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Beta Renewables Officially Opens Italian Biofuels Plant

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!

It's Italian, so of course it is stylish. Beta Renewables Crescentino biofuels plant.

It’s Italian, so of course it is stylish. Beta Renewables Crescentino biofuels plant.

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.


Khosla, KiOR Double Down in Mississippi

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.



EPA’s Magic Number for Cellulosic Biofuels

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

Ineos Bio – First Cellulosic Ethanol Plant in U.S.

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.

Ineos Bio has started up this cellulosic ethanol plant in Fla. Credit: Ineos Bio

Ineos Bio has started up this cellulosic ethanol plant in Fla. Credit: Ineos Bio

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.

Choppin’ Broccoli

In the quest for chemicals and fuels made from biomass, there are a few important black boxes that make it difficult to compare different companies’ business models and likelihood of success. One of them is the process by which a particular facility obtains sugars from its biomass feedstock.

In many cases, the first step is expensive, but low-tech – chopping up the stuff. This is the part that reminds me of Choppin’ Broccoli, the Saturday Night Live song as performed by Dana Carvey. Since cellulosic ethanol is sort of an offshoot of corn ethanol, it’s helpful to imagine how different it is to process a corn cob or stalk or an entire sugar cane, compared to grinding up a starchy corn kernel. Getting sugar from cellulose is difficult enough, getting the cellulose away from the clutches of a plant’s lignin first requires heavy machinery to chop it into little pieces.

So say you have tidy chipped up pieces of biomass. What do you do then? Like the SNL song, it ain’t pretty. Generally it requires some combination of thermochemical assaults to get the sugar out. Steam, alkali-acid washes, and pricey enzymes… In an otherwise green business, the pretreatment steps use energy and possibly chemicals that you wouldn’t want to spill.

Since pretreatment of biomass has a lot to do with both costs and the yield of sugars from feedstock, it is a busy area of research. An article by Chris Hanson in the appropriately named Biomass Magazine delves into some intriguing ideas. To release the useful cellulose from lignin, researchers at University of Illinois at Urbana-Champaign and the U.S. DOE’s Joint BioEnergy Institute are investigating ionic liquids. Instead of using a traditional, two-stage alkali-acid pretreatment, a dose of butadiene sulfone got the job done in one step, according to U. of Illinois scientist Hao Feng. Another major benefit is that the butadiene sulfone can be recovered and recycled.

In California, the JBEI has been experimenting with imidazolium chloride. It has succesfully obtained sugar yields of 95% from mixed feedstocks and recycled 95% of the ionic liquid.

And a company called Leaf Energy has been studying a glycerol pretreatment method. Compared to acid pretreatments, the company says their method gets more sugars faster by dissolving lignin with a relatively inexpensive reagent with low temperature and standard pressure.

The goal with improving pretreatment steps is to bring down the cost of sugar from cellulose so that it is not more expensive than sugar from corn or sugar cane. Maybe if major cellulosic ethanol producers take up these technologies, we’ll have a better window into how they get the sugar out.


Biobased Chemicals: Some growing pains

Gevo, a maker of bio-based isobutanol, is now actually making isobutanol. It says something that a publicly-traded company has been not making its commercial product for some months. The problem was a bug in the production system – technically a microbe – a microbe other than the one (a yeast) that was supposed to be making isobutanol.

I spoke with Gevo’s CEO Pat Gruber yesterday at the BIO show in Montreal. He was rather forthright about what happened. First, they were running the plant at full scale with their own yeast and had their separation process running. They were producing truckloads of isobutanol. The facility had previously been an ethanol fermentation plant. With the new operating conditions, a dormant microbe sprang to life, contaminating the process. The product was still being made but the company decided to shut down the plant and decontaminate it.

“We had to identify the sources of the contaminant, change the pipes, sanitize the equipment, train the staff and modify the operating conditions to favor our yeast,” Gruber recounted. He emphasized that these plants are not sterile like a pharma plant would be. Instead, vectors of contamination are controlled so they stay at very low levels.

When I wrote about biobased chemicals last summer, analysts held out Gevo as an example of a success story. It was shortly after the story ran that Gevo stopped its process at its Luverne, Minn. plant due to problems with contamination. The episode shows the kind of growing pains that the industry and its followers are learning to anticipate and accept.

Other companies might face different kinds of growing pains – for Gevo there was what is called technical risk. Other firms are making chemicals such as biosuccinic acid. They also face a market risk because for most applications their product is not a drop in raw material, so downstream customers must adopt it.

This year is the tenth anniversary of the World Congress for Industrial Technology. Historically, it seems to take about a decade for a new chemical concept to reach commercialization, and then some more time to penetrate new markets. This makes 2013 a very interesting year for the biobased chemical industry.

Optimists at the BIO Show

I’m in Montreal today for the World Congress on Industrial Biotechnology – put on by the Biotechnology Industry Association. The soaking rain that threatened to drown my arrival on Sunday has given way to warmer weather with just a few threatening clouds. Similarly, the mood at the show is one of patient optimism.

This year is the show’s tenth anniversary and it is reported to be the largest one yet with 1200 attendees. There are actually seven tracks of breakout sessions which makes it rather difficult for this reporter to follow along.

The major change that I’ve noticed compared to my first show four years ago is in the content of the presentations. It used to be all about the super microbe – speakers would show off elaborate slides with metabolic pathways – they all looked like very complicated subway maps. Since then the industry has learned that microbes can build a lot, but they can’t build your business for you.

This year the subject matter is all about scale up and applications. The language is more MBA than MicroBio. Supply chains, value chains, financing, customers, joint ventures, IPOs. Of course by now any start-up with a microbe has learned by now if their business plan is worth money or not – and only those that answer yes are still here.

I’ve been told to expect some major announcements this morning so follow along with my tweets @MelodyMV if you want the dish. Yesterday Myriant said it got its bio succinic acid plant up and running in Lake Providence, LA. It will be ramping up tp 30 million lbs per year.


Solar Boom in Japan, with Battery to Match

Japan has been making large strides in solar since the Fukushima disaster, and those efforts look set to accelerate, at least in the near term. The country, which is not blessed with a wealth of fossil fuel resources, had relied heavily on nuclear energy, but it is now spending big for solar installations as well as energy storage.

Just in time for Earth Day, Bloomberg is reporting that the Ministry of Economy, Trade and Industry plans to spend around $204 million on a battery system to stabilize the flow of solar power on the northern island of Hokkaido. The location’s less expensive land has attracted ground module solar power systems. The report did not state what type of battery will be used, though Cleantech Chemistry will be looking for updates. The ministry is targeting 2015 for the system to be up and running (up and storing?)

The country began a generous feed in tariff for solar in July, which attracted just over 1.33 GW of installations through the end of January of this year. According to IHS iSuppli, the FIT is around 42 cents (in U.S. currency) per kilowatt hour, which is quite generous.

Though the tariff may be scaled back as systems come online, IHS forecasts that Japan will install 5 GW of solar capacity this year. To put that figure in perspective, the European Photovoltaic Industry Association reports that 30 GW of grid-connected solar was installed globally in 2012, about the same as in 2011.

Electric-vehicle Batteries are Like Olives…

Sometimes  while I’m reading a standard press release about something that I thought I understood kind of,  I come across a bit of a gap in my knowledge. This week, Nissan says it has opened its lithium ion battery manufacturing plant in Tennessee. The release states, “The first batteries produced at the plant have completed the required aging process and are now ready to receive their first charge.”

Um… what the what? Do these things need to be put on a shelf and cured like olives?

Nissan helpfully includes a really nice graphic describing the manufacturing process, most of which does sound familar to me. In the fourth flow-chart box, after the electrolyte is injected with what looks like a hypodermic needle, the text explains “Cells are aged to allow the cell chemistry to be properly formed.”  Then they go on to be tested, trimmed to size and charged.

If you are a battery geek, I’d love to hear your idea of what the chemistry formation is and what it does for the battery.

My only guess is that the pause is needed for the formation of the solid electrolyte interface (SEI) on the anode – or negative electrode. This layer is formed with the help of the electrolyte (and there are SEI additives for electrolytes to make the process better). It protects the surface of the anode from the degrading environment of the battery when it is recharged. The SEI layer may be composed of various stuff, depending on the particular materials used in the battery but are commonly Li2CO3, LiOH, LiF, or Li2O.

Nissan explains its battery manufacturing process:


Fulcrum Promises 75 Cent Ethanol

With plans for advanced biofuels facilities appearing – and disappearing – with some frequency, it can be difficult to evaluate the exciting claims made by companies that analysts kindly refer to as “pre-revenue.”

Here’s one such claim:

Fulcrum’s engineering and technology teams have recently made numerous enhancements to the design of Sierra [CC note: this is a first commercial facility] and to its proprietary MSW [municipal solid waste] to ethanol process. The Company expects these improvements will dramatically reduce its cost to produce renewable fuel to less than $0.75 per gallon at Sierra, down from approximately $1.25 per gallon as previously disclosed. The cost of production at future Fulcrum plants is now expected to be less than $0.50 per gallon, down from $0.70 per gallon as previously disclosed.

Now, 75-cent ethanol is very cheap. Corn ethanol prices are usually about $2 per gal and thus it costs somewhat less than that to make (or not – many facilities are idle as corn costs are high). Chemtex – an engineering firm based in Italy – is now turning on its cellulosic plant in Cresentino. It plans to make ethanol for $1.50 per gal from 10 cent per lb cellulosic sugar.

Fulcrum plans to make ethanol at its plant near Reno, Nevada from municipal solid waste. Its feed costs are known – it will get free trash from waste handling partners including Waste Management. C&EN recently reported on Waste Management’s involvement in this space. The process is: sort waste, shred waste, gasify it, catalyze it to make ethanol, and separate/purify the ethanol. If the feedstock cost is the same as before, we can speculate on which part(s) of the process has been optimized to take 50 cents off the original cost estimate.

The new cost estimates may also just be something the firm has put out to distract from other thoughts/questions about the process and business model. For one, Fulcrum says it has withdrawn its IPO filing. It will proceed with its first plant using project financing (including a $105 million USDA loan guarantee). The other questions are – will the plant actually be built, and will it produce ethanol at all? These are the kinds of questions facing all the players in the advanced biofuels industry.

And as for the promise of 75-cent or cheaper ethanol – industry watcher Erik Hoover of Cleantechdata responds “More cautious language would help everyone.”