Cellulosic Ethanol: Will the Mandates be Met?
AgMRC Renewable Energy Newsletter
Professor of Economics and Energy Economist
Ag Marketing Resources Center
Iowa State University
When Congress passed the Energy Independence and Security Act (EISA) of December 2007 (1), it envisioned that ethanol from various cellulosic feedstocks would play an important role in supplying U.S. automotive fuel in the next 15 years. The act mandates that, starting in 2010, 100 million gallons of cellulose-derived ethanol will be blended in the nation’s gasoline supply. Figure 1 shows the annual increases in mandated use of cellulose ethanol to 2022 – -- with blending in gasoline by the final year on the chart reaching 16 billion gallons. That’s 13 years away, and the mandated cellulosic ethanol volume is larger than the 15 billion gallons mandated for corn-starch ethanol.
At this writing, it looks very unlikely that enough cellulose ethanol will be produced in the next few years to meet the mandates – for several reasons. If so, that raises a number of important questions for the nation’s biofuels programs. In this article, we review the planned role of cellulosic ethanol, some alternative feedstocks that are being considered, a general overview of some of the production processes being developed, plants currently in the development and construction stages, and possible volumes of production in the next two or three years.
General Overview of Production Processes
Key issues for a successful commercial cellulosic ethanol industry are:
- developing efficient low-cost chemical and/or thermal conversion processes,
- developing the accompanying in-plant handling and pre-processing technology for the feedstock,
- developing suitable technology for farm and forest production, harvesting, handling, storage and transport of the feedstock, and
- assuring an affordable long-term supply of feedstock for the plant through appropriate contracting procedures that will allow the feedstock to be competitive with its alternative uses and alternative uses of land.
In contrast to the starch from corn that is easily converted to ethanol, the cell walls of cellulosic feedstocks are difficult to break down chemically so that sugars can be released and fermented. There are two types of processes being developed.
One is a chemical conversion that utilizes chemical breakdown of cellulose with strong acids or bases and heat. After the initial acid or base treatment process is completed, a neutralization step is necessary. Afterward, enzymes are used to convert the resulting materials to ethanol in processes that are similar to those used in starch-ethanol plants. (2) Recent research also suggests this stage of the biorefinery process may be facilitated by bacteria. (3)
At least two pilot plants using this type of technology have been in operation for several years. A plant in Sweden utilizes wood chips for the feedstock, and another in Ontario, Canada, converts straw into ethanol. A small pilot plant in China has recently been developed to convert corn stover to ethanol. Stover is the stalk, leaves, husks and cobs of the corn plant.
Some U.S. cellulosic biorefineries are being designed to use cellulose from corn cobs and corn stover. These production facilities are being planned and built adjacent to corn-starch ethanol plants. In the future, some plants may be included jointly with a corn-starch ethanol plant, depending on the evolution of the technology. Examples of plants such as these include planned facilities in Emmetsburg and Blairstown, Iowa.
The bulky nature of cellulose feedstocks complicates processing activities and potentially adds to the cost of producing ethanol. Unlike corn, most cellulose raw material does not flow readily through processing facilities without pre-processing and additional handling equipment. Also, the feedstock requires protection from weather, molds, dirt and other conditions that would cause problems in the ethanol conversion process. Because of the bulky nature of the feedstock, current and anticipated first-phase technologies are expected to result in an optimum size of cellulosic ethanol plants that will be much smaller than those for typical recently constructed starch-ethanol plants in the Corn Belt. (4) Because of the smaller biorefinery size, plants located at long distances from urban centers where the ethanol is needed may be at a transportation disadvantage. The 100 to 110 million gallon per year corn-starch ethanol plants are able to take advantage of large train shipments of ethanol that substantially lower transportation costs.
The second broad category of conversion technology is thermochemical. Some small-scale laboratory facilities using heat and in some cases pressure are able to convert the feedstock to gases, and then combine the resulting products into various chemicals in a process that has similarities to a petroleum refinery. With this type of biorefinery, the end result could be either ethanol or various fuels that are very similar to gasoline, jet fuel, diesel fuel and related products. Depending on the relative yield of ethanol vs. synthetic gasoline, this process might produce fuels other than ethanol. Conversion directly to synthetic gasoline would avoid the current “blending wall” that we’ve discussed in previous articles. (5) It would also allow the product to be shipped through existing petroleum pipelines, thus greatly reducing handling and distribution costs. Vehicle fuel mileage likely would be greater than with high percentage ethanol-gasoline blends. With the thermochemical process, issues noted above in producing, harvesting, handling, storing, transporting and pre-processing of the raw material are equally important. Economic efficiency in all of these phases as well as in conversion technology is critically important to the development of a viable large-scale cellulose ethanol industry.
Combined Chemical & Thermochemical Conversion
A technology developed at Texas A & M University involves a combination of biochemical and thermochemical processes to convert cellulosic feedstock to synthetic gasoline. The firm planning to use this technology hopes to have a commercial plant in operation in 2011. (6) It plans to build a 1.3 million gallon per year plant but believes a plant as large as 5.5 million gallons per year may be feasible with this technology. Valero Energy Corporation is a major investor in the development of commercial applications of this technology. Valero owns 16 petroleum refineries. A subsidiary of Valero owns several corn-starch ethanol plants formerly belonging to VeraSun.
A 1.3 to 5.5 million gallon per year plant would be much smaller than recently constructed corn-starch ethanol plants with capacities of 100 to 110 million gallons per year. The large corn ethanol plants are designed to take advantage of economies of size in transportation of the ethanol and distillers grain by rail, as noted above. However, if located adjacent to a petroleum refinery, a small plant using this new technology would be able to move its product directly into the petroleum blending and distribution system, thus avoiding some of the transportation cost issues of corn-based ethanol. For locations away from petroleum refineries, access to a nearby petroleum pipeline might be important in some situations. In both cases, access to a large and sustainable nearby supply of cellulose feedstock would be very important.
Alternative Feedstocks and Feedstock Considerations
A wide range of feedstocks offer potential sources of cellulosic ethanol. A partial list includes corn stover, corn cobs, switch grass and other grasses, straw, forest wastes, cardboard and various other municipal wastes. Corn cobs appear likely to be one of the first to be used in a commercial-sized plant. With current corn harvesting methods, cobs are ejected from combines along with stalks and leaves and are left on the ground. However, new equipment is being developed to collect the cobs separately from the other crop residue during the harvesting operation. (7)
For the farmer-producer of the feedstock, the new harvesting equipment will involve added costs, along with the need for additional trucks or wagons and labor to receive and haul the cobs. These extra handling operations could slow the harvesting progress. Slowing the harvesting operation would increase risk of damage to the crop from adverse fall weather. If so, that might also delay fall tillage and fertilizer applications, thus increasing the spring work load and increasing the risk of yield reductions from planting delays for the next year’s crop. For that reason, a careful assessment of costs to the feedstock producer and needed price to make feedstock production attractive to farmers is necessary. As the cellulose industry evolves in the future, removal of corn stover will involve some loss of plant nutrients for the next year’s crop that currently are provided by leaving it in the field. Thus, stover removal will mean that farmers will have to be paid enough to cover the added fertilizer cost as well as additional harvesting, transport and storage costs.
It has generally been assumed that feedstocks such as wood wastes have few alternative uses, but that may not be a valid assumption. For example, an electrical generating firm in the United Kingdom, MGT Power, recently announced plans to build a 295-megawatt biomass electricity plant that will be powered by wood chips from Europe and the southeastern U.S. (8) The plant is expected to use 2.65 million metric tons of wood chips annually, which may compete with a wood-waste cellulose plant planned for Georgia.
U.S. Cellulose Plants Planned and Under Construction
The U.S. government has provided funding to assist in the development of six cellulosic ethanol plants in various parts of the country, with the expectation that these plants will encourage private investment in other facilities and facilitate technology dispersion. The table below shows the approximate locations of the planned plants, the feedstocks they are expected to utilize and the type of technology to be used.
|Novel Cellulosic Plants to be Built with U.S. Government Sponsorship|
|Abengoa Bioenergy||Hugoton, KS||Corn stover, wheat straw, milo stubble, switchgrass||Thermochemical & biochemical|
|Alico||LaBelle, FL||Yard, wood and vegetable wastes||Thermochemical & biochemical|
|BlueFire Ethanol||Corona, CA||Green waste and wood waste from landfills||Biochemical|
|Poet (Broin)||Emmetsburg, IA||Corn fiber, cobs and stalks||Biochemical|
|Iogen||Shelley, ID||Wheat barley & rice straw, corn stover, switchgrass||Biochemical|
|Range Fuels||Soperton, GA||Wood residues & wood-based energy crops||Thermochemical|
|Source: D.G. Tiffany, U of Minnesota|
1) Abengoa Bioenergy - While the original location for the Kansas plant was listed as Colwich, later information from Abengoa Bioenergy, a Spanish firm, now indicates its plant will be built at Hugoton, Kansas. The plant is being built next to an existing starch-ethanol plant and reportedly will have a capacity of about 11.6 million gallons of ethanol per year. It is expected to process 700 tons of biomass per day. That would be an annual volume of about 540 million pounds. If so, ethanol production would be about 16 percent of the original weight of the biomass. As with starch-ethanol plants, a substantial volume of the feedstock likely will be released as CO2. However, crops producing the feedstock are expected to recapture these carbon emissions during the next growing season. Some or all of the remaining materials are expected to be used to power the plant, with any excess energy being used for the adjoining starch-ethanol plant. (9) The Renewable Fuels Association biorefinery plant list does not indicate that this plant is under construction. However, the company indicates it has an operating pilot plant in York, Nebraska, that produces a small volume of cellulosic ethanol.
2) Alico, which had the second planned plant in the table above, has cancelled its plans to build in Florida. Although funding from the U.S. Department of Energy was originally approved for this plant, the company decided last year that it did not want to follow through with the original plan. In June, the company announced it was abandoning the planned plant because “the risks associated therewith outweighed any reasonably anticipated benefits for Alico.” (10)
3) BlueFire Ethanol is moving forward with plans to build a cellulosic ethanol plant using cellulose waste from Southern California landfills. It plans to employ technology currently in operation in a small plant in Japan that uses a patented acid hydrolysis process. The California plant is expected to have a capacity of 3.9 million gallons per year. The expected completion date for the plant is not available.
4) Poet (Broin) is moving forward with plans for a cellulose ethanol plant adjacent to its corn-starch ethanol plant in Emmetsburg, Iowa. Initial plans reportedly are to use corn cobs as the feedstock, and to later expand the plant to include processing of corn stover. The expected initial size for the plant is 25 million gallons. The company plans to begin commercial production by 2011. (11)
5) Iogen, a Canadian firm, is moving forward with plans for the cellulosic ethanol plant in Wyoming. The company manufactures enzymes for various purposes, some of which will be used in the ethanol plant. It also operates a small demonstration plant in Canada that produces about a million gallons of ethanol from straw. (12) The planned biorefinery plant is intended to process agricultural wastes such as straw. Iogen plans to develop a commercial plant with 50 million gallons per year capacity, although the expected completion date is not available.
6) Range Fuels, headquartered in Colorado, is moving forward with plans for a wood-chip ethanol plant in Georgia that will utilize waste wood from the state’s Georgia pine forests. Range Fuels has developed a patented technology that it says does not require enzymes, thus lowering the cost of production. (13) Land for the plant has been broken, and initial production of 10 million gallons per year is expected to begin in mid-2010.
Other prospective cellulosic ethanol plants in the United States
1) KL Energy Corporation, headquartered in Rapid City, South Dakota, opened a commercial biorefinery in January 2008 that produces ethanol from wood wastes in a plant near Upton, Wyoming. Information on the annual plant capacity is not available, but it is believed to be much smaller than a typical corn-ethanol plant, probably in the 1 to 2 million gallons per year range. The company indicates the technology is applicable to other feedstocks and locations. (14)
2) Verenium has a small cellulosic ethanol plant in Osaka, Japan. It opened a pilot plant in Louisiana in 1999 and completed the mechanical portion of a 1.4 million gallon cellulosic plant in 2008. It appears that this plant may begin operations in 2010.
3) DuPont Danisco Cellulosic Ethanol LLC (DDCE) is developing a cellulosic plant in Tennessee that is expected to come on line with 250,000 gallons of ethanol annually by the end of 2009. This facility initially will use corn cobs as the feedstock. Plans call for it to be expanded to 15 million gallons per year by 2013. At that time, switchgrass is expected to be its main feedstock. DDCE also plans to have a cellulosic plant in the Midwest by 2012 that will use corn cobs and produce 25 million gallons of ethanol per year. Other organizations contributing to the development of this project include the University of Tennessee Biofuels Initiative, Genera Energy and Oak Ridge National Laboratory. (15)
4) Gulf Alternative Energy Corporation (GAEC) has purchased a small corn-starch ethanol plant at Blairstown, Iowa, and plans to convert it to a cellulosic plant that will use corn stover, switchgrass and agricultural wastes for feedstocks. The plant capacity is six million gallons per year. No start-up date is available.
The above plants are the ones for which we have been able to find information. However, our list is not guaranteed to be all inclusive. Other firms also may be developing cellulose ethanol plants.
Since only two or three small commercial cellulose ethanol biorefineries are currently at or near the operational stage, it looks almost certain that the 2007 EISA mandates for cellulosic ethanol blending will not be met for at least the next two to four years.
To meet the EISA mandate for 2011, the nation would need 192 plants of the typical 1.5 million gallons annual capacity noted above, or 46 of the 5.5 million gallon commercial-sized plants. For 2012, ninety-two 5.5 million gallon plants would be needed. For 2013, 182 plants with 5.5 million gallons of annual capacity would be needed. At 12 million gallons of capacity, 84 plants would be required.
With at least two years time required to construct a commercial plant, a huge surge in investment in cellulosic ethanol will be needed in the next two years to meet the mandates in the EISA. That degree of investment surge is not currently in sight.
|Cellulosic ethanol mandates are unlikely to be met in the next few years.|
In order to meet the near-term government mandates, profitability of the ethanol industry will need to be substantially more favorable than it has been in the last 18 months. Conditions that could improve profit prospects include:
- Raising the allowable ethanol-gasoline blend for non-flex-fuel vehicles to 15 percent
- Development of new cost-saving breakthroughs in conversion of cellulose to ethanol
- Harvesting, handling, storage and pre-processing technology that would reduce costs
- Development of equitable and risk-neutral long-term contracts between feedstock producers and biorefineries that will make possible a sustainable long-term supply of feedstocks. (16)
It appears likely that the cellulosic ethanol industry will fall short of meeting government ethanol mandates by several hundred million gallons in the next four years. An important question for the corn-starch ethanol industry as well as the entire grain, feed, livestock and farm supply industry is whether this short-fall will be transferred to starch-ethanol plants. If it is transferred, demand for corn and corn production inputs as well as profitability of corn-starch ethanol plants and other users of corn will be affected.
1 Energy Independence and Security Act of 2007.
2 For details on one version of this process, see A. Aden, M. Ruth, K. Ibsen, J. Jechura, K. Neeves, J. Sheehan and B. Wallace (National Renewable Energy Laboratory) , Montague, A. Slayton, and J. Lukas Harris Group Seattle, Washington, Lignocellulosic Biomass to Ethanol Process Design and Economics Utilizing Co-Current Dilute Acid Prehydrolysis and Enzymatic Hydrolysis for Corn Stover, NREL/TP-510-32438, National Renewable Energy Laboratory, Golden, Colorado, June 2002, pp. 5-6.
3 Lisa Gibson, “Bacteria simplifies cellulosic ethanol production,” Biomass Magazine, July 28, 2009.
4 Doug Tiffany and Steven Taff, “Comparing Conventional and Advanced Biofuels: Financial Performance and Logistics”, Presentation at a Chicago conference, “Biofuels in the Midwest: A Discussion", sponsored by the Woodrow Wilson Foundation, the University of Minnesota Department of Applied Economics, and The Joyce Foundation, September 6, 2008.
5 See R. Wisner, ” Ethanol Blending Economics, the Expected ‘Blending Wall’ and Government Mandates,” Ag Marketing Resource Center Renewable Energy Newsletter, January 2009 and “Wild Cards for the Ethanol Industry,” Ag Marketing Resource Center Renewable Energy Newsletter, July 2009.
6 Anna Austin, “Terrabon proves biomass-to-fuel process,” Biomass Magazine, July 28, 2009.
7 “Poet Starts Harvesting Cobs,” Argus Leader, July 28, 2009.
8 Lisa Gibson, “British OK world's largest renewable energy plant,” Biomass Magazine.
9 Green Car Congress, “DOE Awards Up to $385 Million to Six Cellulosic Ethanol Plants; Total Investment to Exceed $1.2 Billion.” and U.S. Department of Energy press release, “Biorefinery Grant Announcement , Prepared Remarks for Energy Secretary Bodman,” February 28, 2007.
10 Katie Fehrenbacher, “Alico Abandons Cellulosic Ethanol Plant Plans,” Earth2tecch.com, June 4, 2008.
11 POET Successfully Completes First 2009 Cob Collection Trials for Cellulosic Ethanol Production, Biofuels Journal, July 27, 2009.
12 Gregory Bohlmann, “Ethanol from Straw,” PEP Review 2004-10, June 2004 and Stuart F. Brown, Biorefinery Breakthrough,” Fortune, February 6, 2006.
13 “Range Fuels to produce 1B gallons of cellulosic ethanol - New cellulosic plant in Georgia to turn wood chips into ethanol, without using enzymes,” Clean Tech, February 7, 2007. Range Fuels.
14 “KL Process Design Group, the 2nd Generation Cellulosic Ethanol Leader, Becomes Public and Changes Its Name to KL Energy Corp. -- Company to Focus on Expansion of Its Current Operation of the US' First Commercial Waste Wood to Ethanol Facility,“ Market Wire, October 2008.
15 University of Tennessee, Institute of Agriculture, Office of Bioenergy Programs, “Biorefinery Groundbreaking,” October 14, 2008 and Genera Energy, “The next generation of biofuels and bioproducts.”
16 The need for long-term feedstock contracts was pointed out by Dr. Wallace Tyner (Purdue University) at a 2009 American Applied Economics Association Biofuels Symposium in Milwaukee, Wisconsin on August 27, 2009.