Price tags for demonstration plants range from $50 million to $80 million, while costs for small commercial facilities are over $200 million.
Funding the transition is problematic. Typically banks don’t like loaning money to high-risk projects using first-of-a-kind technologies. At the same time, equity investors are reluctant to provide all the financing for demonstration or commercial-scale projects.
To bridge this financing gap and spur commercial development of biofuels produced from nonfood feedstocks, the U.S. Department of Energy (DOE) announced over $240 million in grants for nine small-scale cellulosic biorefinery projects in 2008. The awards, ranging from $25 to $30 million, will fund up to 50 percent of the design and construction of one-tenth commercial-scale biorefineries that serve as prototypes for full-scale commercial opportunities.
November 2008’s article, “Commercializing Cellulosic Ethanol,” provided an update of DOE funded commercial-scale celllosic ethanol projects. This article reviews the nine small-scale projects selected by DOE for funding.
Of the companies awarded grants, Verenium in Cambridge, Massachusetts is leading the race to prove its cellulosic technology at demonstration-scale. The firm completed construction of a 1.4-mgpy demonstration plant in May 2008. Commissioning of the $79 million facility, located in Jennings, Louisiana, is expected by year-end. Negotiations are underway with DOE to determine the exact size of the grant and its use in the continued development of the facility.
Work will begin shortly to optimize the plant, a process that will validate economic and performance hurdles along with helping the company understand what needs to be done to move forward with its first commercial facilities, explains Kelly Lindenboom, Vice President of Corporate Communications. Verenium is planning a series of 30- to 60-mgpy commercial plants in Florida, Louisiana and Texas. Construction of the first facility is slated for mid 2009.
Initially the demonstration facility will focus on converting sugarcane bagasse, the residues remaining after crushing sugarcane to extract the juice, into ethanol. Cellulosic feedstocks like bagasse are composed of cellulose, hemicellulose and lignin. Verenium’s process employs mild acid hydrolysis and steam explosion to separate these components and convert the hemicellulose into five carbon (C5) sugars.
Following hydrolysis, presses separate the liquid containing the sugar from the fiber solids, composed of the remaining cellulose and lignin. The solids undergo enzymatic hydrolysis to convert the cellulose into six carbon sugars (C6), which are then fermented. The C5 sugars are fermented in a separate process. The resulting ethanol mixtures are combined and distilled. Lignin, leftover from the process, is burned in a boiler to produce steam to drive the process.
Ultimately the plant will be used to test feedstocks, such as wood residues and switchgrass, with different combinations of enzymes and organisms. “We want to become geographically diverse and expand our commercial reach into different parts of the country,” Lindenboom explains.
Lignol Energy Corporation
Based in Berwyn, Pennsylvania, Lignol was awarded $30 million to build an $80 million demonstration cellulosic ethanol plant in Grand Junction, Colorado, colocated at Suncor Energy’s petroleum refinery. The facility will process 100 tons/day of mixed hardwood and softwood wastes into 2.5 mgpy of ethanol and high purity lignin. Colocating the plant at the Suncor facility offers logistical advantages, including operational support and ethanol distribution efficiencies.
Lignol acquired and enhanced a solvent-based pretreatment technology for its process, originally developed for pulp mills by a subsidiary of General Electric. In the first stage of the process the solvent, applied under heat and pressure, strips the hemicellulose and lignin from the feedstock, leaving a pure form of cellulose. “It is 95 to 97 percent pure cellulose,” explains Lignol’s president, Ross MacLachlan. “So when it is time to convert the cellulose into fermentable sugars, we use dramatically less enzymes.” The company is testing a variety of enzymes from industry partners at its Vancouver facilities to determine which work best at converting cellulose into fermentable sugars.
The second stage of the process extracts the lignin from the hemicelluloses, producing a highly pure form of lignin, dubbed HP-L™. Typically lignin is burned to produce process heat, equating to a value of 3 to 7 cents per pound, MacLachlan explains. But HP-L™ demands significantly higher prices since it can be used by chemical companies to replace petrochemicals in products such as polyurethane, industrial adhesives and epoxy resins. Sales of HP-L™ are expected to improve project economics.
Permitting and preconstruction activities are underway for the facility, but the design will not be finalized until the firm obtains operational data from a $10 million pilot plant that is under construction in British Columbia. MacLachlan expects to have the data by the later part of next year.
Pacific Ethanol Inc.
Pacific Ethanol in Sacramento, California received a $24.3 million grant to build a demonstration cellulosic ethanol plant colocated at its corn ethanol facility in Boardman, Oregon. The $50 million facility will convert agricultural residues, primarily wheat straw and corn stover, to 2.7 mgpy of ethanol using a process developed by BioGasol, a Danish company.
BioGasol employs a proprietary pretreatment technology called wet explosion, a combination of steam explosion and wet oxidation that applies oxygen and pressure released at temperatures of 170° to 200°C, to breakdown the feedstock. Enzymatic hydrolysis of the pretreated material produces glucose, a C6 sugar, and xylose, a C5 sugar. The glucose is fermented into ethanol by yeast. A proprietary C5 fermentation process uses a thermophilic bacterium to convert the xylose into ethanol – increasing ethanol output by 20 percent or more depending on the feedstock, explains Harrison Pettit, Pacific Ethanol’s Director of Business Development.
Wastewater from the distillation process is anaerobically digested; the biogas is used to generate heat for the process. “This is one of the unique qualities of the BioGasol technology,” Pettit explains. “It is a fully integrated system.” Lignin, a by-product of the process, can be burned to produce energy for the corn-ethanol plant colocated at the site or sold on the open market for its BTU value. “We feel there are advantages to colocating and that is part of what we are exploring,” Pettit says. The company is targeting the third quarter 2009 for ground breaking and hopes to have the plant operational before the end of 2010.
DOE awarded a $30 million grant to ICM, a company in Colwich, Kansas that designs, builds and services ethanol facilities, to construct a demonstration-scale cellulosic ethanol plant in St. Joseph, Missouri. The biorefinery will be colocated at the Lifeline Foods plant and ICM’s recently completed 50-mgpy corn ethanol facility. ICM owns a 49 percent interest in Lifeline, a producer of dry corn ingredients such as flour.
The plant is part of ICM’s Food and Fuel technology development project. The first component of the project, dry fractionation, was introduced in June. Dry fractionation separates the corn kernel into three components: endosperm (the starchy portion of the inner kernel), germ (the protein and oil-rich center) and bran (the kernel’s fibrous outer layer). “We think that a lot of grain based [ethanol] plants are going to have fractionation at the front end so they can extract greater value out of the grains, including getting food, fuel, and feed out of all the streams,” says Douglas Rivers, ICM’s Director of Research and Development.
Beyond producing ethanol from the starch, optimizing use of the whole kernel permits the production of food and feed from the proteins and oil and cellulosic ethanol from the bran. Since the bran is already at the biorefinery, utilizing it to produce cellulosic ethanol eliminates a key barrier to entry to this biofuel market – the logistics associated with collecting, transporting and storing the cellulosic feedstocks, notes Rivers.
The bran will be converted to cellulosic ethanol using a biochemical process that employs pretreatment in conjunction with enzymatic hydrolysis to convert the feedstock into fermentable sugars. Testing is underway to determine which third party enzymes and pretreatment technologies works best.
Colocation creates additional synergies, such as leveraging existing infrastructure and maximizing efficiencies by using heat recovered from one plant to provide thermal energy to the other. He estimates total ethanol production will increase by about 10 percent at combined starch/cellulosic facilities employing dry fractionation.
ICM, like other companies that design and build ethanol facilities, is impacted by the current economic downturn. Negotiations are underway with DOE to revise the grant award to redirect the money to a pilot-scale facility already under construction at the site. Under the revised proposal the pilot facility could be completed within 9 months of receiving the funding, saving DOE and ICM money and shortening the timeline for the company’s plans to commercialize cellulosic ethanol by about two years, Rivers says.
Ecofin, a subsidiary of Alltech Inc. (Nicholasville, Kentucky), was awarded $30 million to fund a $77 million biorefinery in Springfield, Kentucky. A pilot-scale plant at the site has been producing corn-based ethanol via fermentation techniques for about 15 years.
Dr. Pearse Lyons founded Alltech in 1980 to pioneer yeast fermentation and enzyme technology for the animal feed industry. The company is leveraging its expertise in enzyme development and fermentation to convert biomass into ethanol. Initially, corncobs will be used, although plans call for expanding feedstock sources to include corn stover and switchgrass.
The animal feed industry is being targeted as the market for by-products of the process. “Beyond the simplest cellulosic conversion we are able to control the process in order to produce many higher value by-products out of the system,” explains Mark Lyons, Alltech’s Director of International Projects. “Therefore our financial model does not simply depend on the price of ethanol or cellulosic ethanol subsidies.”
Alltech is finalizing contractual negotiations with DOE for the grant and the engineering drawing for the facility, Lyons says. The environmental review and permitting process is also underway. The current schedule calls for the plant to be operational by December 2010, with production starting in early 2011.
DOE originally awarded $26 million to a joint venture between Mascoma (based in Boston, Massachusetts) and the University of Tennessee to build a demonstration-scale cellulosic ethanol facility in Vonore, Tennessee. But Mascoma dropped out of the project in July 2008, after the university decided to scale back the facility to the size of a pilot plant. Mascoma, which already operates a pilot plant in Rome, New York, instead wanted to focus on building a larger scale facility.
In October, Mascoma announced that DOE had agreed to transfer the grant to a 40-mgpy facility the company plans to build in Kinross Township on Michigan’s Upper Peninsula. The state of Michigan is contributing $23.5 million to the project. The site in Michigan was selected due to the availability of feedstock and other agricultural biomass in the area, existing infrastructure at the site – including roads and railroads – and the technical expertise available through Michigan-based project partners.
“Michigan had a lot of things tuned up and ready to go,” says Jay Niles, Director of Business Development at Mascoma. “They are very well coordinated and focused on this opportunity and there is a lot of incentive to bring industry to the state.”
The facility will employ consolidated bioprocessing (CBP) to produce ethanol from mixed hardwood chips. Most biochemical conversion techniques employ enzymatic hydrolysis to convert cellulosic feedstocks into sugars. A separate process ferments the sugar into ethanol. CBP use microbes to hydrolyze and ferment the sugars in one step, thereby simplifying the process and lowering production costs. Pending completion of the engineering and permitting process, construction is targeted for the end of 2010 or early 2011 and is expected to take 18 to 24 months, Niles say.
Flambeau River Biofuels, Inc.
Flambeau River in Park Falls, Wisconsin is receiving $30 million to build a biorefinery colocated at its pulp and paper mill in Park Falls. The proposed facility is expected to produce diesel fuel from unmerchantable forest residues collected within a 75-mile radius of the plant. The mill, which had been operating for 100 years, went bankrupt and closed in 2006. Butch Johnson purchased and restarted the facility. “Butch realized after the mill got up and running that he had to do something to improve the value of the facility,” says Ben Thorp, strategic consultant to the project. “So he decided to build a biorefinery.”
Initial plans called for a cellulosic ethanol facility but a market analysis showed a thermochecmial process producing Fischer-Tropsch diesel and wax to be more profitable, he explains. The process utilizes a gasifier to convert the feedstock into syngas, a mixture of carbon monoxide and hydrogen. In the second stage, a catalytic process converts the syngas to diesel and wax.
Heat recovered from the system will produce steam and hot water that will be sold to the mill, replacing 1.2 trillion BTUs of natural gas. “He [Butch] will be able to stop buying natural gas, thereby dramatically improving the carbon footprint and the financials for the mill,” Thorp explains.
Under the original DOE proposal, the plant was sized to produce 6-mgpy of Fischer-Tropsch liquids, but further study indicates a larger plant will be more economical. “So the mill has petitioned DOE to build a slightly larger plant that will have an output of 16 mgpy,” he adds. Negotiations are underway to finalize the contract for the grant. The next step is to complete the environmental review and secure the necessary permits.
Newpage and RSE
DOE awarded Stora Enso North America up to $30 million to build a 5.5-mgpy biorefinery in Wisconsin Rapids, Wisconsin. The facility would employ gasification and a gas-to-liquids (Fischer-Tropsch) process to convert mill wastes from the Wisconsin Rapid Mill into diesel fuel.
NewPage, based in Miamisburg, Ohio, acquired Stora Enso, is conducting a feasibility study to determine if it will pursue the project. Completion of the feasibility study is expected in the fourth quarter of 2009, according to Doug Freeman, Wisconsin Rapids Mill Investment and IT Manager.
DOE awarded RSE Pulp and Chemical in Old Town, Maine $30 million to construct a 2.2-mgpy cellulosic ethanol facility using a proprietary process for extracting hemicelluloses during the pulping process. Red Shield Environmental LLC, RSE’s parent company, ran into financial difficulties and was forced to auction the company at the end of October. Patriarch Partners, a New York investment group, purchased the firm and restarted operations on November 10th. It is not known if Patriarch will pursue the cellulosic ethanol facility.
Diane Greer is a Contributing Editor to BioCycle.