Who’s on the List?
In June, the U.S EPA issued its proposal to reduce the coming year’s cellulosic biofuels volume target for the renewable fuel standard (RFS). The RFS goals set by Congress in 2007 call for increasing amounts of cellulosic biofuels, beginning with 100 million gallons in 2010 and ramping up to 16 billion gallons in 2022. The EPA is authorized to reduce those targets if the industry does not have the capacity to reach them, which is what it has been doing every year since 2009.
Cellulosic producers agree that the reductions have been necessary and say this year’s proposal to drastically reduce the 2012 volume requirements from 500 million gallons down to no more than 15.7 million ethanol-equivalent gallons is on par with the industry’s growth. While some critics cite the repeated reduction in cellulosic biofuels volumes as proof of the industry’s failure, cellulosic producers say it is merely an indicator of the enormously difficult financial climate and stress that the technology is ready for take-off as soon as facilities can be built.
“Bioscience and process engineering solutions are being delivered across the nation, but the capital required to enable meaningful production, and the difficulty in sourcing such capital, has resulted in project delays,” says Craig Stuart-Paul, CEO of Fiberight LLC. “The industry, however, is populated with creative entrepreneurs and strategic industries willing to shoulder this risk, and new financing options have been established which, with support from government loan funding, will ensure that projects come online in 2012.”
Fiberight has been working for some time to transform a former corn-ethanol plant to produce 5.5 MMgy of cellulosic ethanol from municipal solid waste (MSW). The facility was one of a few plants expected to produce measurable volumes of cellulosic ethanol this year, but has yet to achieve that goal. Stuart-Paul says that while the plant produced several tanker loads in 2010, the delay in market value for cellulosic renewable identification numbers (RINs) prompted the company to focus its 2011 efforts on fundraising. He hopes to begin production by the end of the year, but says he can’t predict an anticipated volume until construction and commissioning activities are complete. The EPA expects Fiberight will contribute 3 million ethanol-equivalent gallons to the 2012 volume. The facility is expected to begin producing at capacity in 2013.
DuPont Danisco Cellulosic Ethanol LLC also made the EPA’s short list of expected producers for both 2011 and 2012. The company has been producing small amounts of ethanol at its demonstration-scale facility in Vonore, Tenn., and plans to continue. It recently announced Nevada, Iowa, as the location for a 25 MMgy cellulosic ethanol facility, expected to be ready in 2013. Jennifer Hutchins, communications director for DDCE, says it is critical that the long-term RFS goals remain in place to provide assurance to investors. “The most important thing is consistency in policy, which will be key to meeting U.S. goals for renewable fuel and energy independence,” she says. “From DDCE’s perspective, the technology is proven and now we are preparing the process for large-scale production and establishing a cost-efficient model for commercial biomass supply. The industry continues to advance.”
Ineos Bio is a new addition to the EPA’s anticipated producer list for 2012. The company’s joint venture, Ineos New Planet BioEnergy LLC, is currently constructing an 8 MMgy vegetative waste and MSW-to-ethanol facility in Vero Beach, Fla., and is expected by the EPA to contribute up to 3 million ethanol-equivalent gallons of fuel next year. Dan Cummings, vice president of Ineos Bio, says the company is comfortable with the EPA’s target for the Vero Beach plant and believes the overall reduction proposal is accurate. “EPA conducts a thoughtful screening and interview process to determine the level to set for each year,” he says. “We don’t have any information or reason to second-guess their work or process. While the target may have been lowered in 2012, we believe new technologies like ours are coming online, which will help the U.S. in its quest for energy security and help meet the RFS targets in the coming years.” Ineos expects the Vero Beach plant to come online mid-2012 and will operate at capacity by the end of the year. The company is currently actively discussing licensing opportunities for its technology with companies around the world and believes its 8 MMgy model can be replicated at larger scale to help meet future RFS goals in coming years, Cummings says.
Fulcrum Bioenergy Inc. is also new this year to the EPA list. The company has struggled to obtain federal loan guarantee assurance for its project and has not yet begun building its 10.5 MMgy post-sorted MSW-to-ethanol plant in McCarran, Nev., but the EPA believes it could contribute 500,000 ethanol-equivalent gallons of cellulosic ethanol next year. Ted Kniesche, vice president of business development at Fulcrum, declined to comment on whether the EPA’s target for its facility is accurate, but says the continued waiver of the cellulosic biofuels category should not be perceived as an industry failure. “The industry is moving rapidly into construction with several commercial plants, which will begin contributing materially to the RFS in the coming years,” he says. “It’s important to remember that the gallons ‘waived’ under the cellulosic category are still required to be blended under the overall advanced biofuel category. By holding firm to those volumetric requirements, EPA sends an important signal to obligated parties that the overall 21 billion gallons of advanced biofuels will continue to be required by 2022.”
Comments on the EPA’s proposal are being accepted until Aug. 11. The agency is required to finalize the 2012 volume requirements by Nov. 30.