachable goal,” Coleman told Watchdog.org in a telephone interview. “We have a number of plants coming online … They have the ability on their own by applying the technology to their assets to very, very quickly ramp up the capacity of the industry.”

But critics say the EPA’s goals are way too optimistic.

“There is no cellulosic ethanol to be had,” said Robert Bryce, an energy writer and senior fellow at the Manhattan Institute, a right-of-center think tank. “Yet they increased the mandate for it. How do you increase the mandate for something that doesn’t exist?”

“These plants are all over the place and they’re producing cellulosic ethanol,” Coleman said. “What we don’t have is a willing buyer because the oil industry won’t buy our stuff unless someone makes them do it.”

Congress created the Renewable Fuel Standard as a way to reduce dependence on oil and help create a cleaner energy alternative. Cellulosic biofuel was part of the standard’s requirements, which are enforced by the EPA.

A decade ago, the government anticipated cellulosic biofuel would grow by leaps and bounds.

Congress initially called for 100 million gallons of cellulosic ethanol to be blended into the gasoline supply by 2010 and the program was revised, calling for the target to shoot up to 16 billion gallons of cellulosic biofuel by 2022.

But the cellulosic industry has not kept pace with those goals.

As a result, the EPA has had to radically adjust its targets for cellulosic biofuel down. In fact, the agency in 2012 revised the number all the way to zero.

“The technology is not there to make it economic,” said Drevna.

“Yes, the cellulosic biofuel industry has not produced to the levels targeted by the law and it is no secret why that is true,” Coleman said. “We went through a global, 100-year recession. You couldn’t get a car loan much less a loan for a $250 million or $300 million plant and we’re behind. But what (critics) leave out is that the EPA has the authority to adjust the program to levels that are reasonable and they have done that.”

Corn-based ethanol was also part of the RFS when the standard was introduced in 2005 and updated in 2007, but corn-based ethanol production has exponentially outpaced cellulosic.

EPA records indicate between 14 billion and 15 billion gallons of corn-based ethanol was produced last year.

Coleman estimated to Watchdog.org that last year cellulosic ethanol generated “a couple million gallons.” Officials at the the American Fuel and Petrochemical Manufacturers point to EPA figures and say only 728,509 gallons of cellulosic ethanol were produced in 2014.

A number of companies have jumped into the biofuels business and they are spending quite a bit of money — and quite a bit of government taxpayer money — to try to make the technology work.

Photo from Flickr Commons

HIGH HOPES: DuPont is constructing a cellulosic ethanol facility in Nevada, Iowa, with an expected capacity of 30 million gallons.

DuPont is wrapping up construction on a $200 million cellulosic ethanol facility in Iowa it touts will be among the first commercial-scale biorefineries in the world.

POET, a biofuel company based in Sioux Falls, South Dakota, opened a $275 million cellulosic ethanol production facility in Iowa that converts baled corn cobs, leaves, husk and stalk into renewable fuel.

The U.S. Department Energy provided $100 million in investments and research grants to POET while Iowa spent $20 million.

“Some have called cellulosic ethanol a ‘fantasy fuel,’ but today it becomes a reality,” Jeff Broin, POET founder and executive chairman, said when the facility opened last September.

POET expects to produce ethanol at a rate of 20 million gallons per year, later ramping up to 25 million gallons.

Other facilities include the Ineos Bio plant in Florida and Abengoa, a company based in Spain that opened a cellulosic ethanol plant in Kansas in 2014.

According to the New York Times, the Ineos Bio facility received a $75 million guarantee for a refinery.

Abengoa said it received a $132.4 million loan guarantee and a $97 million grant through the Department of Energy to help construct its facility in Hugoton, Kansas.

Another company, KiOR, supplied an estimated 230,000 gallons of cellulosic biofuel in 2013, but ended up going bankrupt. Late last year, KiOR defaulted on a loan it had with Mississippi after failing to make a $1.8 million debt payment.

Related: The EPA’s Renewable Fuel Standard proposal ticks off just about everyone

Energy analyst Robert Rapier noted the industry’s struggles in a recent column.

“Of course you can subsidize all sorts of schemes into existence,” Rapier said. “The real question is whether there is a realistic pathway to the process standing on its own commercially … it’s going to require exponential production increases over the next few months to salvage the economics.”

“The fundamental problem is the energy density of feed materials, which is — regardless whether it’s corn or grass or woodchips or whatever — is so low that you’re not able to achieve the power density on the land that is required to make any sense,” Bryce said in a telephone interview.

“There’s nothing wrong with an aggressive yet adjustable mandate and there’s nothing wrong with the RFS,” Coleman said. “But the oil industry is very creative in what they do and they’ve taken this positive and tried to turn it into a negative and say, well the targets were aggressive therefore the program’s broken.”

“The Renewable Fuel Standard is an anachronism,” said Drevna, who now is a senior scholar at the Institute for Energy Research, which has been harshly critical of mandates for biofeuls. “It has totally failed to live up to the commitment and the intent for why it was passed and it’s far past time to get rid of it and allow the market to work.”

Biofuel defenders say the oil companies and refineries simply don’t want competition from a nascent industry.

“The entire market is rigged to create one outcome and that is petroleum motor-based fuels at the pump,” Coleman said. “This is not a free market. If it was, we’d be out there competing with them and beating them without the RFS.”

But critics say the EPA requirements for cellulosic biofuels weren’t met before and don’t think they’ll be met again.

The EPA is “saying we think cellulosic will be available in these quantities and tomorrow is going to be a better day,” Drevna said. “It’s trite, but the definition of insanity is repeating the same thing over and over again and looking for a different result.”


Rob formerly served as staff reporter for Watchdog.org.