Biofuels Digest, BIO Invite Responses to the Q2 2011 Bioenergy Business Outlook Survey

Biofuels Digest, the world’s most widely read biofuels daily, and BIO are inviting responses to the quarterly Bioenergy Business Outlook Survey, today through Friday June 17.
The 21-question survey examines growth expectations and opportunities from a company, national and organizational point of view and is open to companies and organizations in all sectors of the industry.
The Spring 2011 Survey found that nearly 40 percent of the industry expected strong to moderate growth, anywhere from 5 to 20 percent, with rising demand for alternative fuels, new technology or intellectual property, and partnering in R&D, production and marketing driving growth.
The Summer 2011 Survey will indicate whether those expectations are still as strong.

Pacific Rim Summit Focuses on Drop In Fuels for Military

BIO’s Pacific Rim Summit came to a close on Tuesday, but not before giving attendees a preview of what the industry expects to be two of the hottest trends for 2011, as recorded in a recent BIO/Biofuels Digest poll.

Department of Defense interest in biofuels is expected to increase, due to the national security implications of reliance on oil. As Chris Tindal, director of Operational Energy for the U.S. Navy, explained to attendees of the Summit, “While the Department of the Navy is a significant consumer of fuel, neither DoN nor DoD can affect the price of oil. Therefore, both are at the mercy of the market – both the stability of supplies and fluctuations in price.”

Tindal noted that the DoD used 119 million barrels of petroleum in FY08. The Blue Navy used 29.4 million barrels (not including Marine Corps). And the airline industry and the Department of Defense collectively consume 1.5 million barrels of jet fuel per day. The Navy has set a goal of replacing 50 percent of petroleum in the commercial fleet by 2015.

Tindal also noted that the Defense Energy Support Center and the Air Transport Association of America signed an Alternative Fuels Pact on March 19, 2010. The pact sets shared goals of spurring the development and deployment of commercially viable and environmentally friendly alternative aviation fuels.

Commercialization of Bioproducts
Paul Bryan, Biomass Program manager at the Department of Energy, gave some detail behind the second expected trend for 2011, that attention will be given to bioproducts and renewable chemicals in addition to biofuels. Bryan emphasized that we need to “develop technologies and supply chains to replace the whole barrel and all products made from crude today.” Because so many products are made from each barrel of petroleum, and biofuels displace a portion of each barrel, oil refineries have no incentive to make a shift.

If we reduce total petroleum usage as a percentage of one market, we need to think about how that impacts other markets. The most obvious issue is that we have to replace diesel and jet in proportion to gasoline, since their combined volume is approximately three-quarters that of gasoline, and their markets are projected to grow significantly faster than that for gasoline. But other products are important, too. The largest chunk of the ‘other products’ in the barrel is the petrochemical industry, virtually all of which is based on crude oil and natural gas.

Biofuels Digest Surveys Readers on 2011 Industry Trends

Biofuels Digest, the world’s most widely read biofuels daily, is asking readers to rank the trends that will drive the biofuels and biorefining industry in 2011. Will Congress debate new energy legislation? Which federal agency will support construction of the first commercial advanced biofuel biorefinery, USDA, DOE or DOD? How important will biobased products and renewable chemicals be as advanced biofuels producers look for an economically viable model?

BIO member companies weighed in to suggest the trends. Now, we’re encouraging everyone interested in the industry to read Biofuels Digest and rank the trends they think are most important.

BIO and Biofuels Digest will co-publish the top trends in coming weeks and continue watching throughout the coming year.

The Latest in Advanced Biofuels and Climate Change

“Four more BIO interviews remaining in the pipeline (woohooo!). This one is my interview with Dennis McGrew, Genomatica’s new executive vice president of business development and chief business officer.”

So begins the post by Doris de Guzman of ICIS Green Chemicals .

Guzman interviewed Dennis McGrew, Genomatica’s new executive vice president of business development and chief business officer.

“Genomatica,” Guzman writes, announced at the BIO industrial biotech conference that it was able to achieved pilot-scale validation of its bio-based 1,4 butanediol (BDO) at 3,000 liter-batches, a 100-fold increase from lab scale within two months. The scale-up was performed at MBI, a not-for-profit technology company affiliated with Michigan State University’s BioEconomy Network.

The next step is another 10x scale up between 20,000 and 50,000 liters within the next several months. Genomatica plans to have an integrated demonstration facility to come online in the second half of 2011, and commercial production either late 2013 or early 2014 for their bio-BDO.”

“We’ve taken BDO through piloting and demonstration phase on our own but for other products in the pipeline, we’re looking to partner more early. Partners will help drive the selection of which products from amongst the other 19 chemicals that we can work on — that will be a primary criteria from which one of those to move forward,” said McGrew,

“Another update,” writes Guzman, ” is Genomatica confirming that they have shelved the bio-methyl ethyl ketone (MEK) project for now. McGrew said they were able to show proof of concept for the chemical in the course of 4 months but current market opportunity is not as compelling compared to BDO.”

“Genomatica started research on bio-MEK in the second half of 2008, when corn ethanol producers were being squeezed. At the time, the company expected to produce MEK from plants being idled by ethanol producers. The downtrend in global economy and change in ethanol economics have made the bio-MEK project not as attractive, said McGrew.  “We want to focus on driving BDO as quickly as possible instead of focusing to develop two projects simultaneously,” he added.”

Earth2tech announced their top 15 algae fuel start-ups

“Two and a half years ago we put together this cheat sheet on 15 algae fuel startups you need to know, which turned into one of our most popular posts of all time. But boy have things changed since then. In early 2008 GreenFuel Technologies was still in business, Aurora Algae (then called Aurora Biofuels) was still focusing on fuel, Petro Algae hadn’t yet filed for an S-1, and it was unclear then that Craig Venter’s Synthetic Genomics was going to become a dark horse in the algae fuel world. Here’s our updated 2010 version of our original 15 algae fuel startups bringing pond scum to fuel tanks.”

And they are….

1.  Solazyme

2.  Aurora Algae

3.  Synthetic Genomics

4.  Petro Algae

5.  Sapphire Energy

6.  Bioalgene

7.  Phycal

8.  Live Fuels

9.  Solix Biofuels

10.  Aquaflow

11.  Bionavitas

12.  Seambiotic

13.  Bodega Algae

14.  Algennol

15.  General Atomics

According to Solve Climate News

Another biofuel company is about ready to go public.  This time it’s Gevo.

“Colorado-based Gevo makes isobutanol, a second-generation biofuel that it says has a number of advantages over ethanol and biodiesel, including higher efficiency and the ability to be transported through existing pipelines. But the company’s proprietary technology produces and separates isobutanol using a fermentation process that still needs food crops like corn, wheat, sugar cane or sugar beets as a feedstock”

“With the promise of cellulosic ethanol — biofuel from non-food sources — still a distant vision, Gevo is hoping investors will see the $150 million initial public offering it announced this month as a smart bet that provides a bridge to the future.”

Solve Climate News writes,

“It’s [Gevo] banking on a business model that involves retrofitting existing ethanol plants, which it says can cut the time and capital required to get a production facility running.

“The technology they have is promising,” as is their plan to build upon existing facilities, Tammy Klein, assistant vice president of Hart Energy Consulting, told SolveClimate News. But ultimately, she said, the company’s decision to file for an IPO probably has more to do with tight credit markets and a lack of access to capital during the economic downturn than the strength of the biofuels sector as a whole.

“Raising capital is an issue,” Klein said. “That’s why Gevo is doing this.”

“For Gevo—which tallied $660,000 in revenue and $19.9 million in losses in 2009—and its brethren” writes Solve Climate News, “success may be a matter of riding out an initially tough market, according to a 2009 report by market research and consulting firm Pike Research.

“In the near term, the biofuels market looks like a train wreck,” Pike’s managing director Clint Wheelock said in a statement when the report was released. “The economics of ethanol and biodiesel are not yet competitive with petro fuels, and governments have pulled back some of their support.

“However, in the 10 to 15 year timeframe, the outlook remains very positive. The long-term commitment of national governments to foster robust biofuels markets remains solid, and technological advances and economies of scale will dramatically improve the economics of biofuels versus petroleum.”

In Pennsylvania things aren’t looking up for biofuels.

According to Erin Voegele of Biodiesel Magazine,

“Legislation currently pending in Pennsylvania could negatively impact the state’s biodiesel industry. On Oct. 6, the Pennsylvania House of Representatives adopted an amendment, SB 901, which seeks to impose a new fuel tax on businesses that sell biodiesel fuel by amending the state’s Biofuel Development and In-State Production Incentive Act of 2008.”

According to John Kulik, executive vice president of the Pennsylvania Petroleum Marketers and Convenience Store Association, the amendment would levy a new fee, or tax, on companies that sell biodiesel within the state. Under the amendment, each convenience store, service station, truck stop or other retail location selling biodiesel would be required to pay a new $100 fee in addition to existing local, state and federal fees and taxes.

According to information released by PPMCSA, some of its members have also expressed concern over a $5,000 blender fee contained in the proposal. The association notes that the new fee could severely impact its members’ ability to import regular diesel and blend biodiesel from surrounding states, which could have a significant impact on fuel distribution patterns and the price of fuel.

The amended legislation establishes a total of four of these registration fees:

  • $5,000 for each biodiesel manufacturing facility within the state
  • $5,000 for each location within the state where biodiesel is blended
  • $100 for a person, other than a person that operates at a biodiesel production or blending facility, that sells, offers sale or otherwise transfers biodiesel or a biodiesel blend within the state, whether or not the that person operates a location within Pennsylvania where such activities are conducted
  • $100 for each location, in excess of one, within Pennsylvania where a registered person sells, offers for sale or otherwise transfers title of biodiesel or a biodiesel blend

Video of Plenary Sessions from BIO’s World Congress

BIO’s World Congress on Industrial Biotechnology held 6 plenary sessions, featuring Agriculture Secretary Tom Vilsack and DOE Asst. Secretary Cathy Zoi. Additionally, a World Economic Forum report on the Future of Industrial Biorefineries, detailing the potential economic contribution that industrial biotechnology can make, was presented by Novozymes CEO Steen Riisgaard. And a survey of the industrial biotech and advanced biofuel industry by McKinsey & Co. took the pulse of executives in the industry.

In the June 28 plenary session, DOE Asst. Sec. Zoi announces funding totaling $24 million for three algae biofuel research consortia.

During the June 29 plenary session, Ag. Sec. Vilsack indicated that the Obama administration supports biofuel development as a means of boosting rural employment and economic development.

Novozymes CEO Riisgaard followed Vilsack, saying that “converting biomass into fuels, energy, and chemicals has the potential to generate upwards of $230 billion to the global economy by 2020.”

Earlier that day, McKinsey & Co.’s Raoul Oberman presented the findings of a survey of the industry, including that more than half of respondents said there is currently insufficient capital to support growth of the industry.

Final Notes from BIO’s World Congress

On June 29 at BIO’s World Congress, Steen Riisgaard, CEO of Novozymes, and Stephen Tanda, Board Member of Royal DSM N.V., released a report from the World Economic Forum on The Future of Industrial Biorefineries. The report says that a biorefinery value chain could create revenue for agricultural inputs ($15 billion US), for biomass production ($89 billion), for biomass trading ($30 billion), for biorefining inputs ($10 billion), for biorefining fuels ($80 billion), for bioplastics ($6 billion) and for biomass power and heat ($65 billion) by 2020.

You can download and listen to the press conference Release of report on The Future of Industrial Biorefineries.

The highlight of the final day of the World Congress was a debate between Princeton Visiting Scholar Tim Searchinger and MSU Professor Bruce Dale, moderated by Univ. of Minnesota’s John Sheehan. Sheehan sought to explore both the strongest and weakest parts of the arguments for and against including an indirect land use penalty in the carbon lifecycle of biofuels and bioenergy. For him, the central question in the debate is whether or not the world is running out of land to use — for all purposes, not just agriculture — meaning that any new use, such as biofuels, inevitably causes a shift of use somewhere else.

For Searchinger, the central point is that the traditional lifecycle of biofuels and biomass energy accounts a credit for using carbon stored in crops and trees. Bioenergy, he argues, should only get credit for new sources of carbon that it creates or for using carbon that would have decayed and entered the atmosphere anyway, but never for carbon that is already stored.

Dale took an optimistic view that a switch to bioenergy — and away from petroleum — would spur the creation of additional carbon stores. This could be accomplished through increased productivity and yield on the same amount of land, for instance, and through regrowing of crops and biomass sources so that the credit given to bioenergy is repaid quickly.

More from the World Congress in Washington

Day two of BIO’s World Congress on Industrial Biotech brought more announcements from Genomatica and BIO itself, and day three promises exciting news from Ceres — The Energy Crop Company, according to sources.

Genomatica successfully scaled its first commercial product — 1,4 butanediol (BDO), a product with a $3 billion market used to make spandex, automotive plastics, running shoes, etc. — to pilot scale, running multiple successful batches of 3,000 liters. Genomatica uses computer aided analysis, modeling and simulation to design highly engineered microbes and has a vision that microbial productivity will increase the way chip memory did for computers.

Ceres has developed a new plant trait that improves salt-tolerance for energy grasses, including sorghum, miscanthus and switchgrass. Researchers tested the effects of very high salt concentrations and seawater from the Pacific Ocean, which contains mixtures of salts in high-concentration, on improved energy grass varieties growing in greenhouses. “Soils containing salt and other growth-limiting substances restrict crop production in many locations in the world. This genetic breakthrough provides new opportunities to overcome the effects of salt,” said Flavell. In food crops, Ceres has confirmed the trait in rice to date and is preparing additional testing in others.

During the lunch plenary session on Tuesday, Raoul Oberman of McKinsey & Co. released the results of a survey of BIO member companies on the future of the industry. Notably, the results included responses to the question, “By the year 2025, what will be the dominant fossil fuel alternative?” The majority (60 percent) of industry respondents said “Bio-substitutes for gasoline,” while 19 percent cited biodiesel and 16 percent said electric vehicles. McKinsey’s analysis showed that on a land use efficiency analysis, electric vehicles powered by biomass achieved 37 miles per acre while biofuels achieved 30.

More than half (55 percent) of respondents said there is currently insufficient capital to support growth of the industry. Three quarters of respondents (76 percent) supported “Governments create long-term regulatory frameworks and offer incentives” as a solution, and two thirds also supported “Science offers clear evidence of biofuel efficiency and carbon impact” as a driver of investment.

You can view the presentation of the findings by Oberman at McKinsey Industry Survey on Biofuel Outlook 2010.

BIO also presented the 2010 George Washington Carver Award to MIT Professor Greg Stephanopoulos, a pioneer in metabolic engineering and commercialization of industrial biotech processes.

Algae-Based Biofuels

Last week the Triplepundit wrote a post called, Breaking the Cost Barrier on Algae-based Biofuels.  The piece noted that the technology was promising and then provided a summary of where things are today

And just where are things?  Today biofuel companies are currently seeking to scale the commercial production of algae and are pursuing several engineering approaches to the design of an economical system for growing algae. The industry is also investigating use of closed systems and open pond systems. In closed systems, engineers can precisely regulate algae growth conditions. Closed systems include both photobioreactors for photosynthetic algae strains and traditional bioreactors (enclosed tanks such as those used in other microbial growth) for those, such as cyanobacteria, that do not require sunlight. Open pond systems have been used in many settings, but can be sensitive to various environmental factors, such as contamination by other algae strains, or variations in nutrients, heat and light. Pond systems covered by thin plastic films and combination closed/open systems are being developed to control these factors.

The Defense Advanced Research Projects Agency is working with teams led by Science Applications International Corp. (SAIC) and General Atomics to produce cost-effective military jet fuel (JP-8) from algae. Testing is expected to begin in 2011. The Navy’s Defense Energy Support Center has also purchased and begun testing algae-derived diesel distillates from Solazyme. And Continental Airlines and Japan Airlines have successfully tested Jet A from Sapphire Energy and UOP Renewables in commercial jets, including Boeing 737 and 747 planes.

Raining on Cellulosic Ethanol’s Parade

Writer Alyssa Danigelis posted an item of interest on Discovery News last month detailing the latest supposed “blow” to the biofuel industry. The writer highlights a new study in Agronomy Journal in which Kansas State University Assistant Professor Humberto Blanco-Canqui concludes, “Only a small fraction (about 25%) of residue might be available for removal, depending on soil type and climate. This small amount of crop residues is not economically feasible nor logistically possible.”

Matt Merritt of POET and Professor Bruce Dale of Michigan State University have posted responses to Blanco-Canqui’s conclusion. What they drive at is that the fraction of agricultural residue that can be removed from a field depends greatly on the geography and management of that field. Jim Hettenhaus of CEA Inc. has helped lead a study in Imperial, Neb., to determine optimum stover removal and storage practices based on local variables in soil type and weather, and he was kind enough to share preliminary results (See Stover Value Review). And several years ago, BIO published a study, Achieving Sustainable Production of Agricultural Biomass for Biorefinery Feedstock, that indicates the amount of residue removed from a field can be increased through adoption of no-till soil management.

The economic feasibility of harvesting crop residues for cellulosic biofuel production, of course, is highly dependent on the individual farmer. Aside from its value in managing organic carbon in tilled soil, crop residues are also currently used as animal bedding and other things. Individual farmers are thus faced with a decision whether the biofuel market for crop residues is attractive enought to induce them to change their field management practices, buy new harvesting equipment, and forego current uses of residues to instead transport them to a collection or storage facility. The same economic question faces any farmer who considers growing switchgrass or short-rotation woody crops, which are favored by Blanco-Canqui. And for the most part, biofuel production does not yet provide a compelling market for farmers, although POET and others have begun contracting directly with farmers to harvest and deliver small, easily harvested amounts of residues to pilot production plants.

Perhaps the most pernicious assumption behind many academic and press articles is that cellulosic ethanol “proposes turning waste into something useful.” Considering the costs of trash removal for most cities, even trash won’t be considered “waste” if it becomes a valuable feedstock for biofuels. Just as pernicious, perhaps, is the industry’s assumption that an apparently abundant resource is naturally a cheap resource. Inevitably, these assumptions have led everyone to search for the perfect energy source – one that doesn’t compete with food production, doesn’t require petroleum fertilizers, and doesn’t come with the dreaded “unintended consequences.” A far better plan would be to seek sources that best fit a local area, and then look for ways to manage them in economically and environmentally sound ways.

Where is BIO: Amy Ehlers, Advanced Biofuels Technology Trends and Policy Opportunities

Last week, Amy Ehlers, Policy Manager in BIO’s Industrial and Environmental Section, gave a presentation in the Sustainability and the Environment track at the 2010 DOE Biomass Conference in Washington, DC. The title of the panel was: A look at the effect of Federal climate change legislation on the bioenergy sector and the title of her presentation was: Advanced Biofuels Technology Trends and Policy Opportunities. The session was moderated by Liz Marshall, Resource Economist, Biofuels Production and Policy Project, World Resources Institute and other panelists included Brent Yacobucci, Specialist in Energy and Environmental Policy, Congressional Research Service, Nathanael Greene, Director of Renewable Energy Policy, Natural Resources Defense Council and Dr. Adam Liska, Assistant Professor, Department of Biological Systems Engineering, University of Nebraska.

Ms. Ehlers highlighted industrial biotechnology as the key enabling technology for producing biofuels and biobased products like bioplastics and renewable chemicals to aid in reducing our dependence on foreign sources of oil, thereby reducing greenhouse gas emissions. Industrial biotechnology is the application of life sciences to improve traditional manufacturing and chemical synthesis manufacturing processes by using micro-organisms like bacteria and fungi as well as enzymes to improve manufacturing processes and make new “biobased” products and materials, including biofuels, from renewable feedstocks. Our member companies are using this technology to improve the yield, efficiency and energy inputs in first generation biofuels production, develop new feedstocks such as purpose-grown energy crops, broaden the use of algae technologies, make advancements in end molecule diversification for fuels and increase focus on renewable chemicals and bioproducts.

Currently there are over 40 planned or pilot production biorefineries all over the United States. The total job creation potential for the biofuels industry could reach 123,000 in 2012, 383,000 in 2016, and 807,000 by 2022 if the 36 billion gallon renewable fuel standard is met. In addition, industrial biotechnology can save the world up to 2.5 billion tons of CO2 per year. EPA’s analysis for the renewable fuel standards found that cellulosic biofuels reduce emissions by 110% compared to the gasoline baseline.

However, to realize the potential of this technology, there are serious issues that need to be addressed. For example: The issue of indirect land use change needs a conclusive policy approach; cap and trade legislation needs carbon accounting for advanced biofuels; financing policy needs programs that de-risk invest and tax incentives; and to advance the technology and product diversity we need a variety of feedstocks, conversion technologies, and products to achieve relevance and sustainability.

The benefits on all fronts reach far beyond ethanol, even beyond biofuels. The integrated biorefinery is the goal. Similar to a petroleum refinery, the integrated biorefinery has one feedstock going in, multiple products coming out. The benefits are numerous: an economic business model, energy efficient facilities, lowering dependence on foreign oil, lowering fuels, products and chemicals prices, boosting regional/rural economies, creating thousands of new permanent jobs and significantly reducing green house gas emissions compared to petroleum counterparts.

Finally Ms. Ehlers recommended that as the federal and several state governments contemplate and draft comprehensive climate change legislation and regulations, it’s important to keep in mind the benefits of industrial biotechnologies, biofuels and bioproducts and not inadvertently deter commercialization of some of the most promising greenhouse gas reduction technologies ready to be deployed. Specifically, biofuels should not be reregulated in a carbon regime as they are already regulated under the renewable fuel standard and biobased products need to be recognized and treated equally as these products provide green house gas emission reduction benefits by replacing petroleum use. Also, with regard to bio-power we need to consider how biomass feedstocks used for electricity be regulated in climate legislation, will biopower feedstocks be held responsible for indirect land use change like biofuels and how this could affect feedstock pricing for biofuels and biobased products. In closing, Ms. Ehlers reminded the audience that you can’t have a low carbon future without significant contributions from the biofuels and bioproducts industries.