scottmadden advances in cellulosic ethanol · pdf filesupport for second generation fuels is...

Advances in Cellulosic Ethanol T h l iTechnologies

January 2009

Contact: [email protected]

Copyright © 2009 by ScottMadden. All rights reserved.

ContentsContents

Cellulosic Ethanol Overview

C ll l i Eth l T h lCellulosic Ethanol Technology

Costs, Funding and Investment

Major Policies and Industry Players

Biorefineries

Summary – SWOT Analysis

Appendices— Appendix 1: Summary of Technology Development Goals— Appendix 2: Per Acre Economics

Copyright © 2009 by ScottMadden. All rights reserved.1

Cellulosic Ethanol Overview

OverviewOverviewIn 2006, ethanol (produced from sugar cane in Brazil and corn in the US) was a global industry of over 12 billion gallons peryear

Major agriculture and food conglomerate, Archer-Daniels-Midland (ADM), produced 1 billion gallons of corn based ethanol in 2005, which was more than 25% of the U.S ethanol production and 11 % of the world total

Due to the pressure on commodity supply and prices, a range of innovative companies are looking to find better and cheaper ways to make ethanol from nonfood crops

— There are conflicting projections on whether corn will be able to meet the growing ethanol feedstock needs— A 2006 New Energy Harvest report states that if the US reaches its Renewables Fuel Standard (RFS) goal for 2010,

the limits of feedstock supply will be reached (and still only supply approximately 6% of light duty vehicle fuels); some estimates have corn-based ethanol running out of land at 15 billion gallons/year

— The report further implies that for ethanol to significantly reduce oil imports and improve national oil security p p g y p p yfeedstocks must shift from grains to cellulose such as corn Stover, wheat straw, and rice husks, or other sources

Support for second generation fuels is certainly near the top of the US government’s biofuels agenda— In addition to recent extensions of the Federal Production and Investment Tax credit programs, the Emergency

Economic Stabilization Act contains provisions that half of new cellulosic biofuels plants can be written off immediately against a company’s tax bill provided they come on line before 2013against a company s tax bill provided they come on line before 2013

To move beyond current ethanol technologies, there needs to be a variety of alternative fuels, including ethanol produced from cellulosic materials like grasses and wood chips

The US has abundant agricultural and forest resources that can be converted into biofuels – recent studies by the US Department of Energy (DOE) suggest these resources can be used to produce enough ethanol 60 billion gallons/year toDepartment of Energy (DOE) suggest these resources can be used to produce enough ethanol – 60 billion gallons/year – to displace about 30% of our current gasoline consumption by 2030


Sources: The Clean Tech Revolution, Ron Pernick and Clint Wilder, HarperCollins Publishers, 2007; New Energy Finance Monthly Briefing, Volume V – issue 20, December, 2008

Overview (Cont’d)Overview (Cont d)Currently, there are no commercial cellulosic ethanol refineries – the ethanol we use is derived primarily from corn kernels, a form of starchy biomass

When manufacturers produce ethanol from corn, they use enzymes to convert starches to simple sugars and yeasts to ferment the sugars into ethanol

Cellulosic biomass contains sugars as well, but they are much harder to release than those in starchy biomass. To complicate matters, the process of releasing the sugars produces by-products that inhibit fermentation, and some of the sugars from cellulosic biomass are difficult to fermentcellulosic biomass are difficult to ferment

All this makes cellulosic ethanol production complicated and expensive – to displace petroleum, cellulosic ethanol must be cost competitive

Current research includes both biochemical (chemicals, enzymes, and fermentative microorganisms) and thermochemical (heat and chemical) processesand chemical) processes

For the biochemical processes, research is focused on pretreatment, hydrolysis, and fermentation steps as well as process integration and biomass analysis

For the thermochemical processes, research focuses on catalyst development, process development, and process analysis


Sources: The Clean Tech Revolution, Ron Pernick and Clint Wilder, HarperCollins Publishers, 2007;New Energy Finance Monthly Briefing, Volume V – issue 20, December, 2008

The Maturity of Various Biofuels TechnologiesThe Maturity of Various Biofuels Technologies

FUEL SOURCE BENEFITS MATURITY

Grain / Sugar Ethanol

Corn, sorghum, and sugarcane

Produces a high-octane fuel for gasoline blendsMade from a widely available renewable resource

Commercially proven fuel technology

Biodiesel Vegetable oils, fats and Reduces emissions Commercially proven fuel

More M

aBiodiesel greases Increases diesel fuel lubricity technology

Green Diesel Oils and fats, blended with crude oil

Offers a superior feedstock for refineriesA low sulfur fuel

Commercial trials underway in Europe

Produces a high-octane fuel for gasoline blends DOE program is focused on a

ature

Cellulosic Ethanol Grasses, woodchips, and agricultural residues

Produces a high octane fuel for gasoline blendsThe only viable scenario to replace 30% of U.S. petroleum use

DOE program is focused on a commercial demonstration by 2017

Butanol Corn, sorghum, wheat and sugarcane

Offers a low volatility, high energy density, water tolerant alternate fuel

BP and DuPont in the process of producing Butanol

Pyrolysis Any lignocellulosic biomass

Offers refinery feedstocks, fuel oils, and a future source of aromatics or phenols

Several commercial facilities produce energy and chemicals

Syngas Liquids Various biomass as well as fossil fuel sources

Can integrate biomass sources with fossil fuel sources

Demonstrated on a large scale with fossil feedstocks, commercial biomass projects Las fossil fuel sources

Produce high quality diesel or gasolinecommercial biomass projects under consideration

Diesel/Jet Fuel From Algae

Microalgae grown in aquaculture systems

Offer a high yield per acre and an aquaculture source of biofuelsCould be employed for CO2 capture and reuse

Demonstrated at a pilot plant in the 1990’s

Could generate synthetic gasoline diesel fuel Laboratory scale research in

Less Mature


Hydrocarbons Biomass carbohydrates Could generate synthetic gasoline, diesel fuel, and other petroleum products

Laboratory scale research in academic laboratories

e

Cellulosic Ethanol vs. Corn-based EthanolCellulosic Ethanol vs. Corn based Ethanol

Cellulosic ethanol has several advantages over corn-based ethanol, but it is currently more expensive

AttributeAttribute CornCorn--basedbased CellulosicCellulosic

Renewable Resource Yes Yes

Primary Feedstock Domestic corn Non-edible biomass: grasses, woodchips, agricultural residuesagricultural residues

Economics Borderline in certain regionsStarch in corn is easily accessible and convertible into sugars

Restrictively higher costConverting cellulose into sugars that can be fermented is more complex and thus more expensive

Production Process Dry or wet milling Complex biochemical or thermochemical processes

Impact on Land Can leave soil exploitedRequires significant fertilizer and

ti id

Less erosion and better soil fertility than food cropsLower inputs of energy, fertilizer and pesticides are

d d tpesticide use needed to grow grasses

Quantity Potential in US Many experts estimate that corn-based ethanol producers will run out of land at around 15 billion gallons of fuel

The National Resource Defense Council (NRDC) estimates cellulosic sources should allow for up to 150 billion gallons of ethanol by 2050

Greenhouse Gases Requires fossil fuels during production; quantity is dependent upon methods used

Lower need for fossil fuels during production, resulting in less GHG emissions throughout life-cycle

Efficiency Growing corn for energy requires more land and will compete with demand for these crops as food

An acre of grasses or other dedicated ethanol crop could produce more than two times the gallons of ethanol as an acre of corn partly because the


demand for these crops as food ethanol as an acre of corn, partly because the entire plant can be utilized

Source: MIT Technology Review

Cellulosic Ethanol Technology

FeedstockFeedstock

Several different feedstocks can be used to produce cellulosic ethanol, including agricultural and forest residues and dedicated cellulosic crops. While woodchips and agricultural residues may be the main p p g ysources of cellulosic ethanol during developmental stages of the industry, in order to reach commercial scale production, dedicated crops will most likely be needed to meet quantity and quality demands

In 2005 the UDSA and DOE engaged in the “Billion Ton Study” to investigate whether land resources in the US are adequate to sustain production of over 1 billion dry tons of biomass annually, enough to displace

i t l 30% f t ti f li id t t ti f lapproximately 30% of our current consumption of liquid transportation fuels— The report concludes that approximately 1.3 billion dry tons of biomass could be available for

bioenergy and biorefinery industries by mid-21st Century with modest changes in agricultural and forestry practices, while still meeting demand for forestry products, food and fiber

Th Offi f th Bi P ti t th tThe Office of the Biomass Program estimates that approximately 250 million try dons will be available by 2017, increasing alongside the cellulosic ethanol industry

— Assuming 100 gallons per dry ton, this results in approximately 25 billion gallons/yearpp y g y

Currently the two largest sources of cellulosic feedstock are forestry resources and corn stover, both of which can leverage markets and infrastructure already in place for the pulp/paper and the corn grain industries


Sources: NRDC; Billion Ton Study, USDA and DOE; US DOE Office of Science;US Ethanol Industry: The Next Inflection Point, BCurtis Energies & Resource Group

Feedstock (Cont’d) Feedstock (Cont d)

Development of dedicated energy crops, such as switchgrass and perennial trees, will take longer and is dependent upon the p g p pdevelopment of cellulosic ethanol technologies and facilities, as farmers will be unwilling to plant large areas until a market is guaranteed

Dedicated energy crops, such as switchgrass, offer several d t

Switchgrass

advantages over corn— Higher yield per acre— Lower need for fertilizers and herbicides— Perennial growth— Less soil erosion— Greater soil fertility

Recently Miscanthus, another perennial grass, has b tti i ifi t tt ti f it i kbeen getting significant attention for its quick growth and giant size. Miscanthus yields greater biomass per acre than switchgrass, which already produces approximately two times as much biomass per acre as corn. Some estimates show Miscanth s can ield 20 tons/acre as comparedMiscanthus can yield ~20 tons/acre, as compared to 7-15 tons/acre for switchgrass


Sources: Biofuels: Think Outside the Barrel, Vinod KhoslaEnvironment News Service

Miscanthus after one year of growth

Ethanol from Cellulosic Biomass

Cellulosic ethanol production differs from the simple milling process used to derive corn-based ethanol. The difference in process is due to the recalcitrance of the biomass used, its resistance to attacks from

Ethanol from Cellulosic Biomass

pbacteria, fungi, insects and extreme weather. It is much more difficult to breakdown cellulose into its component sugars, and therefore a more complex process is required

There are two methods of producing ethanol from cellulosic biomass: biochemical and thermochemical


Source: Michigan State University

Biochemical Production Biochemical Production

A great deal of research and activity is currently underway to address the challenges presented in each stage of cellulosic ethanol production. The primary challenge remains: efficiently and cost-effectively g p p y g y ybreaking down cellulose

ChallengesDescriptionProduction Step

In this step the cellulose is separated from the High cost of enzymes and pretreatment technology is a

Pretreatment

In this step the cellulose is separated from the hemicellulose and lignin that surround it in a protective sheathPretreatment methods include physical, chemical and biological processes, with physical and chemical most prevalent

High cost of enzymes and pretreatment technology is a major challenge of cellulosic ethanolOften pretreatment techniques that are most effective at breaking down hemicellulose also create severe conditions that degrade the sugars; use of enzymes has helped maintain milder conditions and effectiveness

Hydrolysis

This step breaks down the cellulose into its component sugars to allow for fermentationBoth chemical and enzymatic (biological) hydrolysis methods exist; however most current activity is focused on enzymatic

Production or purchase of cellulase enzymes, the enzymes that break down cellulose, is currently very expensiveMany cellulases act very slowly; improvements are needed to increase activity and efficiencyy y

methodsThe mixture resulting after pretreatment and hydrolysis is called hydrolyzate

y yAs with pretreatment, some hydrolysis methods are so harsh that they can create toxic degradation products that hinder fermentation

During fermentation, microorganisms convert the sugars in the hydrozylate into ethanol

High solids, toxic compounds and increasing ethanol concentration in the hydrolyzate make it toxic to the

Fermentation

the sugars in the hydrozylate into ethanolMicroorganisms used are primarily fungi and bacteria

concentration in the hydrolyzate make it toxic to the fermenting microorganismsBoth 5-carbon and 6-carbon sugars are freed during hydrolysis; however, known yeasts and bacteria cannot naturally ferment both types of sugar

C li ti tt f th ft ti i i diti i t ill i t f f th t


Complicating matters further, often optimizing conditions in one step will impact performance of another step. Balancing trade-offs to determine the best combination is needed to optimize the process

Source: NREL

Thermochemical ProductionThermochemical Production

Thermochemical conversion of ethanol has not received as much attention as biochemical conversion, but this process may be more suited to biomass that has higher lignin content, such as forest products p y g g pand mill residues. Cellulosic biomass can be made of 10-25% lignin-rich cellulose, which cannot easily be converted biochemically

GasificationGasification Syngas ConversionSyngas Conversion DistillationDistillation

During the gasification step, heat and chemicals are used to break the cellulose down into synthesis

After gasification, the resulting syngas must be reassembled into products such as ethanol

Since the syngas created from biomass is not clean, it must be distilled to remove contaminants

y gy g

ygas, or syngasSyngas is primarily CO and H2

psuch as tar and sulfur that interfere with the conversion of syngas into products

Thermochemical conversion is much faster than biochemical conversion and can more easily handle high lignin content; however,challenges remain for this process as well

During syngas conversion the catalysts used to convert syngas into ethanol also make other products; the process needs— During syngas conversion, the catalysts used to convert syngas into ethanol also make other products; the process needs to be refined in order to be more selective for synthesizing ethanol

— The presence of tars and other contaminants in the syngas hinders ethanol production

— Scalability remains a concern for the technology – moving from pilot plants to commercial-scale facilities will present complex challenges


complex challenges

Sources: NRELMIT Technology Review

Research Efforts and Achievements Research Efforts and Achievements

Several organizations are conducting research and developing demonstration operations in hopes of pushing the industry through the many challenges on the way to commercial-scale cellulosic ethanol p g y g y g yproduction

PretreatmentNREL – NREL and other companies are now using

i b k d h i ll l

Process IntegrationQteros – has developed a bacterium that can combine

i I d f b ki d ll lenzymes in pretreatment to break down hemicellulose. Typically the more effective pretreatment methods create harsh conditions that degrade the sugars. If enzymes are used to further break down hemicellulose after pretreatment, then a more mild pretreatment can be used without sacrificing effectiveness

two steps into one. Instead of breaking down cellulose with enzymes and then fermenting the sugars, Qteros’ bacterium can eat cellulose and produce ethanol. Additionally, it can digest 5-carbon and 6-carbon sugars

Michigan State University – Mariam Sticklen has led without sacrificing effectiveness

FermentationNREL – NREL, in partnership with NCGA and CRA, developed a yeast that can break down the 5 carbon

the development of genetically engineered corn that produce enzymes to break down the cellulose in its leaves and stems. Since the plant breaks down its own cellulose into sugars, this eliminates the need for costly external enzymes

developed a yeast that can break down the 5-carbon sugar arabinose, which constitutes up to 20% of fermentable sugars in corn fiber

NREL – NREL also modified a bacterium to enable it to ferment both arabinose and xylose, the most important 5-

b

ThermochemicalRange Fuels – Broke ground on a commercial-scale cellulosic ethanol facility in November 2007. The facility

carbon sugar

Mascoma – Lee Lynd, a professor at Dartmouth college, led the development of a bacteria that can produce ethanol at much higher temperatures, thus reducing the number of enzymes needed to break down cellulose and

will use thermochemical conversion and is expected to be operational by late 2009. Range Fuels is one of several companies in the race to achieve the first commercial scale cellulosic ethanol plant


greatly reducing cost

Sources: NRELMIT Technology Review

Costs , Funding, and Investment

Production CostsProduction Costs

The below figures show the current costs of cellulosic ethanol production and their anticipated downward trajectory over the next five years, as projected by NRELj y y p j y

For comparison, the average cost of corn ethanol was $1.69 in 2007 and rose slightly above $2.00 in the beginning of 2008

The DOE has set forth a number of cost targets for cellulosic ethanol, in order for the fuel to be cost competitive

— The cost target for 2012 is $1.33/gal –determined to be the price at which cellulosic ethanol can be cost competitive The costethanol can be cost competitive. The cost target for 2017 is $1.20/gal

The figure to the left shows the DOE cost structure targets for 2017, excluding feedstock

— These targets are based on advanced


Sources: US Ethanol Industry: The Next Inflection Point, BCurtis Energies & Resource GroupNREL

gtechnologies that are not yet deployed at full scale

Government Support and Venture Capital InvestmentGovernment Support and Venture Capital Investment

While government support plays a central role in biofuel development, cellulosic ethanol has also sparked interest from venture capital firms p p

Funding from the DOE flows through two major offices, The Office of the Biomass Program and The Office of ScienceSince the beginning of 2007, over $650 million has been ll t d f th l Bi P b d t t

Venture capital has been a major driver in the development of biofuels, with over $650 million invested in the US from the beginning of 2007 through the Q1 of 2008; this funding is almost evenly split between early and late stage dealsMajor VC firms investing in biofuels include Khosla Ventures Nth Power Mohr Davidow @ Venturesallocated from the annual Biomass Program budget to

support commercialization of biofuel technology and private efforts, and the Office of Science has committed $375 million to support new Bioenergy Research Centers, listed on the following slide

Ventures, Nth Power, Mohr Davidow, @ Ventures, Capricorn, Pinnacle and othersInvestment is skewed toward the West Coast and Northeast, regions with a history of venture capital and technological innovation, rather than areas where feedstock is plentiful and production facilities are being built


Source: US Ethanol Industry: The Next Inflection Point, BCurtis Energies & Resource Group

Government Support – Grants Government Support Grants

Without loan guarantees and government incentives, it will be difficult for the budding cellulosic ethanol industry to move from its current demonstration phase to commercial operations. The DOE has awarded y p pseveral grants to spur this transition

Integrated Cellulosic Biorefineries

Announced Feb 2007 – Selected six biorefinery projects to develop commercial-

Ethanologen Projects

Announced Mar 2007 – Selected five projects focused on developing high efficient

BioEnergy Research Centers

Announced Jun 2007 – Established three new Bioenergy Research Centers to accelerate basic y p j p

scale integrated biorefineries using a wide variety of cellulosic feedstocks

Selected Amount ($ million)Abengoa 76ALICO 33BlueFire Ethanol 40

p g gfermentative organisms to convert biomass into ethanol

Selected Amount ($ million)Cargill 4.4Verenium 5.3DuPont 3.7

gyresearch to develop cellulosic ethanol and other biofuels

Created Amount ($ million)Oak Ridge National Lab 125University of Wisconsin 125Lawrence BerkeleyBlueFire Ethanol 40

POET 80Iogen 80Range Fuels 76

DuPont 3.7Mascoma 4.9Purdue University 5.0

Lawrence Berkeley National Lab 125

Thermochemical Solicitation Enzyme Systems SolicitationSmall Scale Cellulosic Biorefineries

Announced Dec 2007 – Selected five biofuel projects to receive funding for demonstrating the thermochemical process of turning cellulose into biofuel

Selected Amount ($ million)Emergy Energy 1 7

Announced Feb 2008 – Announced investment of up to $33.8 million in four projects that will focus on developing improved enzyme systems to convert cellulosic material into sugars suitable for fermentation into biofuel

Announced Jan/Apr 2008 – Announced investment of up to $114 million to support development of small-scale cellulosic biorefineries (10% of commercial scale). Another $86 million was announced for this effort in April

Selected Amount ($ million)Emergy Energy 1.7Iowa State University 2.0Research Triangle Institute 2.0Southern Research Institute 2.0Gas Technology Institute 2.0

Selected Amount ($ million)DSM TBDGenecor TBDNovozymes TBDVerenium TBD

Selected Amount ($ million)ICM 30.0Lignol Innovations 30.0Pacific Ethanol 24.3NewPage Stora Enso 30.0Mascoma 26.0RSE Pulp & Chemical 30.0


Source: US Ethanol Industry: The Next Inflection Point, BCurtis Energies & Resource Group

Ecotin 30.0

Major Policies and Industry Players

Cellulosic Ethanol Policy TimelineCellulosic Ethanol Policy TimelineFood, Conservation and

Energy Act of 2008 (FCEA)P t i l t dit f $1 01

Energy Policy Act of 2005 (EPAct)

Established a Renewable FuelsTarget set by DOE to displace 30%

of US gasoline demand (2004Put in place a tax credit of $1.01 per gallon for cellulosic ethanol.

Also provided grants for demonstration-scale biorefineries and allowed for loan guarantees of

up to $250 million for building commercial-scale biorefineries to

Established a Renewable Fuels Standard (RFS) that set a goal of

producing 7.5 billion gallons of renewable fuels by 2012. Also

modified the Small Ethanol Producer Tax Credit, increasing the definition of a “small ethanol

EISA 2010 mandate to be met (100 million gallons cellulosic ethanol)

of US gasoline demand (2004 levels) with biofuels in 2030

commercial scale biorefineries to produce advanced biofuelsproducer” from 30 million

gallons/year to 60 million gallons/year. Small producers

qualify for 10 cents per gallon up to 15 million gallons (limit $1.5

million)

VEETC currently authorized through Dec 2010

Small Ethanol Producer Tax Credit currently authorized through Dec 2010

20072005 2008 20222010 2012

Target set by DOE for cellulosic ethanol to be cost competitive in

2017 20302004

Volumetric Ethanol

Energy Independence and S it A t f 2007 (EISA)

EISA 2022 mandate to be met (36 billion gallons renewable fuel, including 16 gallons cellulosic

ethanol)

ethanol to be cost competitive in 2012 at $1.33/galExcise Tax Credit

(VEETC)Established by The

American Jobs Creation Act of 2004, this credit originally offered $0 51 Security Act of 2007 (EISA)

Amended the RFS to require 9 billion gallons of renewable fuel in 2008,

growing to 36 billion gallons by 2022. Included in the total requirement, it

mandates that cellulosic ethanol will

Cost target from DOE decreases to $1.20/gal in 2017

originally offered $0.51 for every pure gallon of

pure ethanol blended into gasoline, but was

reduced in 2009 to $0.45 per gallon


provide 100 million gallons in 2010 and 16 billion gallons in 2022

Sources: VereniumInternational Federation of Agricultural ProducersAmerican Coalition for Ethanol

Renewable Fuels Standard in More DetailRenewable Fuels Standard in More DetailThe Energy Policy Act of 2005 established a Renewable Fuels Standard (RFS) for automotive fuels; the RFS was expanded by the Energy Independence and Security Act of 2007

Th E I d d d S it A t i th t ti l th t bl f l ff t d f i il— The Energy Independence and Security Act seizes on the potential that renewable fuels offer to reduce foreign oil dependence and greenhouse gas emissions and provide meaningful economic opportunity across this country, putting America firmly on a path toward greater energy stability and sustainability

The RFS requires the blending of renewable fuels (including ethanol and biodiesel) in transportation fuel— In 2008, fuel suppliers (refiners, blenders, and importers) must blend 9.0 billion gallons of renewable fuel intoIn 2008, fuel suppliers (refiners, blenders, and importers) must blend 9.0 billion gallons of renewable fuel into

gasoline; this requirement increases annually to 36 billion gallons in 2022— The expanded RFS also specifically mandates the use of “advanced biofuels” — fuels produced from non-corn

feedstocks and with 50% lower lifecycle greenhouse gas emissions than petroleum fuel — starting in 2009— Of the 36 billion gallons required in 2022, at least 21 billion gallons must be advanced biofuel, of that 21 billion

gallons, 16 billion gallons are to come from cellulosic ethanol specificallygallons, 16 billion gallons are to come from cellulosic ethanol specifically— Compliance is required for any facility generating more than 10,000 gallons or more of renewable fuel per year

The RFS directs EPA to promulgate regulations ensuring that applicable volumes of renewable fuel are sold or introduced into commerce in the United States annually

— On May 1, 2007, EPA issued a final rule on the RFS program detailing compliance standards for fuel suppliers, as y , , p g g p pp ,well as a system to trade renewable fuel credits between suppliers

— While this program is not a direct incentive for the construction of biofuels plants, the guaranteed market created by the renewable fuel standard is expected to stimulate growth of the biofuels industry

According to a January 2008 study, the economic impacts of a 36 billion gallon RFS include:— Adding more than $1.7 trillion to the Gross Domestic Product between 2008 and 2022— Generating an additional $436 billion of household income for all Americans during the same time period— Supporting the creation of as many as 1.1 million new jobs in all sectors of the economy— Generating $209 billion in new Federal tax receipts


Sources: Economic Impact of the Energy Independence and Security Act of 2007, LECG LLCwww.ethanolrfa.org/resource/standard/CRS Report for Congress – “Biofuels Incentives: A Summary of Federal Programs” (1/30/2008) http://epa.gov/otaq/regs/fuels/rfsforms.htm

Major Players Major Players

At least 11 companies are in the race to develop the first commercial cellulosic ethanol plant

CompanyCompany HeadquartersHeadquarters FundingFunding ActivityActivityVerenium (NasdaqGM: VRNM)

Cambridge, MA Has received DOE funding to advance cost-effectiveness of enzymes

Has a demo plant running in Jennings, LA that produces 1.4 million gallons/year; construction began February 2007

Plans to begin building a 30 million/year plant in mid-2009

Coskata Warrenville, IL Has raised over $30 million from Globespan Capital Partners, GM, Khosla Ventures, GreatPoint Ventures and Advanced Technology Ventures

Plans to scale up a pilot project in Madison, PA to 40,000 gallons/year that will start delivering ethanol in early-mid 2009

Working on a 100 million gallon/year; hopes to have it online in 2011

Range Fuels Broomfield, CO Has raised over $130 million from Plans to finish a 20 million gallon/year (scalable to 100 million g , $Passport Capital, BlueMountain, Khosla Ventures, Leaf Clean Energy Company and Pacific Capital Group

g y (gallons/year) commercial facility in 2009; construction began November 2007

Uses thermochemical process which it has been testing in pilot projects for seven years

POET (formerly Broin)

Sioux Falls, SD Was selected for a DOE grant of $80 million for its cellulosic

In process of expanding its corn-based ethanol plant in Emmetsburg IA to include a cellulosic plant(formerly Broin) $80 million for its cellulosic

ethanol plant Emmetsburg, IA to include a cellulosic plant

Construction is scheduled to start in 2009 and finish in 2011; the plant will produce 25 million gallons/year from cellulosic sources

DuPont Danisco Cellulosic Ethanol LLC

Itasca, IL Joint venture (50/50) between DuPont and Genecor, with both companies investing $70 million over three years

Plans to have its Vonore, TN pilot plant operating by 2009 and a commercial demonstration plant online by 2011

Process uses DuPont’s pretreatment and ethanologen over three years p gtechnology and Genecor’s enzymatic hydrolysis methods

Mascoma Itasca, IL Has raised almost $90 million from several investors, including GM, Khosla Ventures, Flagship Ventures, General Catalyst Partners, Kleiner Perkins Caufield & Byers Vantage Point Venture

Began construction on a pilot plant in Rome, NY in 2006

Working with Michigan State University and Michigan Technological University to build a commercial-scale biorefinery fed by wood in Michigan


& Byers, Vantage Point Venture Partners, etc

Sources: Earth2tech website; Company websites

Major Players (Cont’d) Major Players (Cont d)

CompanyCompany HeadquartersHeadquarters FundingFunding ActivityActivityZeachem Menlo Park, CA Has received funding from Mohr

Davidow Ventures ($4 million) and Firelake Capital

Has an operational test facility in Menlo Park, CA; Zeachem uses a combination of biochemical and thermochemical processing steps

Working with GreenWood Resources to build a 1.5 million gallon/year test plant in Portland, OR

Qteros (formerly SunEthanol)

Hadley, MA Has received funding from VeraSun, Battery Ventures, Camros Capital LLC and LongRiver Ventures

Developed bacteria which performs hydrolysis and fermentation in one step; long-term plan is to license its technology to companies wanting to build cellulosic ethanol facilities rather than build the facilities itself

Was awarded $100,000 research grant from DOE

Plans to have a pilot plant operational in 2009 and is working with ICM to build a demo plant that would produce 2.5 million gallons/year

BlueFire Ethanol (OTC: BFRE)

Irvine, CA Was awarded $40 million in funding from DOE

Working with contractors MECS and Brinderson on a plant located at a Lancaster, CA landfill that will produce 3.1 million gallons/year

Working with DOE to develop a 17 million gallon/year plant that will also use landfill waste to produce ethanol

Abengoa Bioenergy

Chesterfield, MO (owned by

Spanish company Abengoa)

Was awarded $76 million in funding from DOE

Opened a $35 million pilot plant in York, NE in October 2007

Plans to spend $300 million on a cellulosic ethanol plant in Hugoton, KS; plant will produce 49 million gallons/year

$Received $76 million from DOE for a 11.4 million gallon/year plant to be built in Colwich, KS

Iogen Ottawa, Ontario Has received over $130 million over the past 25 years from investors including Royal Dutch / Shell Group, Petro-Canada and Goldman Sachs

Planning to build a cellulosic ethanol plant in Saskatchewan; Iogen uses biochemical conversion

Was slated to receive $80 million in funding from DOE to build a US plant, but has more recently suspended these plans


Goldman Sachs p y p p

Sources: Earth2tech website; Company websites

Biorefineries

BiorefineriesBiorefineries

Biorefineries could be the key element in achieving the economical and efficient production of cellulosic ethanol

A biorefinery integrates biomass conversion processes and equipment to produce fuels, power, and chemicals from biomass

— Takes advantage of differences of biomass components and intermediates to maximize value derived from biomass feedstock

— Allows parallel production of chemicals and fuels— Produces energy (for internal usage or for sale as electricity)

Biorefineries can be specialized according to biomass type— Can be based on similar processes or feedstocks, for example, forest biorefineries

The biorefinery concept is much like to today's petroleum refineries, which produce multiple fuels and products from petroleum. Industrial biorefineries have been identified as the most promising route to the creation of a new domestic biobased industry

By producing multiple products, a biorefinery can take advantage of the differences in biomass components and intermediates and maximize the value derived from the biomass feedstock

— A biorefinery may produce one or several low-volume, but high-value, chemical products and a low-value, but high-volume liquid transportation fuel, while generating electricity and process heat for its own use and perhaps enough for sale of electricity. The high-value products enhance profitability, the high-volume fuel helps meet national energy needs, and the power production reduces costs and avoids greenhouse gas emissions


Source: NREL

Potential Biorefinery TechnologiesPotential Biorefinery TechnologiesSeveral technologies The Sugar Lignin TechnologyThe Sugar-Lignin Technology

One out of eight gallons of gasoline sold in the United States already includes ethanol as an additive. Ethanol is made by fermenting sugar, most of which is derived from starch in corn kernels. In contrast, instead of starting with sugar, NREL’s advanced bioethanol technology starts with cellulose and hemicellulose, two of the three main components of most plant material—vastly expanding potential feedstocks—breaking them down to sugars for fermentation. In addition to ethanol, the y p g p g gsugars, or intermediate breakdown products, can be fermented, polymerized, or otherwise processed into any number of products. Lignin, the third main component of biomass, can fuel the process or be used to produce a slate of different chemicals, expanding the number of products for the sugar-lignin platform biorefinery

The Syngas Technology

If biomass is heated with limited oxygen (about one-third that needed for ideal combustion), it gasifies to a “syngas” composed mostly of hydrogen and carbon monoxide. That syngas inherently burns cleaner and more efficiently than the raw biomass. NREL scientists are using gasification technology to improve a large innovative biomass power plant in Vermont (see sidebar “Vermont Gasifier”) and to provide electricity for the first time to isolated Philippine villages with small electric generators. The syngas also can be used to produce hydrogen (see “Hydrogen Economy” on pages 10-13) which, in turn, can g y g p y g ( y g y p g ) , ,be used as a fuel or to make plastics, fertilizers, and a wide variety of other products. Syngas can also be converted to sulfur-free liquid transportation fuels using a catalytic process (known as the Fischer-Tropsch Process), or provide base chemicals for producing biobased products

The Bio-Oil Technology

If biomass is heated to high temperatures in the total absence of oxygen, it pyrolyzes to a liquid that is oxygenated, but otherwise has similar characteristics to petroleum. This pyrolysis- or “bio-” oil can be burned to generate electricity or it can be used to provide base chemicals for biobased products. As an example, NREL researchers have extracted phenolics from bio-oil to make adhesives and plastic resins. NREL uses several thermochemical reactor systems—available for use by outside researchers—to efficiently pyrolyze and control the bio-oil components. NREL scientists have also used pyrolysis for “true


recycling” of plastics such as nylon carpeting, selectively regenerating the base chemicals from which the plastics were made

Source: NREL

Potential Biorefinery Technologies (Cont’d)Potential Biorefinery Technologies (Cont d)The Biogas Technology

Another way to convert “waste” biomass into useful fuels and products is to have natural consortiums of anaerobicAnother way to convert waste biomass into useful fuels and products is to have natural consortiums of anaerobic microorganisms decompose the material in closed systems. Anaerobic microorganisms break down or “digest” organic material in the absence of oxygen and produce biogas as a waste product. Biogas produced enclosed tanks, or anaerobic digesters, consists of 50% to 80% methane, 20% to 50% carbon dioxide, and trace levels of other gases such as hydrogen, carbon monoxide, oxygen, and nitrogen. NREL has developed an anaerobic digestion system that handles much higher solids loading than typical digesters. This system effectively converts cellulosic waste (such as municipal solid waste) and f tt t ( h t l d ) t th i h bi it bl f ti ( t ti t i lfatty waste (such as tuna cannery sludge) to a methane-rich biogas suitable for power generation (or as a starting material for biobased products) and usable compost material. Anaerobic digesters are currently getting considerable attention as a way to turn swine and cattle manure into useful fuel and chemicals

The Carbon- Rich Chains Technology

Plant and animal fats and oils are long h drocarbon chains as are their fossil f el co nterparts Some are directl sable asPlant and animal fats and oils are long hydrocarbon chains, as are their fossil-fuel counterparts. Some are directly usable as fuels, but they can also be modified to better meet current needs. Fatty acid methyl ester—fat or oil “transesterified” by combination with methanol—substitutes directly for petroleum diesel. Known as biodiesel, it differs primarily in containing oxygen, so it burns cleaner, either by itself or as an additive. Biodiesel use is small but growing rapidly. In the United States, it is made mostly from soybean oil and used cooking oil. Soybean meal, the co product of oil extraction is now used primarilyas animal feed, but also could be a base for making biobased products. Glycerin, the coproduce of making biodiesel, is l d d t k i t f d t b t h t ti l f A d th f tt id d f d t t dalready used to make a variety of products, but has potential for many more. And the fatty acids are used for detergents and

other products. So carbon-rich chains are already well on their way as a platform for the biorefinery

The Plant Product Technology

Modern biotechnology not only can transform materials extracted from plants, but can transform the plants to produce more l bl t i l S l ti b di d ti i i b d t i d ti f h i l llvaluable materials. Selective breeding and genetic engineering can be used to improve production of chemical, as well as

food, fiber, and structural products. Plants can be developed to produce high-value chemicals in greater quantity than they do naturally, or even to produce compounds they do not naturally produce. With its genetic engineering, material and economic analysis, and general biotechnology expertise, NREL could make major contributions in this exciting arena. For example, NREL researchers exploring variation in composition of stover for various strains of corn are analyzing the impact this makes on producing ethanol from stover


Source: NREL

Typical BiorefineriesTypical Biorefineries

Despite multiple technology options, the two most promising biorefinery technologies are biochemical technology (or “sugar platform”) and thermochemical technology (or “syngas platform”). As discussed gy ( g p ) gy ( y g p )earlier, sugar platform biorefineries break biomass down into different types of component sugars for fermentation or other biological processing into various fuels and chemicals. Thermochemical biorefineries would convert biomass to synthesis gas (hydrogen and carbon monoxide) or pyrolysis oil, the various components of which could be directly used as fuel


Sources: DOE; EERE

Biorefinery DevelopmentBiorefinery Development

Because a biorefinery uses more than one technology, successful deployment of biorefineries depends on overcoming not just biochemical technology challenges, but biochemical and thermochemical g j gy gchallenges. These barriers need to be addressed in order for lenders to be comfortable loaning the large sums required for biorefinery projects

As highlighted earlier, thermochemical and biochemical conversion methods offer different challenges— Thermochemical

• Improving syngas clean-up is necessary to more effectively reduce the tars and other contaminants that negatively impact conversion to ethanol

• Catalyst selection needs to be improved in order to increase yield of desired products— BiochemicalBiochemical

• The need for increased enzyme effectiveness and greater efficiency of fermentation remains

Government support is working to make commercial-scale biorefineries viable— Six grants were awarded to develop commercial-scale biorefineries using multiple feedstocks,

h i i $33 $80 illieach company receiving $33-$80 million— An additional $114 million was awarded in four grants for “10 Percent” demos – smaller scale

projects than the original six that are expected to demonstrate commercial viability by building biorefineries that will produce 10% of an intended commercial volume • Displaying 10% of commercial volume was determined to be required in order for conventional• Displaying 10% of commercial volume was determined to be required in order for conventional

financiers to consider investment— Several projects are underway as a result of government funding, but currently no commercial-

scale biorefinery has been completed


Sources: NREL; Ethanol Producer Magazine

Summary – SWOT Analysis

Summary – SWOT Analysis For Cellulosic Ethanol Summary SWOT Analysis For Cellulosic Ethanol

Strengths WeaknessesC t ib t t l C t d ti t h l i t t titiContributes to secure energy supplyMore likely to reduce GHG emissions than corn-based ethanolNew employment – estimate possible 10,000-20,000 jobs per billion gallons of ethanolRural economic benefits – provides farmers with revenues for th i id

Current production technologies are not cost competitive Capital costs are high – federal support needed to encourage investment Diversification of transport fuels requires diversification of technology (e.g. motors)F l i l l d d th l f d ttheir residues

Additional farming distribution channelReduced agricultural premiums and subsidiesMaximized use of set aside landReduced land degradation and greener wastelands

Fuel prices largely depend on the sale of co-productsFeedstock production largely depends on many vagaries of nature, including extreme weather conditions and pest attacksLower energy content per volume than fossil fuels

Reduced land degradation and greener wastelandsHigher yield per acre than corn-based ethanolCo-products provide additional incomeNontoxic

Opportunities ThreatsOpportunities ThreatsReplace a large percentage of fossil fuelsDecrease dependency and imports of crude oilReduce air pollution and GHG emissionsOrderly transition from fossil fuels era

Relatively new market and small market shareWeak political lobby vs. fossil fuelsLimited feedstock production – need technology to develop in order to incentivize larger feedstock investment

Future research initiativesEnergy efficient crops and cheaper feedstocksImproved conversion technologiesAdvancement of biotechnology

Further biological and technological breakthroughs are necessary for commercial-scale viability


Source: WIP Renewable Energies – “Biofuel SWOT Analysis” (2007)

Appendices

Appendix 1: Summary of Technology Development Goals Appendix 1: Summary of Technology Development Goals The DOE’s Office of the Biomass Program has established the following technology development goals and timeline


Sources: DOE – Office of The Biomass Program

Appendix 2: Per Acre EconomicsAppendix 2: Per Acre EconomicsSeveral studies claim the benefits for US farmers will be substantial once the cellulosic ethanol industry takes off. The below table shows how the higher per acre yield of dedicated biomass crops can benefit feedstock producers

Per Acre Economics of Dedicated Biomass Crops vs. Traditional Row Crops

Biomass Corn WheatGrain yield (bushel) N/A 162 46

Grain price ($/bushel) N/A $2 $3

Biomass yield (tons) 15 2 2Biomass yield (tons) 15 2 2

Biomass price ($/ton) $20 $20 $20

Total revenue $300 $364 $178

Variable costs $84 $168 $75

Amortized fixed costs $36 $66 $36

Net return $180 $120 $57


Source: Ceres

Contact UsContact UsFor more information on advances in cellulosic ethanol technologies, please contact us.

J “J k ” J biJere “Jake” JacobiPartner

ScottMadden, Inc.Ten Piedmont Center

Suite 805Atlanta, GA 30305

Jere “Jake” JacobiPartner and Sustainability Practice Leader

ScottMadden, Inc.Ten Piedmont Center

Suite 805Atlanta, GA 30305

Phone: 404-814-0020Mobile: 262-337-1352

[email protected]

Phone: 404-814-0020Mobile: 262-337-1352

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Prepared by : Katy Cagle & Jere Jacobi

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