This year begins the ninth year of cellulosic ethanol mandates in the U.S. Today I want to give a brief review of cellulosic ethanol, review the original targets, and examine the current status of the industry.
What is Cellulosic Ethanol?
Conventional ethanol production utilizes a fermentation process to convert starches or simple sugars to ethanol. The vast majority of the world’s ethanol is produced from either corn or sugarcane.
Cellulose is an important structural material for plants, and it is made up of many repeating sugar units. These repeating sugar units can be broken down by various processes into the component sugars, which can then be fermented into ethanol.
The process of breaking down cellulose into sugars was discovered in France in the 1800’s, and cellulosic ethanol production was first commercialized in Germany in 1898. Commercialization in the U.S. followed in 1910, but the process was ultimately abandoned almost everywhere for economic reasons.
Ethanol Mandates Begin
The Energy Policy Act of 2005 created a Renewable Fuel Standard (RFS) for the U.S. that required 7.5 billion gallons of renewable fuel — primarily corn ethanol — to be blended into the fuel supply by 2012.
The act created mandates requiring that increasing volumes of biofuel be blended into the U.S. fuel supply. Corn ethanol production soared and quickly outstripped the mandates. The 2007 Energy Independence and Security Act (EISA) increased and accelerated the schedule for the mandates. But it also created a mandate to begin blending cellulosic biofuel (which was primarily envisioned as ethanol) into the nation’s fuel supply.
Interestingly, there was no commercial cellulosic ethanol production when the mandates were established, but proponents of the technology were certain that commercialization would come in response to the mandates. The cellulosic ethanol mandate went into effect in 2010 when 100 million gallons of cellulosic ethanol was required to be blended into the fuel supply.
The mandate quickly ramped up to half a billion gallons in 2012, one billion gallons in 2013, and in 2017 was supposed to reach 5.5 billion gallons.
The Mandates Fall Short
In reality, no commercial cellulosic ethanol was produced in 2010 or 2011, but in 2012, the first qualifying batch (i.e., the first batch qualified by the Environmental Protection Agency to receive cellulosic biofuel tax credits) of cellulosic ethanol was produced. Blue Sugars Corporation produced some 20,069 gallons of cellulosic biofuel in April 2012. Following this, no further cellulosic ethanol was produced in 2012 (or 2013), and Blue Sugars declared bankruptcy a year later.
In 2014 — when the mandate called for 1.75 billion gallons of cellulosic biofuel — several new plants came online. For the most part, these plants were heavily subsidized by taxpayers, and every gallon of qualifying production also received subsidies in the form of renewable energy credits.
Companies that built plants to produce cellulosic ethanol included DuPont, Abengoa, INEOS Bio, and privately-owned POET. Most of these plants have also now gone out of business, but they did manage to contribute to the production of 728,509 gallons of cellulosic ethanol in 2014 (per EPA data).
As an aside, cellulosic biofuel production skyrocketed in 2014, primarily because the EPA reclassified biogas from landfills, municipal wastewater treatment facility digesters, agricultural digesters as cellulosic biofuel. As a result, biogas producers became eligible for generous tax credits.
The Million Gallon Milestone
Even though the RFS called for 100 million gallons of cellulosic ethanol production in 2010, it wasn’t until 2015 that annual cellulosic ethanol production crossed the one million gallon threshold. For the entire year, 2.2 million gallons were produced. In 2016, another 3.8 million gallons of cellulosic ethanol was added. Then 2017 saw the biggest jump in cellulosic ethanol production to date, with production reaching 10.0 million gallons.
Jumping from under a million gallons to 2.2, 3.8, and then 10.0 certainly qualifies as exponential growth. But bear in mind that as early as 2015, the nameplate capacity of plants that had announced they were in production was at least 88 million gallons of cellulosic ethanol per year. Further, the mandate for 2017 was 5.5 billion gallons. That puts 2017’s production of 10 million gallons into perspective.
More than two years after announcing they were in production, the cumulative output of the plants that announced startups in 2014 and 2015 was 11% of nameplate capacity. In part, that’s because some of the companies couldn’t even make cellulosic ethanol work economically despite all of the available financial assistance.
The picture is still bleak even if we restrict the focus to a single plant still in operation — POET’s Emmetsburg, Iowa facility. In 2014, the company had announced the first production from its 25 million gallons per year nameplate capacity plant. Yet total production for all cellulosic plants three years later was less than half the nameplate capacity of this single plant.
Conclusions
The bottom line is that cellulosic ethanol has fallen far short of the hype and the expectations. Production that has been achieved to date has come about as a result of loan guarantees — many of which the taxpayer will have to foot when the plants go bankrupt. Production has also been the result of generous financial compensation for every gallon that was produced.
Thus, it is true that production is now growing exponentially. But what has yet to be demonstrated is that this is a viable avenue for fuel production without both plant construction and production being heavily subsidized.
It is possible to subsidize all sorts of uneconomical schemes into existence. I would argue that’s what has happened here. Cellulosic ethanol today is largely in the same shape as cellulosic ethanol production 100 years ago.
Despite some incremental improvements in production, it is still uneconomic to produce and isn’t competitive with conventional ethanol production or fossil fuels. This is an experiment that is likely to end with billions of tax dollars have been wasted.
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Does anyone understand if the main challenges are on the technical side of just due to high costs. Does this mean the high RIN values are not sufficient?
I would say that yes, it means RIN values are not high enough. You could drive production if you jacked up RIN prices, but then you are subsidizing a process that will have a tough time ever competing economically with other types of liquid fuel (including ethanol from corn or sugarcane).
Not a good conclusion. First, don’t utilize hype as the measure. Hype is hype.
Not much interest in the ethanol community giving up on cellulosic. The technology has advanced upon a very high rate. The genetic feed stock, supply chain, process technology, and microbiotics. The technology is has a steady path of improvement much like petrol technology enjoyed for a decades. Actually, a big stumbling block is regulation as opposed to petrol negative marketing that exclaims tax payer waste and mandates. You would think petrol industry are taxpayer’s best friend. Alerting them to waste and fraud. That is 180 degree mirror like and laughable. One must suspect the petrol industries claims that cellulosic is not important, yet they spend so much resources convincing public to the point. If you believe this to be true? Why the concern?
The biggest headwind for cellulosic is cheap oil per fracking technology. Remember GW started the national priority on a path of alternative energy as the country was being hammered by Sultans and oil company profits. Any hiccup on the supply would spike fuel costs. This situation was a national risk as much as enemy invasion. We could no longer depend on foreign countries to supply our crucial energy supply. This is still true today. The country can not depend on single source fuel supply. We need competition at the pump. Given that ethanol is a very minor contributor to the complete supply of our fuel needs, but the technology, cost, and quality of the product does work to moderate the ability of a single supplier to tap your wallet and steal national economic wealth.
Cellulosic is following the lead of starch ethanol. Starch ethanol is frontier fuel that establishes supply chain and sales to the make the path of cellulosic stable. The RFS reg does like wise in which it will grantee a stable demand for ethanol, thus providing a safe harbor from single source supplier that will spend heavily to bankrupt your effort.
Ethanol is good for our economy as well as fracking. We are indeed blessed for both energy supplies. Yes, our BEV cars are on a good flight path and have much good future ahead. Same for fuel cell cars and nuclear. We will tap out as much renewable energy as economically possible. RR reports that the world needs a bunch of energy so we needn’t bother to black eye a promising source.
Great post.
Moreover it looks like solid-state batteries are on the cusp. We are talking cars with ranges of 500 miles, and eventually less expensive to produce than ICEs.
Batteries have been hyped repeatedly, but this time around very serious outfits are moving towards commercialization.
At more than $60 a barrel or so, I think we see continuous declines in demand for oil, starting in a few more years. If you want to sell oil in 2030, it had better be cheap
Wouldn’t the smartest strategy be to use this cellulose to make biofuel pellets to replace the
use of fuel oil for heating. Then use that fuel oil for transportation.
Yes, government frittering away out tax dollars again.
Absolutely. I have some archived articles that make that exact point. Far better to burn cellulose for heat than to go through a convoluted process that requires a lot of energy to extract a liquid fuel.
When was the last time anyone had to decide whether to use fire wood for ethanol or heat? Yes, a red herring concern. First their is just about unlimited fiber capability on the planet and all of it will rot to waste the CO2 sequestration if not harvested. True the root zone sequestration still occurs such that has been learned of corn plantings. Corn value has increased per the ethanol/biorefiner development, yet we continue to export corn for animal feed. The percentage of harvest required for ethanol continues to drop as processing becomes more efficient and bushels per acre increase. The feed nutrition and value did increase as well. But, they still sell corn pellet stoves nonetheless.
Cellulosic ethanol production is projected to increase at a very slow rate. This is o.k. as this will keep the infrastructure in place to shake out better methods. This technology, like solar, took a long time to foment to real capability. These renewable energy sources seem to require long development cycles. Solar and wind power depends on strategy, capability, and cost of power storage and grid flexibility to quickly compensate for power loss or over production. Cellulosic is developing on many fronts likewise. Remember POET Jeff Broin comparing processing advances of corn vs cellulosic? Cellulosic is developing at a faster rate.
Recent developments include high growth low lignan plants that lend themselves to easier production of fuel and higher production rates (gallons per ton). Process improvement require less time. It went to half with ensuing doubling of production. Plant energy efficiencies continue improve that will go to cellulosic process as well. The industry is transforming to process starch and cellulosic material to ethanol, feed, food, and chemicals. Lower investment cost and the two process complement each other for higher efficiencies. Farm land need continues to decrease as owners look to get more valuable product from fewer acres. This trend is not new and primary reason the ILUC is such bull hockey. Carbon rating of corn ethanol should be well below 50% of gasoline. Energy Department fuel analysis continues to claim ethanol can be a primary driver for engine efficiency. E30 should be the #1 choice for cost, efficiency gain, and environment. Nothing else in the ballpark. Talk of solar and wind power achieving a natural storage of energy by powering ethanol process plants.
Trees,
“First their is just about unlimited fiber capability on the planet and all of it will rot to waste the CO2 sequestration if not harvested.”
I did not need any further, but encourage you to rethink this. We are already exploiting a good quarter of the net primary productivity of the planet, and virtually all that goes for essentials like food and raw materials that have no viable/desirable alternatives (like cotton, construction timber, etc.). Covering just a few % (3-5%, depending the assumptions) of our total energy needs would require the total current forest harvest. Biomass is a hugely inefficient way of capturing (and using) solar energy.
You are right to the extent that biomass that would be allowed to “rot” (not the right word, but never mind, essence is that biomass that would decompose without any benefit) is better used for energy (or something else: there is no a priory reason why it would need to be used for energy, if it can be collected, it could be used for composite or whatever – but again I digress). The point is that there is little such biomass out there: none of the biofuels is like that (not even the cellulosic ones – Robert can explain that much of it is coming from corn kernel fiber), and much of the agricultural residue needs to go back to the soil to maintain its productivity (soil organic matter and nutrient level). The situation is similar in forests. Such potential “waste” as you call it would not cover more than 1% of US energy demand. You can, of course, grab some more from other regions, but nobody really has a surplus, not if people don’t want to starve or totally deforest their land (and even if they deforest, what will be next?).
Energy department has continuing study of U.S. biomass called “Billion Ton Study”. Its a determination of best path forward for goal of billion ton harvest of biomass for fuel conversion. Some farm field, wood waste, and plantings of grass and hybrid trees. It is very doable and good for environment. Conversion rates basically 100g/ton.
Agriculture studies indicate the high growth of corn supplies an over abundance of fiber for soil needs. To much will waste fertilizer. Optimum rate varies, but all will be safe if only harvesting 30%.
Corn yields will continue to improve with GMO technology and better agronomic practices. Drones and robotics will play a large role. More efficient small acreage lots. Traditional forest waste to expensive to remove. Arborist trimmings good. The high growth low lignin poplar tree are in the mix. High growth grass, and sorghum plant as well. Estimates from the industry think 2 billion tons of fiber will eventually be available.
I reviewed the USDA 10 year forecast on biofuel markets. Not much change. Corn ethanol will gradually increase then a decrease. E10 continues to be the standard fuel, with E15 growing marginally due to infrastructure cost. E85 continues to be a specialty blend. The ethanol market depends on gasoline sales.
Cellulosic production will increase most at the corn ethanol plant. Technology of supply chain and quality will continue to improve per R&D. Process capability will continue to improve. Problem is the low cost of fuel and ample supply of conventional fuel. Fears of GW are abating as well.
I read of Michigan’s large Consumer Power utility company giving up on coal. The article and new CEO crowing about politics and the rest bull feathers. It reads to me as typical ROI analysis wherein the coal plants need replacement and NG turbine power is much easier, low risk, almost as cheap to operate given the high efficiency and load adjustment capabilities. But what caught me was the analysis that less power would be needed, They claimed more efficient devices. So, Consumer’s power analysis to 2040 claims decreased power needs. This would naturally increase the wind power and solar portion of supply and drop need for coal. This doesn’t say much of electrifying the transportation sector does it?
My guess on what’s going on- we will be more self contained for power needs. The grid will lose customers or at least drop the average kWh need per customer. This may be because of household solar coming of age. Also, industrial and commercial co-generation will be more popular as well as efficiency gains in motors and appliances. We know cheaper batteries and fuel cell power storage will improve solar and wind worthiness. The USDA study may be confirming the 10yr projection of fuel cell and battery power boost to transportation fuel needs.
https://www.wsj.com/articles/americas-emerging-petro-economy-flips-the-impact-of-oil-1519209000 an interesting article. Cheers , Jim
Government subsidy silliness. Oh well, at least some kids from Goldman anf McKinsey made money on “cleantech”.
Robert,
Thanks for tracking cellulosic ethanol. Do you have any news on Brazil? I found two plants there (bagasse), but hard to find reliable information on production figures and, in any event, the amounts in the literature are similarly insignificant (like in US).
In case you missed it: The parent company of the first (and only) “commercial-scale” cellulosic ethanol plant in Europe (Biochemtex in Crescentino, Italy) declared bankruptcy last fall:
http://www.biochemtex.com/en/media-relations/news
It opened with great fanfare about four years ago, but it is unclear how much it produced. It clearly suffered from some of the usual problems (certainly the pretreatment of feedstock, probably many more) and most likely never reached nameplate capacity. RIP
Yes, I remember all the fanfare, but I haven’t really heard much sense. My guess is that if they were having success, we would have seen plenty of stories touting that success.
I don’t think cellulosic ethanol invented hype and fanfare. Brazil is building and producing more corn ethanol as stop gap during sugar cane low production times. The industry is learning and gaining technology advancements for processing plants. How best to manage profit margins for investments. Modern day plants continue to lesson emissions, improve efficiency, and increase diversity of products. The gen 1.5 is very attractive for cost of production and markets. They have competing technology now . Most think the transition will go directly into more and more cellulosic depending on cost of material. Corn of course will provide the stability. It’s interesting that we all are currently utilizing cellulosic fuel within gasoline or at least will be. Cellulosic ethanol production continues to increase and at a faster rate. So, the volumes are low , but the pattern is in place.