EIA issues 2012 cellulosic biofuel predictions

By Kris Bevill | November 16, 2011

The U.S. DOE’s Energy Information Administration predicts that only six cellulosic biofuel producers will make fuel available for sale in 2012, producing a total of just 6.9 million gallons of fuel over the course of the coming year. The agency’s annual fuel production estimates were submitted recently to the U.S. EPA as required by the Clean Air Act and will be used as the basis for the EPA’s 2012 renewable fuel standard (RFS) volumes, due to be finalized by Nov. 30.

In June, the EPA proposed a 2012 cellulosic biofuel volume range of 3.45 to 12.9 million gallons,   drastically lower than the original 500 million gallon target set by the Energy Independence and Security Act of 2007. The proposed reduction was somewhat anticipated by the biofuels industry, which has failed to scale-up its cellulosic production capabilities at the pace intended initially due a variety of reasons. Producers argued at a public hearing this summer that the EPA should finalize a volume on the high side of the proposal in order to continue to encourage investment in the industry, but the EIA’s predictions, which are based on publicly available information and on discussions with potential producers, indicate that actual production will likely be closer to the low end of the EPA’s proposed spectrum. The EIA has also determined that several companies named by the EPA in its proposed rule will not be mechanically able to produce fuel for sale next year.

According to an Oct. 19 letter issued by EIA Acting Administrator Howard Gruenspecht to EPA Administrator Lisa Jackson, the EIA expects cellulosic ethanol producers Fiberight LLC and Ineos New Planet BioEnergy LLC and renewable diesel producer KiOR Inc. to produce cellulosic biofuels at commercial-scale next year. Additionally, the EIA named KL Energy Corp. and ZeaChem Inc. as being able to contribute smaller amounts of fuel to the 2012 RFS from their demonstration-scale cellulosic ethanol facilities. The EIA also included American Process Inc. as a small contributor. The EPA did not include API on its list, but according to Gruenspecht the company has indicated that it intends to make some fuel available for sale in 2012. API is currently constructing a 1 MMgy wood-based facility in Alpena, Mich., and has stated that it plans to produce cellulosic ethanol and butanol.

Three of the producers named to the EPA’s list—cellulosic ethanol producers DuPont Danisco Cellulosic Ethanol LLC and Fulcrum Bioenergy Inc. and renewable gasoline producer Terrabon Inc.—were omitted from the EIA’s list of anticipated producers. According to the EIA, DDCE is expected to focus its efforts in 2012 on its proposed commercial-scale facility in Iowa and won’t be making fuel produced at its Vonore, Tenn., demonstration-scale plant available in the marketplace. Fulcrum and Terrabon are not expected to have mechanically complete facilities by mid-2012 and therefore cannot be expected to produce fuel by the end of the year, according to the agency.

Gruenspecht said in the letter that the EIA’s predictions reflect the agency’s best judgment, but that they are still “inherently uncertain.” To illustrate the uncertainty of the agency’s projections, he pointed out that the EIA’s cellulosic biofuel estimate for 2011 was 3.94 million gallons, but that actual sales, if any, will be well below that estimate.