Category → Scale-up
Cleantech Chemistry thanks C&EN colleague Marc Reisch for contributing this news about biobased chemicals.
M&G Chemicals, a unit of Italy’s Gruppo Mossi & Ghisolfi, plans to build a $500 million biorefinery in China to make ethanol and the polyester raw material mono-ethylene glycol from 1 million metric tons of biomass per year. The facility in Fuyang, Anhui Province, China, will be four times larger than M&G’s recently commissioned Crescentino, Italy-based biorefinery when it is open in 2015.
To be built in a joint venture with minority partner Guozhen Group, a Chinese energy and real estate conglomerate, the Fuyang refinery will use Proesa technology from Beta Renewables, a joint venture partly owned by M&G which is also a polyethylene terephthalate maker.
M&G’s CEO Marco Ghisolfi says the Fuyang refinery “is the first act of a green revolution that M&G Chemicals is bringing to the polyester chain to provide environmental sustainability.” The company’s entry into China will ultimately position it to supply PET to firms such as beverage maker Coca-Cola which have advanced the development of renewably-sourced bottles, among them Coke’s own “PlantBottle.”
Coke currently buys ethanol-based ethylene glycol from India Glycols to make a PET bottle that is nearly 30% biomass derived. To increase feedstock availability, last year Coke formed a partnership with India’s JBF Industries to build a 500,000 metric-ton-per-year bio-ethylene glycol plant in Brazil, also set to open in 2015.
While the JBF plant will use sugarcane and sugarcane-processing waste as feedstock, M&G’s China facility will be based on wheat straw and corn stover. So M&G’s plant has the added virtue of depending on a non-food feedstock source.
But the ethics of using one feedstock crop versus another, or of using biomass versus petrochemical feedstocks, might not matter if consumers don’t care. At the BioPlastek Forum, a conference held in June, Coke, Ford Motor, and yogurt makers Danone and Stonyfield Farm told bioplastic makers that most consumers are unwilling to pay higher costs for bioplastics (C&EN, July 15, page 18).
And while the large M&G and JBF plant may have the economies of scale to drive down bio-based PET costs, they’ll encounter headwinds from petrochemical-based ethylene glycol makers. Lux Research senior analyst Andrew Soare points to the spate of ethylene and derivatives plants planned in the U.S. based on low-cost natural gas. M&G itself, for instance, is building a 1 million metric-ton-per-year PET polymer plant in Corpus Christi, Texas.
However, M&G will be challenged to make cost competitive ethylene glycol in China given the competition expected from U.S. petrochemical producers, Soare says.
Imagine a giant pile of biomass – lets say wood chips for simplicity sake. And next to the wood chips is a big pile of money (likely from investors, whose patience for payback may vary). In a third pile is a group of job candidates: engineers, chemists & microbiologists.
To get useful energy from the first pile of feedstocks requires careful consideration of all your piles. The wood chips can be burned, fermented, or – bear with me now – squeezed. Each approach requires different amounts of feedstock, cash up front, and expertise to get a particular type and amount of fuel or energy.
C&EN’s own Craig Bettenhausen has taken a look at the benefits – and potential downsides – of squeezing the wood chips to make liquid fuels, specifically hydrocarbons that can be made into drop-in biofuels (the best kind!). Of course he doesn’t say “squeezing” – experts call it pyrolysis. Bettenhausen explains that the biomass is subjected to high temperature and pressure in an oxygen-free environment (imagining this is making me feel a little breathless and claustrophobic). Check out the free story to learn what happens next.
Meanwhile a press release from our friends at Battelle in Columbus, Ohio, nicely illustrates one way pyrolysis might pull ahead of other technologies (i.e., fermentation into ethanol or gasification into syngas). A group of Battelle engineers and scientists have built a mobile factory that can travel to the site of your big pile of wood chips and convert it into up to 130 gal of oily hydrocarbons per ton of chips per day. The little factory is installed on the flatbed trailer of an 18 wheeler.
“This feature makes it ideal to access the woody biomass that is often left stranded in agricultural regions, far away from industrial facilities,” the press release notes. “It’s potentially a significant cost advantage over competing processes represented by large facilities that require shipment of the biomass from its home site.”
Still, as Bettenhausen explains, pyrolysis – as it is being scaled up today – has not yet proven itself at scale or made profits for anyone. Stay tuned.
It sounds like something from a greenskeeper’s nightmare – certain folks have plans to grow algae and dandelions on purpose, and in large quantities.
Firstly, in the golf course-choked state of Florida, Algenol CEO Paul Woods is scouting a location for a $500 million algae-to-fuels plant. The company was founded and has been operating in the southern part of the state for years now. Its claim to fame is cheap ethanol made from cyanobacteria in a custom-designed bioreactor. Woods does not, as far as I know, have plans to re-purpose stagnant water traps for the purpose of growing his feedstock.
But Florida, though it is sunny and warm, might have missed out on this slimy opportunity. In recent months, Woods questioned the state’s commitment to biofuels. For example, Governor Rick Scott repealed a state law requiring 10% ethanol in gasoline. But now, according to Fort Myers ABC 7 News, the company has been persuaded to build in its home state – apparently the estimated 1,000 jobs was just the ticket to getting a warmer welcome. Algenol needs to be sited near a major CO2 source (i.e., factory or power plant emissions) and says potential partners have come forward.
Meanwhile, it’s called the Russian Dandelion, though it grows in Germany. This common lawn scourge is bringing about not curses, but praise, for its rubber producing capability. Tire makers are enthused about its white latex sap. The goo is expected to give the subtropical rubber tree a bit of competition. Making rubber from dandelions is not a new idea, but has been given new life by a project at the Fraunhofer Institute for Molecular Biology and Applied Ecology.
Fraunhofer scientists, in a collaboration with folks from tire firm Continental are working on a production process for making tires from the dandelions. In addition to the manufacturing process, the researchers are also using DNA markers to grow new varieties of the plant with higher rubber yields.
The project sounds kind of cute but the researchers behind it are dead serious. The partners have already begun a pilot project and plans are afoot to move to industrial scale. According to them, the first prototype tires made from dandelion rubber will be tested on public roads over the next few years.
You can read an earlier post on the history of dandelion rubber here.
Bill Gates (yes, that Bill Gates), through a fund called Gates Ventures, is investing $15 million in advanced biofuels firm KiOR. Gates is not a huge cleantech investor generally (though he has backed other firms such as the young MIT spin-off Liquid Metal Battery). So it’s rather interesting that he’s decided to invest in KiOR, which is not at all an “early stage” tech firm – in fact, it is a public company.
Vinod Khosla, a tech pioneer who is much more well known as a cleantech investor with deep pockets, has committed to putting in another $85 million to KiOR in debt and stock. Khosla was instrumental in the founding of the company and has been an unusually loyal and generous benefactor.
With this $100 million infusion, KiOR says it will be able to build out its capacity-doubling project at its Columbus, Miss. facility (see Khosla, Kior Double Down).
If we go back in time a bit to the end of the second quarter, we see that KiOR had started shipping its drop-in fuels (gasoline, diesel, heating oil) made from wood. But the amount of production was behind schedule, and its cash position was delicate, to say the least. At the time, analysts suggested that the firm should bring in a corporate partner such as a refining company. But that’s not what happened.
It is clearly good news for KiOR that it has a few friends who are willing to keep dipping in to their own pockets to make sure its first facility can reach the point where it generates enough cash to fund operations – and presumably prove out that KiOR’s next commercial facility (planned for Natchez, Miss.) will be profitable.
And its only fair to note that the same analysts who suggested KiOR get an additional large investor are also very bullish on the company. So what is there to like about KiOR?
- KiOR has significantly increased uptime at the Columbus facility
- It has produced and shipped actual product
- Yields are rising
- Drop-in biofuel is considered a much more desirable product than ethanol
- KiOR’s technology can accommodate cheap feedstocks (the expansion will use waste railroad ties)
The main negative, in fact, was the near-term need for additional capital. And even back in August – before both recent investment announcements – analysts at Credit Suisse and Raymond James had an outperform rating on KiOR’s stock.
Does all of this mean that KiOR is a guaranteed win? No, of course not. But I find it interesting how far KiOR is poised to go with the help of a few true believers.
Elevance comes to the U.S.
Elevance is another cleantech firm that is expanding its commercial operations. The company makes specialty chemical intermediates – functionalized esters and the like – for use in downstream products for personal care, coatings, lubricants and additives. Its feedstock is vegetable oil, which it processes using olefin metathesis.
The company did not have an IPO, as KiOR did, but chose instead to raise private capital. Its first plant, in Gresik, Indonesia is a large one, at 180,000 metric tons per year. Elevance says that its output there is all spoken for, and it is now proceeding with plans to build a second plant, also in Natchez, Miss. That facility is expected to come online in 2016.
It’s official – Beta Renewables first commercial-scale cellulosic ethanol plant is open in Crescentino, Italy. The roughly $200 million plant can take in up to 270,000 tons of biomass per year and produce 20 million gal of second-generation ethanol per year. Parent company Mossi & Ghisolfi put up the dough to build the facility without any government subsidies. It’s an unusual funding model, to say the least!
This project leads the first crop of cellulosic biofuels facilities to reach start-up. Beta Renewables, along with its sister firm, engineering company Chemtex, have put together a facility that produces sugars from cellulosic biomass and then ferments those sugars into ethanol.
The feedstock includes wheat straw and an energy crop called Arundo donax, or Giant Reed.
I just want to point out that this is the second blog post in a row discussing commercial-scale cellulosic biofuels facilities (see below for KiOR). Does this count as the official start of the cellulosic biofuels industry?
Just to have fun with a little bit of contrast, back in July, a ginormous first generation ethanol plant started up in Hull, UK. The Vivergo Fuels plant cost $448 million to build and will produce 110 million gal per year of ethanol. The feedstock? Wheat, which is grown in the UK for animal feed. The project is a joint venture between deep pocketed partners AB Sugar, BP, and DuPont Industrial Biosciences. Thanks to Ethanol Producer Magazine for the details.
When the second quarter ended, drop-in cellulosic biofuels maker KiOR was in the process of ramping up production at its first large-scale (eventually 13 million gal per year) plant in Columbus, Miss. The company told investors that it hoped to double the capacity at the Columbus location, at an estimated cost of $225 million.
The company had cash reserves of just under $12 million. But, it had one asset that is incredibly valuable – the backing of venture capitalist Vinod Khosla. Khosla has agreed to fork over $50 million – half of it likely to come from his own personal funds – to seed an investment strategy that may bring in other deep pocketed parties such as an industrial partner or traditional lender.
KiOR makes gasoline and diesel (not ethanol) from cellulosic feedstocks (wood) via fermentation. Khosla was there at the company’s beginning – he helped midwife it into a startup in 2007 and invested in it before – and now after – its IPO in June 2011. The company went public at $15 a share in its pre-production, pre-revenue era (it is now trading around $2.50).
With the Columbus plant, KiOR is in the very first crop of producers of cellulosic biofuels. Investors love that the company’s output is not subject to blend walls the way ethanol production is. But getting steady-state, high levels of output from a first-of-its-kind facility is pretty much unheard of in the second-gen biofuels industry.
And so KiOR is hoping it will produce 1 million gal this year, as it does the start-stop-fix-start thing. That’s why it is interesting that rather than hold out to generate revenue from Columbus I, KiOR plans to use what has been learned already to literally double down on its bet. Interestingly, part of the motivation to build the Columbus II plant is the availability of cheap railroad ties at that location.
In the press release Khosla (who owns a majority stake) stands by his company:
“While KiOR has faced normal start-up issues at the Columbus I facility, I believe that the Columbus I facility has proven that KiOR’s technology can meet and over time exceed the technology performance metrics of approximately 80 gallons per bone dry ton I expected for 2015, driving toward the ultimate goal of producing 92 gallons of hydrocarbon fuels (or over 150 gallons of ethanol equivalent) per bone dry ton of biomass, particularly given the Company’s continued progress in research and development. I believe that KiOR’s proprietary technology platform is substantially better, and can produce hydrocarbon fuels at lower cost, than any other currently visible biofuels fermentation technology, cellulosic or otherwise, that I am aware of. I expect that cash costs per gallon (excluding depreciation) on an energy content basis at the two Columbus facilities should be lower than today’s corn based ethanol. I also believe that KiOR’s cellulosic fuels, which have a higher per gallon energy content than ethanol and can integrate seamlessly into the existing hydrocarbon fuels infrastructure, will provide a biofuel alternative without blendwall issues that is more attractive than ethanol, considering both production costs and logistical efficiencies.”
That’s rather a lot of very specific declarations by the normally Zen-like master of Cleantech VC. But others also sound pretty darned enthused about the company. Stock analysts Pavel Molchanov at Raymond James and Edward Westlake of Credit Suisse both rate the stock as outperform though they acknowledge that investors are jittery.
Once Columbus I and then Columbus II are up and running, both analysts seem very comfortable with the company’s production cost structure. In the meanwhile, Molchanov says investors’ worries should be quieted by Khosla’s confidence.
“By pledging an additional $50 million – an anchor as KiOR finalizes its long-term financing package – Khosla guaranteed KiOR’s financial security for at least six more months, which should set jittery investors’ minds at ease. Khosla’s status as one of the nation’s wealthiest VC investors means that his (yet again reaffirmed) backing for KiOR is analogous to Elon Musk’s support for Tesla and SolarCity, which in the past, went through their own periods of facing a skeptical market.”
You can read more about Khosla’s long-term investing strategy in biofuels on the Wall Street Journal’s Venture Capital Dispatch blog. In addition, Jim Lane at Biofuels Digest writes about how difficult it is for outsiders – and even insiders – to understand the true status of a ramp-up like KiOR’s.
It’s going to be 6 million gallons. That is how much cellulosic biofuel EPA’s research (crystal ball?) shows will be produced in the U.S. this year, and what fuel blenders, who live by the Renewable Fuels Standard, will have to put in their product.
EPA’s final rule on this question was published today. And the text includes a remarkable figure: “From 2007 through the second quarter of 2012 over $3.4 billion was invested in advanced biofuel production companies by venture capitalists alone.”
Egads. Anyway, for at least one more year, cellulosic biofuel will be the black-footed ferret of fuel types, which is to say, exceedingly rare. By comparison there will be over 16 billion gal of regular biofuel (like the stuff made from corn and soybeans) this year.
The 6 million figure comes from output from two sources – the largest is Kior’s Columbus, MS plant, which is projected to make between 5 or 6 million gal of gasoline and diesel from woody biomass using a special kind of catalytic cracking technology. The remainder will be produced by Ineos Bio (see the below post).
I note that the Kior facility’s output is not ethanol and so nicely side-steps the issue of the “blend-wall”, which affects ethanol producers. For 2014, however, the fact that most advanced biofuels are ethanol will cause the EPA some RFS problems. EPA is now saying that there will be changes:
EPA does not currently foresee a scenario in which the market could consume enough ethanol sold in blends greater than E10, and/or produce sufficient volumes of non-ethanol biofuels to meet the volumes of total renewable fuel and advanced biofuel as required by statute for 2014. Therefore, EPA anticipates that in the 2014 proposed rule we will propose adjustments to the 2014 volume requirements, including the advanced biofuel and total renewable fuel categories.
We expect that in preparing the 2014 proposed rule, EPA will estimate the available supply of cellulosic biofuel and advanced biofuel volumes, assess the ethanol blendwall and current infrastructure and market-based limitations to the consumption of ethanol in gasoline-ethanol blends above E10, and then propose to establish volume requirements that are reasonably attainable in light of these considerations and others as appropriate
The prize for the first company to get a commercial-scale cellulosic ethanol plant up and running in the U.S. goes to Ineos Bio. Ineos Bio is a Swiss firm, a subsidiary of the chemical company Ineos.
The facility is located in Vero Beach, Fla. and has a capacity of 8 million gal of ethanol per year. It also produces 6 MW of renewable biomass power. Vero Beach is on the Eastern coast of the state (a bit more than halfway down), near Port St. Lucie.
Folks following cellulosic ethanol might have thought the U.S. would be the first in the world to get a cellulosic ethanol plant, but that distinction goes to Italy, where Beta Renewables owns a 20 million gal per year facility running on wheat straw and giant reed (Arundo donax).
The feedstock for the Vero Beach facility is “vegetative and wood waste.” I’m hoping to learn a bit more about what’s going in there. Because Ineos Bio’s front end process involves gasification, it is likely not terribly picky about the biomass – apparently it has converted vegetative and yard waste, and citrus, oak, pine, and pallet wood waste.
Projecting when the cellulosic ethanol industry will really take off has historically been a fools’ errand. But clearly, having two facilities in existence is infinitely more than zero, which is what we had in 2012. You can review my feeble attempt to forecast the 2013 crop of ethanol makers and check out the list of other facilities set to come online soon.