Petroleum Industry: Relax Biofuel Requirements

http://wallstcheatsheet.com/stocks/petroleum-industry-relax-biofuel-requirements.html/?a=viewall

By Curtis Tate 

August 14, 2013

 Weekly petroleum imports averaged 7.9 million barrels per day over the last week, up negligibly almost by 3,000 barrels per day. Refinery inputs lagged a bit over the last week as well, according to the Energy Information Agency’s weekly  petroleum report, as they were down by 282,000 barrels per day to 15.6 million. Over the last 4 week period, crude oil imports have maintained their 8.0 million barrel per day average, which is the same as last week’s average, up only slightly from the week before that.

8.0 million barrels per day for the last 4 weeks represents 838,000 barrels per day less than the U.S. was importing last year over the same time period. Refineries operated at 89.4 percent capacity.

The petroleum industry is now making itself more publicly opposed to biofuels, or at least regulations making the substances more competitive than would otherwise be the case. The industry has asked President Obama to curb the amount of ethanol they are required to mix in to transportation fuels for the upcoming year, citing concerns of fuel prices and warning of dire consequences to the U.S. economy. Automakers have also made the case that car engines are lacking the design capacity to run on so much biofuel currently.

On the other side, biofuel groups are portraying the petroleum industry as only profit motivated, warning of ruining a chance to make their products more competitive. Tom Buis, chief executive of corn ethanol group Growth Energy, released a statement condemning the industry which is behaving “with one goal in mind — to eliminate any competition from clean, green biofuels in the liquid transportation fuels marketplace.” 

Biofuel groups are perhaps feeling the pressure as their role in alleviating America’s dependency may be reduced as production has been gaining domestically. Here’s a look at U.S. oil field production broke down by region and shown for the country as a whole.

Petroleum groups ask EPA for relief from biofuel mandate

http://thehill.com/blogs/e2-wire/e2-wire/316927-petroleum-groups-ask-epa-for-relief-from-biofuel-mandate

By Zack Colman - 08/13/13 06:07 PM ET

The petroleum industry formally asked the Obama administration on Tuesday to lower the amount of corn-based ethanol refiners must blend into transportation fuel in 2014.

Failing to adjust the Renewable Fuel Standard’s blending targets could result in “severe harm to the U.S. economy” resulting from higher gasoline prices, the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) said in comments regarding a request for a waiver from the rule.

The groups' claim of economic damage relied on an API-commissioned NERA Economic Consulting study that said leaving the fuel mandate intact could raise diesel costs 300 percent and gasoline costs 30 percent in 2015.

The request from the oil trade organizations comes as the Environmental Protection Agency is showing it might bend on the fuel mandate.

Created in 2005 and expanded two years later, the rule calls for blending 36 billion gallons of biofuel into traditional transportation fuel by 2022. It’s at the center of an intense lobbying and political fight that’s drawing attention on Capitol Hill.

The EPA acknowledged last week that refiners could approach the “blend wall” in meeting the federal biofuel-blending mandate’s accelerating targets. It said it would consider tinkering with the requirements for next year to accommodate those concerns.

 

 That term refers to the point at which the oil industry says refiners would need to produce gasoline with higher ethanol concentrations than the market-standard 10 percent mix. 

 

In their formal waiver request, the groups asked the EPA to lower the Renewable Fuel Standard’s blending requirements to below 10 percent of gasoline to avoid the blend wall.

Honoring the waiver would eliminate 3.35 billion of the 18.15 billion gallons of corn-based ethanol called for in 2014, providing “short-term relief” from the rule, said Bob Greco, API downstream group director, in a statement.

The petroleum industry and automakers have warned fuel blends with a 15 percent ethanol concentration, known as E15, could damage car engines. They also say tankers and gas stations don’t have the infrastructure to support the fuel.

The biofuel industry has rejected those claims. It contends that E15 is safe, noting that the EPA has approved E15 for use in cars made in 2001 or later.

Biofuel groups pushed back against the waiver request, saying that it was designed to protect the profits of oil producers and refiners.

“The actions by API and AFPM are designed with one goal in mind — to eliminate any competition from clean, green biofuels in the liquid transportation fuels marketplace,” Tom Buis, chief executive of corn ethanol group Growth Energy, said in a Tuesday statement.

The EPA has so far rejected all previous Renewable Fuel Standard waiver requests, which have centered on the corn-based ethanol that dominates the biofuel market.

Last year, poultry and meat producers failed to secure a waiver when they argued the mandate was pushing corn prices upward and harming their businesses. And several state governors also unsuccessfully lobbied the EPA for relief on those grounds.

The waiver requests are just one example of how the mandate has come under fire in Washington, D.C.

The House Energy and Commerce Committee has pledged to overhaul the rule, saying that the mandate’s goals are unrealistic.

Corn-based ethanol has kept pace with original projections, but many next-generation biofuels have fallen well short of the marks Congress laid out when it expanded the mandate 2007.

Many lawmakers also say the intent of the law — to wean the U.S. off foreign fuels and drive down greenhouse gas emissions — can be accomplished with domestically produced natural gas and oil discovered since the rule was last updated.

But biofuel groups contend next-generation biofuels are just starting to come online in commercial quantities. They say changing the mandate would threaten economic development in rural communities that have come to depend on the biofuel industry.

— This story was updated at 2:56 p.m. on Aug. 14.

The Cellulosic Ethanol Industry Faces Big Challenges

http://www.technologyreview.com/news/517816/the-cellulosic-ethanol-industry-faces-big-challenges/

The advanced-biofuels industry is in danger of withering away.

• By Kevin Bullis on August 12, 2013

A series of cellulosic-biofuel plants are finally starting to come on line after years of delay. But the new wave of plant openings, good news as it is for the emerging industry, also shows just how far it still has to go.

Last week, the chemical company Ineos started making ethanol from wood chips and other plant materials at a facility in Florida, that can produce up to 8.5 million gallons of fuel a year. By next year more than a dozen multimillion-gallon plants are scheduled to be finished in the U.S. Although the plants are considered commercial scale, they’re still relatively small compared with corn ethanol plants, which often produce 100 million gallons of fuel per year.

The facilities won’t come close to meeting the requirements set out by the 2007 renewable-fuel standard, which was central to President Bush’s efforts to bring fuels made from biomass to market.

What’s more, many of the new plants will struggle in an already saturated ethanol market.

Cellulosic biofuels, made from materials such as wood chips and corn stalks, were mandated as part of the Energy Independence and Security Act of 2007. They were supposed to help end what Bush called America’s “addiction to oil.” The renewable-fuel standard called for a rapid increase in the amount of fuel that comes from conventional corn-based ethanol as well as cellulosic ethanol.

Corn ethanol production surged, but cellulosic-ethanol production has been delayed both by technical challenges and by a lack of funds for commercial plants. The renewable-fuel standard originally called for a billion gallons of cellulosic ethanol to be blended into the nation’s fuel supplies this year, but the Environmental Protection Agency has reduced the target to just six million gallons. Next year’s target is 1.75 billion, but the EPA is expected to set a new level based on what it expects companies can produce.

The new wave of biofuel plants will include a 25-million-gallon facility from the corn ethanol giant Poet and a 27.5-million-gallon facility from DuPont, but many of the others will produce 10 million gallons or less. It’s a small start. Meeting the ultimate goals of the renewable-fuel standard would require 300 biofuel plants, and each one would need to produce not 25 million gallons of fuel, but four times that amount.

Right now cellulosic ethanol can’t compete on its own. It costs more than either corn ethanol or gasoline. Wallace Tyner, a professor of agricultural economics at Purdue University, says cellulosic ethanol will never be cheaper than corn ethanol. However, Poet says it hopes to eventually make cellulosic ethanol competitive with gasoline. Getting to that point, at the very least, will require support from the renewable-fuel standard to help the company build more plants and achieve some economies of scale.

The standard has always been controversial (see “The Mess of Mandated Markets”). Right now, there’s a bill before the Senate that would repeal it. This year it’s also been the subject of a series of House hearings and white papers, and the leadership of the House Energy and Commerce Committee is now deciding how to proceed. The chairman of the committee, Republican Fred Upton of Michigan, introduced the most recent hearing by saying, “In my view, the current system cannot stand.”

“Killing the renewable-fuel standard kills whatever future there is for cellulosics,” Tyner says. For now, however, that probably isn’t a big concern: the standard is likely to remain in place, since it has the support of President Obama and many in the Senate.

In Tyner’s view, the industry faces another major challenge. “Cellulosic ethanol today is a nonstarter,” he says; there’s not enough demand for ethanol of any kind.

The promise of advanced biofuels

http://www.csmonitor.com/Environment/Energy-Voices/2013/0810/The-promise-of-advanced-biofuels

Corn ethanol has gone a long way to reducing our oil use, Holland writes, but it's gone about as far as it can go due to the 'blend wall.' The next generation of biofuels can pick up the slack, with support from the EPA's Renewable Fuels Standard.

By Andrew Holland, Guest blogger / August 10, 2013 

• 

A process manager works on a lab scale fermentation trial of cellulosic feed stock to create a new source for making ethanol other than corn. One of the best ways to reduce our oil use is to develop biofuel replacements, Holland writes.

Helen H. Richardson/The Denver Post/AP/File

This week, the EPA announced that it was adjusting the Renewable Fuels Standard (RFS) in order to reflect market realities. As originally proposed earlier this year, the rule called for 14 million gallons of cellulosic ethanol, but the final rule sets a requirement for 6 million gallons of cellulosic ethanol this year.

However, as all the news stories focus on how the EPA has “backed down”, what goes overlooked is that there is finally a cellulosic biofuel industry in which commercial production has started.

KiOR’s biorefinery in Columbus, Mississippi started commercial production in March using wood chips to produce cellulosic fuels, and Ineos just announced on July 31 that their Indian River BioEnergy plant in Florida has begun operations to make biofuels from plant waste. Both of these are now operating at full commercial scale. Whether they’re making money yet, we don’t know, but the fact that they’re producing large volumes of cellulosic biofuels may be a historic turning point. These developments are important steps towards developing a real advanced biofuel industry that can help move us toward a point where we have other options for how to fuel our cars and trucks.

Robert Rapier, writing about this issue in January, had called commercial cellulosic ethanol production a “unicorn” because it was something that doesn’t exist, no matter how much we want it to. Today, we can honestly say that is no longer the case.

Legislative Background

Since 2010, under the requirements of the bipartisan Energy Independence and Security Act of 2007, the EPA has been required to include a standard for cellulosic ethanol. Under the law, that was to start at 100 million gallons in 2010 and increase to 1 billion gallons by 2013. However, the law gives the EPA wide latitude to set the RFS based on current technology and production capacity. That’s why the actual RFS rule for 2010 was 6 million gallons, not 100 million and the rule for 2013 was originally 14 million gallons, now down to 6 million. The RFS was intended to provide an incentive for the development of cellulosic fuels – and it seems to have finally done the job.

Now – to be clear – this has been a long time coming. When I was working on the Hill in ’06 and ’07 as we were considering updating and increasing the RFS, we had the ethanol lobbyists and businesses come in and sell us on the corn ethanol RFS as a stepping stone towards cellulosic ethanol. At the time, they told us that cellulosic was only two to three years from commercialization. It turns out they were off by a few years – but in that intervening time, we had a deep financial crisis that made financing anything difficult. It turns out that financing a factory for an unproven fuel that will compete with the largest incumbent companies on the planet was nearly impossible.

This differential between what Congress anticipated in the law and the reality of actual production shows how difficult it has been to bring these to market.

Why Do We Still Need the RFS?

Let’s remember, reducing our oil use is an important step for national security. It reduces our dependence on volatile prices, set by whatever the most recent unrest in the Middle East is; for example, over the last month, we have seen a 10% oil price spike on news of a restart of Egypt’s unrest – and they’re not even a major oil producer! I’ve written about how development of Advanced Biofuels would help our National Security by giving consumers an option to separate from the global oil market.

One of the best ways to reduce our oil use is to develop biofuel replacements. Corn ethanol has gone a long way – it now makes up 10% of the U.S. fuel supply. However, it also has gone about as far as it can go due to the upcoming ‘blend wall.’ Today, companies like KiOR, Virent, and many others are moving forward with the next generation of biofuels. The RFS ensures that they have buyers when they bring their product to market. There is an increasing discussion in Congress about dismantling the RFS – but the development of advanced biofuels are too important to leave hanging without support. The EPA announcement shows the flexibility of the RFS, and the breakthroughs in commercial production of cellulosic biofuels show that it is working.\

Source: Commercial Production of Cellulosic Biofuels is No Longer a Unicorn

Judge Rules Biomass Plants Have to Obey the Law, While Usefulness is Questioned

http://www.sustainablebusiness.com/index.cfm/go/news.display/id/25085

07/25/2013 11:16 AM

A federal appeals judge has ruled that power plants that turn biomass into energy also have to obey the Clean Air Act.

It closed a loophole under which the Environment Protection Agency (EPA) exempted biomass plants from the same emission rules that all other power plants are subject to.

“Burning trees to generate electricity is dangerous, polluting, and ought to be limited to protect people and the environment,” says Kevin Bundy, a senior attorney with the Center for Biological Diversity’s Climate Law Institute, which challenged EPA's policy. “This important decision will reduce respiratory ailments, protect forests and help ensure a healthier, more livable climate.” 

The ruling reflects recent research that finds biomass-fueled power plants emit significantly more carbon per kilowatt than fossil fuel power plants - even coal. It can take decades before that excess carbon is “re-sequestered” by subsequent plant growth, explains the Center for Biological Diversity.

“Today’s ruling upholds EPA’s authority to regulate pollution that drives climate change. The court’s decision is grounded in an understanding that the science shows that biomass fuels, including tree-burning, can make climate disruption worse,” says Ann Weeks, legal director of the Clean Air Task Force, who argued the case for petitioners, which include the Conservation Law Foundation and Natural Resource Council of Maine. “The court clearly noted that the atmosphere can’t tell the difference between fossil fuel carbon dioxide and carbon dioxide emitted by burning trees.” 

"The court's decision is particularly important for the Southeast. Now we have an opportunity for a more sensible, science-based policy, one that avoids clearcutting the region's wildlife-rich forests for energy while intensifying climate change impacts," says Frank Rambo of the Southern Environmental Law Center, which represented the Dogwood Alliance, Georgia ForestWatch, South Carolina Coastal Conservation League and Wild Virginia in the case. 

In the case of wood, the adverse impact is exacerbated because of the large amounts of carbon released from deep forest soils as a result of disturbances such as logging, finds research released in June by Dartmouth College. Most global atmospheric studies don't consider deep soil, which could store up to half of all carbon in forest soils. 

"Our paper suggests the carbon in mineral soil may change more rapidly, and result in increases in atmospheric CO2, as a result of disturbances such as logging," says Dartmouth Professor Andrew Friedland. "Increased reliance on wood may have the unintended effect of increasing the transfer of carbon from mineral soil to the atmosphere." 

Woody biomass including trees grown on plantations, managed natural forests and logging waste, is used for 75% of global biofuel production. 

“If we are going to start changing recommendations and tell people to leave oil and coal in the ground, and burn more wood, we first need solid science behind that recommendation,” says Friedland. “Wood still might be a green choice, but let’s know all the consequences of everything that we do—and some of these consequences are not currently being discussed or appreciated or evaluated.” 

Next-Generation Biofuel Investments in Doubt 

 

Meanwhile, Europe’s biggest oil companies, BP and  Shell, are scaling back investments in biofuels because they don't see them becoming economical to produce until at least 2020. Exxon (remember all those algae TV ads?) and Chevron gave up several years ago, when they didn't see enough profit.

Why bother with these longer term investments when they're making a killing on their core business, oil and gas?

 

Both Shell and BP, however, continue to expand in their sugarcane ethanol businesses in Brazil. Shell has 23 refineries there and BP is spending $350 million to double production.

Global investment in biofuel production was $57 million in the first quarter, the lowest since 2006 and off significantly from a peak of $7.6 billion in the last quarter of 2007, reports Bloomberg. 
 

“Progress in deploying these technologies has been slower than many had anticipated and what’s needed to keep on track with our aspirations,” Maria van der Hoeven, executive director of the International Energy Agency (IEA), told Bloomberg. “Many potential producers have found it difficult to secure the capital they need.” 

"This is very capital intensive," Phil New, head of BP's biofuels program, told Bloomberg. "There's lots of difficult engineering. It will take time for scale-up."

Last year, BP scrapped plans for a $300 million refinery in Florida, although it just opened a $520 million wheat-to-ethanol facility in the UK with DuPont. Shell canceled plans in April for a straw-to-ethanol facility and also pulled back funding for biofuel enzymes at Codexis and an algae venture with HR BioPetroleum.

"All of these technologies are capable of working technically," Matthew Tipper, Shell's head of alternative energy, told Bloomberg. "It was purely on cost that this technology couldn't be taken forward. Fuels have to be cheap enough to burn. Otherwise no-one will buy them."

Both the US and Europe are counting on biofuels to help reduce emissions that contribute to global warming. To meet climate targets, biofuels must account for 27% of transportation fuels by 2050, up from just 3% in 2012, says IEA. 

Last year, ethanol made from sugar or corn was the major source of biofuels - almost all of the 1.9 million barrels produced a day. Next-generation technologies are focused on supplies that don't compete with food, such as switch grass, corn stalks, jatropha and algae, as well as wood waste from the lumber and paper industries. 

The first commercial-scale cellulosic biofuels plants are coming online, from companies like KiOR, Abengoa Bioenergy, BlueFire Renewables, Mascoma and Fulcrum Bioenergy. The plants will boost US cellulosic biofuel output 20-fold this year. At an anticipated 9.6 million gallons of production, it falls short of government’s target of 14 million gallons.

Big oil has basically decided to let these smaller firms develop the technologies and then surely they'll step in.

Last year, the EU set limits on crop-based biofuels because of rising food prices worldwide and shifted the focus to agricultural residues like straw, and potentially algae.

Chevron Defies California On Carbon Emissions

http://www.bloomberg.com/news/2013-04-18/chevron-defies-california-on-carbon-emissions.html

By Ben Elgin & Peter Waldman - Apr 18, 2013 12:01 AM ET


Chevron Corp. (CVX) helped write the first-in-the-nation rule ordering reduced carbon emissions from cars and trucks. Its biofuels chief spoke at the ceremony where California Governor Arnold Schwarzenegger signed the executive order in 2007, the same year the oil company pledged to develop a gasoline replacement from wood.

Now Chevron is leading a lobbying and public relations campaign to undercut the California mandate aimed at curbing global warming, two years after the state started phasing it in. Research on commercially viable climate-friendly products has come to naught, stymied by the poor economics of coaxing hydrocarbons from plants’ stubborn cell walls, according to Chevron officials.

 

An employee works on a Chevron Corp. sign at a gasoline station in San Francisco, California. Like other major investor-owned oil companies, Chevron and ExxonMobil accept climate-change science and acknowledge carbon emissions contribute to global warming. Photographer: David Paul Morris/Bloomberg 

April 18 (Bloomberg) -- Chevron Corp. helped write California's first-in-the-nation law ordering reduced carbon emissions from cars and trucks. Now Chevron is active in lobbying and public relations efforts to undercut the mandate. Bloomberg's Kevin Thrash reports. (Source: Bloomberg)

 

“We’ve looked at 100 feedstocks, 50 conversion technologies, worked to shape this law the best we can, and we have not come up with a solution to be able to comply,” said Rhonda Zygocki, Chevron’s executive vice president of policy and planning, in a Feb. 4 talk at the Commonwealth Club in San Francisco. Rick Zalesky, the Chevron official who celebrated the order’s signing with Schwarzenegger, was blunt last June when he declared the low-carbon standard “not achievable.”

While still promoting its commitment to renewable energy, the second largest U.S. oil company quietly shelved most of its biofuels work in 2010, according to internal documents and former Chevron officials. It decided products with potential returns of at least 5 percent weren’t enough for a multinational used to margins triple that, said Paul Bryan, a former vice president of biofuels technology.

Cutting Funding 

“The best outcome for the oil companies is if nothing changes,” said Bryan, who left Chevron in 2010 after 15 years. “You can make money today making advanced biofuels -- you just won’t make as much money as the oil companies would like.”

Chevron’s switch is part of the fossil fuel industry’s hardening line against efforts to supplant petroleum in the $500 billion U.S. transportation fuels market.

ExxonMobil Corp., the largest U.S. oil company, has also retreated from a biofuels effort. It slashed funding for research into making the fuel from algae, according to former employees involved in the project, and with Chevron is pressing California to postpone the low-carbon standard. In Europe, meanwhile, carbon credits for December plunged to an all-time low yesterday, making it cheaper for companies to buy the right to emit more carbon dioxide gas under the European Union’s system for controlling global warming.

‘Shockingly Small’

Like other major investor-owned oil companies, Chevron and ExxonMobil accept climate-change science and acknowledge carbon emissions contribute to global warming. They say they’re pushing back against the California rule because it demands technology that may not be available for years, and will cost jobs and send pump prices soaring if not rewritten.

The oil industry is lobbying to stop other states from following California. All the while, oil companies are dedicating few resources to the advances in biofuels they talk about needing to make, said Mary Nichols, head of the California Air Resources Board, which enforces the carbon rule.

“It’s shockingly small given their profitability,” Nichols said. “We’re dealing with companies with revenues in excess of the state of California.”

San Ramon, California-based Chevron had its second most profitable year in 2012, posting net income of $26.2 billion on $222.6 billion in sales, the vast majority from petroleum. California’s revenue in fiscal year 2012 was $87.8 billion.

Doomed Project

The company touts its biofuels program on its Facebook page and website. “It’s time oil companies get behind the development of renewable energy,” a headline on the website says. The text says a joint venture with Weyerhaeuser (WY) Co., Catchlight Energy LLC, is “working to commercialize advanced biofuels made from forest-based biomass.”

While Catchlight still exists, Chevron and the forest products company three years ago scratched a plan to spend more than $400 million and build commercial plants by 2014, according to an internal Catchlight business plan.

The plants were expected to generate a profit of 5 percent to 10 percent, according to Bryan and other former Chevron officials -- short of the average 17 percent the company earns on capital investments, including oil and gas exploration and production, for which it has budgeted $33 billion this year.

The Catchlight plan was doomed when management decreed biofuels had to compete with fossil fuel projects for funds, said Bryan, a lecturer in chemical and biomolecular engineering at the University of California at Berkeley. He said he left Chevron, taking a severance package during a staff downsizing, because he didn’t believe the company was committed to biofuels.

Too Ambitious

Chevron was optimistic when it worked on the low-carbon fuel standard with Schwarzenegger’s team in 2007, said Desmond King, president of Chevron Technology Ventures, which oversees emerging technologies. Former biofuels chief Zalesky, now the company’s general manager of crude and manufacturing strategy, was among several Chevron officials who helped craft the rule.

As the company put theory into practice, trying to make a propellant out of wood’s sugar-rich fibers, it realized the rule was too ambitious, King said. The research didn’t lead to anything that would be commercially viable, he said.

Even a 10 percent potential profit wasn’t attractive because the average payback from other projects is so much higher, he said. “It’s hard for Chevron to make major investments in anything that would be dilutive to its return,” he said. “It all comes down to getting good enough returns for our shareholders.”

Algae Fuel

Spending on biofuels has shrunk, he said, declining to give details. A leading producer of geothermal energy, Chevron expects to spend about $2 billion between 2012 and 2014 on renewable energy and energy efficiency, according to Morgan Crinklaw, a company spokesman.

To try to make algae fuel, Irving, Texas-based ExxonMobil said it would spend up to $600 million and hired Synthetic Genomics Inc. in 2009 to identify and modify algal strains that yield high amounts of oils. The oil company promoted the work in ads with a scientist saying, “We’re making a big commitment to finding out just how much algae can help to meet the fuel demands of the world.”

Research hit a snag in 2011 when a strain that made enough oil in a California greenhouse to meet a required milestone in the contract failed to perform in a pond at an ExxonMobil facility in Texas, according to J. Craig Venter, Synthetic Genomics’ chief executive officer and co-founder and one of the first scientists to sequence the human genome.

Long Term

ExxonMobil recast the contract, leading to layoffs of more than half the Synthetic Genomics employees working on biofuels for the oil company, according to former managers and scientists involved in the project. The effort now focuses on long-term research and development rather than commercial production, said Heather Kowalski, a spokeswoman for La Jolla, California-based Synthetic Genomics.

Charles Engelmann, a spokesman for ExxonMobil, declined to discuss details of the partnership or comment on the company’s opposition to the low-carbon rule’s timeline.

That’s being targeted by Fueling California, an advocacy group whose major funder is Chevron and that spent more than $327,000 in 2011 and 2012 lobbying on fuel and transportation policies, according to state disclosure forms.

The Air Resources Board’s Nichols said regulators haven’t been swayed by the arguments, among them that the economy will suffer if implementation of the rule isn’t delayed. “At this point we’re not seeing any need to change course,” she said.

Corporate Representatives

Both Chevron and ExxonMobil help finance the Houston-based Consumer Energy Alliance, which runs ad and Web campaigns warning low-carbon mandates could cost hundreds of thousands of jobs. After the alliance lobbied in New Hampshire last year, lawmakers passed a law prohibiting the state from participating in any low-carbon fuel program without legislative approval.

In January, the Washington-based American Legislative Exchange Council, which writes bills it recommends to legislators, endorsed a measure based on the New Hampshire law that it’s urging other states to adopt.

The council is made up of lawmakers and corporate representatives. Company memberships cost from $7,000 to $25,000 annually, and those that belong include ExxonMobil, the coal concern Peabody Energy Corp. and Koch Industries Inc., a chemical, textile, trading and refining conglomerate whose co- owners, Charles and David Koch, have supported the Tea Party.

Front Line

The council opposes government dictating Americans’ fuel choices, said Todd Wynn, director of the energy, environment and agriculture task force at the group. It also encourages legislators to repeal mandates -- which exist in 29 states -- requiring renewable energy from solar, wind and other sources to be part of the electric power mix.

This year, 30 bills to kill or weaken renewable rules have been considered in 16 states, according to the North Carolina Solar Center in Raleigh, which tracks such measures. None have passed so far.

California, the most populous state, is the front line: Emission controls enacted there since 1966 have been models for federal car-pollution and miles-per-gallon rules.

The state began to phase in the low-carbon standard in 2011. When it’s fully in effect in 2020, greenhouse gas emissions associated with transportation fuels are supposed to be 10 percent less than they were in 2010.

Transportation Mix

The state’s 32 million vehicles consume 15 billion gallons of gasoline each year, according to state data, and emit 160 million metric tons of greenhouse gases annually, 36 percent of all such emissions in California.

Right now, the state is on track to achieve the goal, according to Stanley Young, a spokesman for the Air Resources Board. Neither the agency nor Chevron and ExxonMobil will disclose how the companies are complying with the rule.

The U.S. government first spurred interest in biofuels, after President George W. Bush signed laws in 2005 and 2007 ordering more non-petroleum ingredients in the fuel supply.

The laws required refiners, importers and blenders to put 16.6 billion gallons of renewables into the mix by 2013. At least 1 billion gallons would have to come from cellulosic biofuels, which, unlike the widely used ethanol supplement derived from corn, are harvested from non-food crops, including switch grass and woody debris.

Fading Appetite

To meet its obligations, Chevron in 2008 teamed up with Weyerhaeuser to start Catchlight. Its goal was 17 plants by 2029, making 2 billion gallons annually, with spending of $370 million by 2013, according to a Catchlight business plan.

“There was a lot of enthusiasm that we would move forward on a path to develop something significant,” said Denny Hunter, Catchlight’s chief technology officer in 2008 and 2009 and a former vice president of technology for pulp, paper and packaging at Federal Way, Washington-based Weyerhaeuser.

Chevron’s appetite for biofuels began to fade after about a year, according to Hunter, Bryan and other former officials affiliated with Catchlight. A key reason, they said, was the shrinking federal cellulosic biofuels directive.

The laws Bush signed instruct the U.S. Environmental Protection Agency to adjust requirements based on supplies, which have never reached the goal. The EPA’s cellulosic biofuels mandate for 2013 is 99 percent below the original target.

‘No Urgency’

Chevron’s biofuels plan wound up in the cross-hairs of cost analysts in 2009 when they determined it would be a better bet to buy renewable fuel credits rather than keep trying to make the product, according to Bryan and two other former employees who asked not to be identified because they were discussing confidential company information. Credits, purchased from the government or producers who exceed low-carbon obligations, allow non-reducers to abide by clean fuel regulations.

After the cost analysts’ report, the Catchlight budget was stripped of money for plants, said Hunter, the former chief technologist who said he retired in 2009 because he was unhappy with the joint-venture’s direction. Chevron “no longer wanted to be a leader in biofuels,” he said.

In April 2010, Chevron and Weyerhaeuser told Catchlight to ratchet back, according to an internal business plan that set the 2013 budget at $8.9 million -- 98 percent lower than previously envisioned.

The Catchlight board said in the plan there was “no urgency” to commercialize and that, “in the absence of mandates,” the first plant “should be driven by financial returns.” The return on the investment would have to “meet or exceed” 20 percent, according to the plan.

‘Technical Winner’

That shocked scientists who were confident they’d come up with a process that would work, called solvent liquefaction, according to Jim Stevens, a chemist who researched technologies for 29 years at Chevron before being laid off in December 2010.

They’d constructed a contraption the size of a Winnebago that used a chemical solvent to turn woody biomass into fuel. It began producing in February 2010. “This was a real technical winner,” Stevens said.

Catchlight roughed out the numbers for a $504 million solvent liquefaction plant producing 92 million gallons a year at a cost of $2.18 a gallon, according to a 2010 internal report that laid out the technical and economic prospects for producing biofuels on a commercial scale. Making gasoline costs between $2 a gallon and $2.75 a gallon when oil prices are $70 a barrel to $100 a barrel, according to another Catchlight document.

‘Still Learning’

The joint venture never performed final tests on the biofuels process, Stevens said. “They just quit trying.”

Chevron hasn’t stopped working on developing biofuels products, according to Crinklaw, the company spokesman.

Taxpayers will help pay for future solvent liquefaction research. It will be conducted at Iowa State University with a $3.5 million federal grant covering 80 percent of the costs, and Catchlight the rest.

Catchlight is also supplying wood chips to Pasadena, Texas- based KiOR Inc., a biofuels producer that announced its first shipment of cellulosic diesel in March. Chevron has a contract to purchase some of KiOR’s renewable fuels. Weyerhaeuser is happy with the joint venture’s status, said David Godwin, vice president of minerals and energy products.

In October 2010, six months after Chevron and Weyerhaeuser put the brakes on at Catchlight, Chevron ran television and print ads about its work on non-petroleum fuels. “Something’s got to be done. So we’re doing it,” the ads said. “We’re not just behind renewables. We’re tackling the challenges of making them affordable and reliable on a large scale.”

Chevron officials didn’t respond to questions about the advertising campaign.

“We remain interested in the solvent liquefaction technology but, like other biofuels production technologies, it is early in its development, and we’re still learning about it,” Crinklaw said in an e-mailed statement. “Unfortunately, the technology hasn’t advanced as quickly as we hoped.”

To contact the reporters on this story: Ben Elgin in San Francisco at belgin@bloomberg.net; Peter Waldman in San Francisco at pwaldman@bloomberg.net
 
To contact the editor responsible for this story: Gary Putka at gputka@bloomberg.net

GlobalData: BioEthanol Car Fuel of Future

http://domesticfuel.com/2013/04/18/globaldata-bioethanol-car-fuel-of-future/

Posted by Joanna Schroeder – April 18th, 2013

According to a new report by @GlobalDataEnergy, bioethanol is the car fuel of the future. The report, “Cellulosic Ethanol – Global Production, Major Trends, Regulations, and Key Country Analysis to 2020,” finds that ethanol is the most widely acclaimed alternative or additive for gasoline used for running vehicles. In addition, the U.S. ranked number one in biofuel production using natural waste feedstocks. According to the latest report, the U.S. is the global leader in cellulosic ethanol production, manufacturing 5.42 million gallons in 2012.


Bioethanol is produced through the fermentation of cellulosic feedstock such as forest and agricultural waste. The reports finds that the U.S. has an abundance of biomass feedstock, and dedicated energy crops such as switchgrass and miscanthus that are grown exclusively for conversion into cellulosic ethanol to help the nation’s ambition to meet fuel needs while reducing greenhouse gas (GHG) emissions.

The U.S. is the only country currently working to promote the cellulosic ethanol market, says the report, with the U.S. Department of Energy (US DOE) providing grants to help companies establish a commercial-scale cellulosic ethanol plant. As a result, several companies have set up pilot and demonstration plants and a few commercial plants are expected to be commissioned in late 2013. The report also finds that the U.S. have also mandated the addition of 10% ethanol in gasoline fuel, setting steady domestic demand for the industry, while certain recently released cars are able to run on a 85 percent ethanol, 15 percent gasoline mix.

The report finds corn stover and wheat straw are among the most freely available types of feedstock used in countries producing cellulosic ethanol, and growing ethanol demand may see these nations utilizing the residue of their corn crop for ethanol production, creating a sizable market for agricultural waste. GlobalData expects that the growing feedstock demand will create a structured market, in which biomass feedstock prices will be set based on their ethanol yield and the prevailing trading price of ethanol.

Some EU countries such as France and Italy have cellulosic ethanol production infrastructure, but a limited supply of biomass feedstock. Growth of commercial production in these countries may fuel the need to import feedstock from nearby countries or expand production to other countries with ample feedstock availability. A few producers with upcoming commercial scale plants in the U.S. have already started signing agreements to procure agricultural residue and other kinds of cellulosic feedstock.

Global cellulosic ethanol is expected to increase from 14.25m gallons in 2012 to 412.25m gallons in 2020, with commercial production anticipated to take off on a large scale in late 2013 and 2014, thanks to major players adding substantial production capacity and new companies joining the market. The report finds that the U.S. is expected to retain its market dominance until 2020.

Country forestry banquet set for Tuesday

http://dailysoutherner.com/community/x1221097993/Country-forestry-banquet-set-for-Tuesday

March 25, 2013
 

BY JOHN H. WALKER  

THE DAILY SOUTHERNER

 

TARBORO — Persons with an interest in the timber industry will gather Tuesday at the East Carolina Agriculture and Education Center for the annual Edgecombe County Forestry Banquet.

The meal portion of the event will get under way at 6:30 p.m. and the program will begin at 7:15

Clay Altizer, Utilization Forester for the North Carolina Forest Service, and Edward Sontag, director of fiber sourcing for Envira LP, will deliver the main presentations.

As recently as the third quarter of 2011, the forest products sector in North Carolina included 2,299 manufacturing facilities and provided 67,613 jobs and an annual payroll of $2.7 billion.

The overall economic benefit to the state was estimated at $23.8 billion with a total related work force of 178,498.

Sontag will talk about the future of palletized woody biomass.

Enviva is one of the largest manufacturers of processed biomass fuel in the form of 100 percent wood pellets in the United States and Europe.

Enviva operates a pellet facility in Ashokie capable of producing 350,000 metric tons of wood pellet annually and is scheduled to bring a 500,000 metric ton plant online in Northampton at mid-year.

Woody biomass is made up of the trees and woody plants, including limbs, tops, needles, leaves, and other woody parts, grown in a forest, woodland, or rangeland environment, that are the by-products of forest management.

The National Energy Policy Act, signed into law on August 8, 2005, recognized the importance of a diverse portfolio of domestic energy. The policy outlined 13 recommendations designed to increase America’s use of renewable and alternative energy. One of these recommendations directed the Secretaries of the Interior and Energy to re-evaluate access limitations to federal lands in order to increase renewable energy production, such as biomass, wind, geothermal, and solar.

On June 18, 2003, The Departments of Energy, Interior, and Agriculture announced an initiative to encourage the use of woody biomass from forest and rangeland restoration and hazardous fuels treatment projects. The three Departments signed a Memorandum of Understanding (MOU) on Policy Principles for Woody Biomass Utilization for Restoration and Fuel Treatment on Forests, Woodlands, and Rangelands, supporting woody biomass utilization as a recommended option to use to reduce hazardous fuels rather than burning or employing other on-site disposal methods.

In North Carolina, North Carolina General Statutes 105-277.2 through 105-277.7 provide an incentive for farmers and foresters to keep agricultural and forested land in those uses through property tax deferments as part of the use value program.

In order to qualify for forestry use, there must be at least 20 acres of forested land, and you must present to the tax assessor a Forestry Management Plan, showing the forested land is under a sound management program.

For more information, contact Bob Filbrun at 641-7815.

First Commercial Cellulosic Ethanol Plant in US Goes Bankrupt

http://www.energytribune.com/75180/first-commercial-cellulosic-ethanol-plant-in-us-goes-bankrupt

Posted date: March 20, 2013

By Robert Rapier

Ed. note: This piece was first ptublished on Robert Rapier’s R-Squared Energy Blog.

First Qualifying Cellulosic Ethanol

 

Last year, to much fanfare, the first batch of qualifying cellulosic ethanol was produced (i.e., it qualified for credits under the EPA program for certifying ethanol for sales). I reported on the development at that time.

Western Biomass Energy LLC, a subsidiary of Blue Sugars Corporation (previously KL Energy) reported the major milestone of claiming the first cellulosic ethanol tax credits under the RFS2 for a 20,069 gallon batch of cellulosic ethanol produced from bagasse (sugar cane waste) in April 2012.

However, regular readers are aware that for years I have been deeply skeptical that cellulosic ethanol as envisioned by — and ultimately mandated by — the US government will be an economic and scalable fuel option. The obstacles to success are significant, and I have described them in detail on many occasions.

Nevertheless, there is the possibility that in some niche applications that modest amounts of cellulosic ethanol may be produced for sale. One of those niches is from waste biomass such as bagasse that is produced during the processing of sugarcane. But in general – despite the proclamations from promoters like Vinod Khosla – the chemistry and physics are formidable obstacles working against the success of cellulosic ethanol. I will state in no uncertain terms that I don’t believe it can ever be mass-produced more cheaply than corn ethanol, and that industry’s financial trouble are well-documented.

Another Reality Check

 

I was extremely skeptical that the batch of cellulosic ethanol produced by Western Biomass was anything more than a publicity stunt rather than an indication that they had actually managed to conquer the economics of the process. My skepticism was heightened when they never produced another qualifying batch for the rest of the year, and that one batch they did produce was exported to Brazil to be used at the Rio+20 Conference.

Now comes news that Western Biomass Energy has filed for Chapter 11 bankruptcy protection. In my column in which I reported on the initial production of cellulosic ethanol from Western Biomass, I noted:

Cellulosic ethanol commercialization still faces a number of challenges. Capital and operating costs are expected to remain higher than for corn ethanol producers, and even they are currently struggling with low margins. The ethanol market also faces the hurdle of the blend wall, which makes it difficult to expand domestic production without increases in E15 and E85 consumption, and/or ethanol exports.

It will continue to be true that as long as the US government incentivizes these ventures, companies will continue to pursue them. But I believe it is also true that every gallon of production they make will be produced at a significant per gallon loss. Mother nature simply didn’t design cellulose to be easily accessible, and extracting the cellulose, converting the cellulose into sugars, fermenting those sugars to ethanol, and finally purifying that ethanol will continue to be capital and energy-intensive operations.

Investors Should be Cautious

 

In addition to Western Biomass, one other company has produced qualifying cellulosic fuel. Vinod Khosla-backed KiOR announced earnings this week, while at the same time announcing that they had shipped their first batch of qualifying cellulosic diesel. This was presented as great news, and KiOR’s share price initially surged on the news. But a closer reading of their financial statement signals the kind of warning flags about KiOR that I have been waving for over a year:

The Pasadena, Texas-based firm lost $0.28 per share during the fourth quarter, falling short of the $0.15 per share loss in Q4 2011. However, it beat the Wall Street consensus of a loss of $0.32 per share.

 Fourth quarter revenue rounded out at $87,000 – the company’s first revenue since   inception. This fell drastically short of the $1.62 million analysts hoped for.

So, revenues were 95% less than expected. Yikes. Also the company’s cash and cash equivalents declined by $91 million over the previous year, down to $41 million. KiOR’s clock is ticking. They will likely find more investors willing to take a chance on them, but even though I have a couple of friends who work there, I am not optimistic about their long-term chances of competing in the motor fuel arena. As long as natural gas prices remain low, they will probably limp along, but their heavy dependence on cheap natural gas is a risk factor unrecognized by most investors.

KiOR announces cellulosic diesel shipment, 2012 financial results

http://www.biomassmagazine.com/articles/8745/kior-announces-cellulosic-diesel-shipment-2012-financial-results

By Erin Voegele | March 19, 2013

• 
  KiOR Inc. converts biomass into renewable diesel and gasoline products.
  KiOR Inc.

On March 18 KiOR Inc. announced the initial shipment of cellulosic diesel from its commercial-scale plant in Columbus, Miss. On the same day, the company reported financial results for the fourth quarter of 2012 as well as the entire fiscal year. According to the financial release, KiOR recorded its first revenues since inception during the fourth quarter 2012.

Fred Cannon, KiOR’s president and CEO, called the cellulosic diesel shipment a major step forward for his company, the biofuels industry, and the renewable fuels sector. “With first production at Columbus, KiOR has technology with the potential to resurrect each and every shut down paper mill in the country and to replace imported oil on a cost effective basis while creating American jobs,” he said. “This facility demonstrates the efficacy of KiOR's proprietary catalytic biomass-to-fuel process with the potential to deliver cellulosic gasoline and diesel to the U.S. We are proud to be making history in Mississippi. The technology is simply scalable and we believe sufficient excess feedstock exists in the Southeast alone to build almost fifty KiOR commercial scale facilities."

Cannon added that the U.S. EPA’s recent actions to qualify cellulosic gasoline for the renewable fuel standard (RFS) market and increase the gasoline blend rate to 25 percent have de-risked KiOR’s business strategy and created a market for the company’s hydrocarbon fuels that is nearly twice the size of the current ethanol market.

During the fourth quarter of 2012, KiOR posted a net loss of $29.7 million, compared to a net loss of $27 million during the prior quarter. Net loss for the full year was $96.4 million, compared to a net loss of $64.1 million in 2011.

KiOR recorded its first revenues since inception during the final three months of 2012. The $87,000 in revenue is attributed to the sale of blended cellulosic diesel from the company’s research and development facility. The fuel was blended with fossil diesel. The cost of revenue for the quarter was $68,000, and related to the first sale, including production, shipping and blending costs.
During a call to discuss the results, Cannon noted his company faces three primary risks: technology scale-up risk, regulatory risk, and financial risk. Since the last financial update was made in November, Cannon said KiOR has made substantial progress in addressing all three risks.

“A mitigation of scale-up risk due to commercial production of cellulosic gasoline and diesel at Columbus is a remarkable achievement by the KiOR team,” he said. “ In four years we have successfully achieved a 20,000 ton scale up in our proprietary biomass to fuels technology from proof of concept in our pilot plant to our demonstration plant and now to our first commercial scale facility at Columbus.”

While KiOR had previously stated it expected commercial shipments of biofuels to commence in late 2012, Cannon noted the company encountered unexpected startup issues unrelated to its technology, but has since overcome those normal startup issues and proven that KiOR’s biomass-to-fuels technology works at commercial scale. “In fact, we know now that our technology performs better in terms of quality as it is scaled,” he continued. “From very good oil at the very small pilot plant to even improved quality oil at the demo and now to our best ever quality oil made at Columbus. So high in quality we’re converting over 90 percent of our oil from Columbus into transportation fuel.” The conversion rate for conventional crude oil is only about 70 percent, he added.

Regarding regulatory risk, Cannon said that the EPA’s recent pathway rulemaking was the last hurdle to KiOR’s ability to fully participate in the mandated RFS2 market. “What this means is that every gallon of cellulosic gasoline and diesel that comes out of KiOR’s Columbus facility and all our future facilities will generate 1.5 or 1.7 cellulosic grams per gallon, which unlocks significant additional value for KiOR relative to nearly all other renewable fuel companies,” he said.

Cannon also spoke about EPA’s approval of an increased Part 79 registration for blending KiOR’s cellulosic gasoline at levels up to 25 percent. “At a 25 percent blend, KiOR has a 33 billion gallon per year domestic market for its cellulosic gasoline. This is more than the entire RFS2 renewable volume obligation in 2022. By comparisons, this is double the size of the ethanol market and without any blend wall limitations,” Cannon continued.

During the call, Cannon also addressed two factors he said KiOR believes will de-risk its funding risk. First, he said, is the achievement of milestones. Second, he continued, is flexibility. “In our experience, one of the best ways to drive value in any financing process, whether debt or equity, is to have the flexibility to raise financing when the market allows a company to maximize the value for its existing shareholders,” he said, noting that Alberta Investment Management Co. and Vinod Khosla have agreed to amend the loan agreement KiOR signed last year in order to give the company flexibility it needs from a liquidity perspective to drive financing for the Natchez facility.

“Specifically, we have increased the potential launch under the agreement from $75 million of current principal to $125 million, with affiliates of Vinod Khosla committed to funding that additional $50 million upon request from the company,” Cannon continued. “If funded, this additional funding would automatically convert into equity in connection with future financing for the Natchez project, which further enhances our flexibility going forward.”

Biofuels Digest’s 10-Minute Guide to Obama’s New Energy Policy

http://www.biofuelsdigest.com/bdigest/2013/03/18/biofuels-digests-10-minute-guide-to-the-obama-administrations-new-energy-policy/

Jim Lane | March 18, 2013 

 

Major push from Obama on energy. 

 

From DOE: “Liquid fuels demand can be sufficiently reduced so that biomass can meet all liquid fuel needs.”

 

What’s up? What is an Energy Security Trust, anyway? The Digest’s 10-Minute Guide tells all.

 

In an address at the Argonne National Laboratories on Friday, President Obama said:

“You see, after years of talking about it, we’re finally poised to take control of our energy future.  We produce more oil than we have in 15 years.  We import less oil than we have in 20 years…But the only way we’re going to break this cycle of spiking gas prices for good is to shift our cars and trucks off of oil for good.  That’s why, in my State of the Union Address, I called on Congress to set up an Energy Security Trust to fund research into new technologies that will help us reach that goal.

“I’m proposing that we take some of our oil and gas revenues from public lands and put it towards research that will benefit the public, so that we can support American ingenuity without adding a dime to our deficit…devising new ways to fuel our cars and trucks with new sources of clean energy – like advanced biofuels and natural gas – so drivers can one day go coast-to-coast without using a drop of oil.

“And in the meantime, let’s keep moving forward on an all-of-the-above energy strategy.  A strategy where we produce more oil and gas here at home, but also more biofuels and fuel-efficient vehicles; more solar power and wind power. We can do this.”

A companion study released the the Department of Energy was, in its way, more ambitious and more specific: “TEF does not project that all liquid fuels will be eliminated from the future transportation sector, but rather that demand can be sufficiently reduced so that biomass can meet all liquid fuel needs.”

The Energy Security Trust. Is it a new idea? 

No. In his 2013 State of the Union address, President Obama called on Congress to create an Energy Security Trust Fund, which would free American families and business from painful spikes in gas prices. The President’s plan builds on an idea that has bipartisan support from experts including retired admirals and generals and leading CEOs, and it focuses on one goal: shifting America’s cars and trucks off oil entirely.

 

How does it work?

Over 10 years, the Energy Security Trust will provide $2 billion for critical, cutting-edge research focused on developing cost-effective transportation alternatives. The investments will support research into a range of technologies – things like advanced vehicles that run on electricity, homegrown biofuels, and domestically produced natural gas. It will also help fund a small number of real-world experiments that try different transportation techniques in cities and towns around the country using advanced vehicles at scale.

 

Does it involve new taxes?

No. The funding will be provided by revenues from federal oil and gas development, and will not add any additional costs to the federal budget.

 

President Obama’s complete remarks are where?

They’re here.

 

Does the White House’s have a short take on the Energy Security Trust?

Yep. Here you are.

 

What is the Transport Energy Futures (TEF) study?

It’s a new study from the U.S. Department of Energy, the National Renewable Energy Laboratory, and Argonne National Laboratory that finds the United States has the potential to reduce petroleum use and greenhouse gas (GHG) emissions in the transportation sector by more than 80% by 2050 – and proposes pathways towards that goal.

 

What is the strategy?

• Stopping Growth in Transportation Sector Energy Use
• Using More Biofuels
• Expanding Electric and Hydrogen Technologies

 

What’s the overall 15-point Obama Energy Strategy, again?

1. Challenges Americans to double renewable electricity generation again by 2020.
2. Directs the Interior Department to make energy project permitting more robust.
3. Commits to safer production and cleaner electricity from natural gas.
4. Supports a responsible nuclear waste strategy.
5. Sets a goal to cut net oil imports in half by the end of the decade.
6. Commits to partnering with the private sector to adopt natural gas and other alternative fuels in the Nation’s trucking fleet.
7. Establishes a new goal to double American energy productivity by 2030.
8. Challenges States to Cut Energy Waste and Support Energy Efficiency and Modernize the Grid.
9. Commits to build on the success of existing partnerships with the public and private sector to use energy wisely.
10. Calls for sustained investments in technologies that promote maximum productivity of energy use and reduce waste.
11. Leads efforts through the Clean Energy Ministerial and other fora to promote energy efficiency and the development and deployment of clean energy.
12. Works through the G20 and other fora toward the global phase out of inefficient fossil fuel subsidies.
13. Promotes safe and responsible oil and natural gas development.
14. Updates our international capabilities to strengthen energy security.
15. Supports American nuclear exports.

 

Where’s the Fact Sheet on that?

Right here.

 

Why the transport sector, specifically?

The transportation sector accounts for 71% of total U.S. petroleum consumption and 33% of U.S. total carbon emissions.

 

What are the 9 Interconnected reports that make up the overall TEF study?

1. Deployment pathways issues including the development of, transition to, and challenges of advanced technology
2. Non-cost barriers to advanced vehicles such as range anxiety, refueling availability, technology reliability, and consumer familiarity.
3. Opportunities to improve non-light-duty vehicle efficiency for medium- and heavy-duty trucks, off-road vehicles and equipment, aircraft, marine vessels, and railways
4. Opportunities for switching modes of transporting freight, such as moving freight from trucks to rail and ships.
5. Infrastructure expansion required for deployment of low-GHG fuels, including electricity, biofuels, hydrogen, and natural gas
6. Balance of biomass resource demand and supply, including allocations for various transportation fuels, electric generation, and other applications.
7. Opportunities to save energy and abate GHG emissions through community development and built environment strategies
8. Trip reduction through mass transit, tele-working, tele-shopping, carpooling, and improvement of vehicle performance through efficient driving
9. Freight demand patterns, including trends in operational needs and projections of future use levels.

 

How much biofuels use does the TEF study anticipate?

Up to 100 percent of fuel needs, if the US hits its 2050 fuel efficiency, hydrogen fuel, and electrification goals as well. Even at the EIA baseline projected fuel demand in 2050, biofuels could supply as much as 50 percent of the jet fuel market, and 30 percent of the gasoline and diesel markets if EERE biofuel technology goals are met. Getting to the point where biomass could provide 100 percent of vehicle liquid fuels requires reducing the need for fuel through the efficiency and demand management measures described above, including deployment of electricity or hydrogen fuel alternatives.

 

Will this require an avalanche of infrastructure?

Some. “While new fuel types require new infrastructure, the share of infrastructure cost within total fuel costs is very small (1.5-3 percent), and these costs can be made up for in fuel cost savings of more efficient advanced vehicles.”

 

Where can I start to dig deeper into the overall plan and the TEF study?

You can start here at the TEF home page.

 

Who was responsible for TEF?

TEF is a collaboration between EERE, the National Renewable Energy Laboratory (NREL), and Argonne National Laboratory (ANL). The project benefitted from the input provided by a steering committee that included some of the nation’s foremost experts on transportation energy from the Environmental Protection Agency (EPA), the U.S. Department of Transportation (DOT), academic researchers, and industry associations.

 

What is NEPA and what is happening there?

NEPA is the National Environmental Policy Act of 1970, a product of the Nixon Administration.

 

Er, Nixon? What’s new there?

The President’s strategy includes requiring federal agencies, under NEPA’s authority, to include climate change impact in reviewing proposed projects. For example — leases to drill for coal, or export coal to China, or construct oil pipelines like the Keystone XL pipeline, could be reviewed not only for air pollution and water fouling, but for overall greenhouse gas impact.

 

Are the changes in NEPA reviews ho-hum, or a big deal?

Big deal. Brendan Cummings, senior counsel for the Center for Biological Diversity told Bloomberg that the result will be “a major shakeup in how agencies conduct NEPA” reviews.

 

Does the President have this authority under NEPA?

Generally, yes. NEPA grants a right of Federal review of proposed projects for environmental impact — and climate change certainly falls broadly within that category. The devil is going to be in the details — after all, how much specific contribution to a problem like climate change be attributed to a single project?

 

Is a NEPA review capable of derailing a project?

No. A NEPA review is, at the end of the day, aimed at producing a thorough vetting process, rather than a specific outcome. Projects go through NEPA reviews — there is a robust commentary opportunity — but regulators, in the end, make decisions on permits. NEPA does establish a forum for introducing or reviewing data that will be used in a regulator’s decision — or, in lawsuits that may be filed to reverse a ruling.

 

Overall, is there going to be opposition from the right on the Energy Security Trust?

Forbes’ Houston-based energy columnist Christopher Helman writes: “This is a terrible idea — and a backdoor to the imposition of a nationwide carbon tax — that congress should not allow to pass.

“There is absolutely no reason why we need a dedicated Energy Security Trust to fund the national labs, or to fund any kind of alternative energy research. If congress wants to fund research it can pass a bill to fund research…Isn’t congressional appropriation how the federal government is supposed to pay for such stuff?

“Then consider that the Department of Energy has in recent years built up an insanely terrible record of wasting taxpayer money by directing funds to private companies, many of which have simply gone belly up (but not before paying lavish bonuses to executives).

 

Why is there opposition from the left?

Here’s some flavor. “This approach will only encourage more dirty energy production…[and] doesn’t create any additional cost for using fossil fuels, thus creating no incentive for firms to divert resources into safer, cleaner and more renewable sources of energy,” Tyson Slocum, director of Public Citizen’s energy program, told bizjournals.com.
 

Construction on Clinton biofuel refinery could start as early as fall

http://www.fayobserver.com/articles/2013/03/18/1243607?sac=fo.business

Published: 07:22 AM, Mon Mar 18, 2013

By John Ramsey
Staff writer

Construction on a $170 million refinery in Clinton to convert 20 million tons of grass into fuel each year could start as early as this fall.

Chemtex, an international company with offices in Wilmington, plans to build the refinery on 166 acres in Sampson County. The plant would mirror one already built in Italy. If construction begins as planned, the plant could open in 2015.

Yet hurdles remain.

"We're working very hard to try to make it a reality," said Dennis Leong, an executive vice president at Chemtex. "I'm very confident that in 2015, this plant will be open somewhere, and I should say we're still very hopeful and it's our intention to open in North Carolina. It's really making sure it's a project that's welcome in the state."

It will take at least 20,000 acres of energy crops such as miscanthus and switchgrass to feed the refinery. Chemtex has developed its own technology to extract the energy from green plants and soft woods.

The plan is to sign up farmers near the plant to grow materials on land they aren't already using to grow food.

Chemtex estimates the facility will help create more than 300 jobs in the region while helping the nation reduce its dependence on foreign oil. And that could be just the beginning. Chemtex documents say North Carolina has enough available land to support as many as 15 refineries, which could mean 5,000 new jobs and a $2 billion boost to the state's economy.

The N.C. Biofuels Center has identified 100,000 acres of spray fields in Sampson, Duplin and Wayne counties that could potentially be used for biocrops. But state environmental workers are still studying how to plant the crops in spray fields in a way that complies with waste regulations.

The ethanol produced at the plant could be sold to fuel blenders and end up in cars' gasoline tanks.

Staff writer John Ramsey can be reached at ramseyj@fayobserver.com or 486-3574.

Southern Research Institute (NC) Wins DOE Grant to Develop Biomass Liquification Process For Transportation Fuels Production

http://www.biofuelsjournal.com/articles/Southern_Research_Institute__NC__Wins_DOE_Grant_to_Develop_Biomass_Liquification_Process_For_Transportation_Fuels_Production-131092.html

Date Posted: March 14, 2013

Durham, NC—Southern Research Institute announced March 13 it has entered into a cooperative agreement with the U.S. Dept. of Energy to develop a mild liquefaction process that will economically convert biomass to petroleum refinery-ready bio-oils.

The process will convert biomass to stabilized bio-oils that can be directly blended with hydrotreater and cracker input streams in a petroleum refinery for production of gasoline and diesel range hydrocarbons.


“We hope the project will advance liquefaction by demonstrating cost-effective biomass conversion to stable bio-oils at mild conditions. Other liquefaction processes either use severe conditions or expensive catalysts to achieve stability,” said Santosh K. Gangwal, Ph.D., Southern Research principal investigator.

“We will also evaluate the suitability and process economics of directly blending our bio-oils with refinery hydrotreater and cracker streams for co-production of diesel and gasoline.”

Gangwal said co-processing of bio-oil with petroleum refinery streams can help refineries comply with new renewable fuels standards (RFS-2.)

The process will be evaluated and optimized using a continuous flow lab-scale biomass liquefaction system simulating the commercial embodiment of Southern Research’s liquefaction process.

Also a lab-scale reactor will be constructed and tested for hydrotreating and cracking the bio-oils to produce gasoline and diesel range hydrocarbons.

Southern Research is seeking a refinery partner who will help to further define bio-oil quality specifications that meet requirements for direct insertion at various points in the petroleum refining process.

Based on the experimental data, a technical and economic evaluation and life-cycle assessment of the process will be carried out.

Requirements for scale-up and commercialization of the liquefaction process will be determined.

“Development and commercialization of a cost-effective biomass liquefaction process using a high impact feedstock such as wood waste to produce renewable gasoline and diesel can reduce the nation’s requirement for importing oil from foreign countries, help to stabilize the prices at the pump, and lower the emission of greenhouse gases” said Tim Hansen, director of Advanced Energy and Transportation Technologies.

For more information, call 205-337-9634.

Cellulosic Ethanol Inches Forward

http://www.technologyreview.com/view/512501/cellulosic-ethanol-inches-forward/

Kevin Bullis
March 13, 2013

The technology for making fuel from wood chips and grass is late, but still on the way. 

A few years ago, large scale, billion-gallon-a-year cellulosic ethanol production seemed around the corner. Instead we’ve seen companies fail, or scale back and delay their plans, as they find it hard to secure financing or bring down costs. The technology seems to have dropped off the radar, except for the occasional news of opposition to a mandate requiring the use of cellulosic ethanol.

Still, there are signs of progress. This week ZeaChem announced it started production at a 250,000 gallon demonstration plant that is making chemicals that can be used to make ethanol and other things. Two companies, Ineos and Kior, have finished construction at larger plants that can produce 8 and 11 million gallons of fuel. They’re in the process of starting those plants up. And Poet and Abengoa hope to finish construction on even larger plants—25 million gallon ones-by the end of the year.

It’s still not clear that these companies can make ethanol profitably. ZeaChem is hedging its bets. It can make ethanol if that’s the most profitable option. Or it can convert the acetic acid it makes to chemicals such as propylene. Other advanced fuels companies, such as Amyris, are also pursuing chemicals at first.

But there are plenty of challenges involved in trying to break into existing chemical markets, especially if the chemicals are low-cost commodities. For example, chemicals like propylene are typically made by big petrochemical companies at huge well-integrated plants that make many chemicals, and have low costs that will be hard to compete with.

Hot sauce! 5 Lessons Louisiana can teach us about advanced bayoufuels

http://www.biofuelsdigest.com/bdigest/2013/03/07/hot-sauce-5-lessons-louisiana-can-teach-us-about-advanced-bayoufuels/

Jim Lane | March 7, 2013 

Louisiana — it’s as hot as cayenne pepper in biofuels capacity development, but there are cautionary tales hidden in the sauce.

 

When it comes to the first generation of ethanol and biodiesel-based biofuels, Louisiana didn’t figure much into the calculations — to date, there’s just the 5 million gallon (per year) Oswalt Bioenergy biodiesel plant in Lake Providence and the 15 Mgy Vanguard Synfuels in Pollock.

But since drop-in renewable fuels arrived, Louisiana hasn’t just been in the race, or near the front of the pack — it has become the Secretariat of project development — out in front by a mile. In all, more than 500 million gallons in advanced biofuels and chemicals project capacity announced — a 100-fold jump in the past five years.

Now — before booking your ticket down to Baton Rouge for the “renewable fuels forever” victory parade , let’s emphasize the phrase “project announcement”.

76 million gallons of that proposed capacity is currently completed (another 142 million expected to come online this year, and 50 million more in 2014, the rest we don’t have firm dates on as we await financing news). From that capacity, today, there’s not currently any commercial production — as Dynamic Fuels awaits better RIN price conditions (and the 1.5 mgy BP Biofuels plant in Jennings is a pilot plant used in research and development).

So, we can learn a lot down in the bayous about what works, and what’s problematic, in advanced biofuels development.

1. Smoke ‘em if you got ‘em

 

Louisiana has many blessings above and beyond Bourbon Street and cajun spices. Among them are an abundance of gases for sale — from hydrogen to natural gas; fats and greases from animal rendering, and a forestry sector that has fallen on tough times with the decline of newsprint. Buck Vandersteen, executive director of the Louisiana Forestry Association, spoke for a lot of these resources in observing, “We have to recognize our traditional industries and seek out new industries.”

The combination of rendering greases and hydrogen is, for now, the primary catalyst for growth — as Louisiana firms have perfected the art of purifying greases into renewable oils which are then hydrotreated to remove excess oxygen — voila, producing renewable diesel. Variations on this formula are the source of the Tyson-Syntroleum 75 million gallon plant in Geismar (Dynamic Fuels), the Valero-Darling 137 million gallon project in Norco (Diamond Green Diesel), the proposed Emerald Biofuels 85 million gallon project in Plaquemine, and the proposed D2 Renewable 150 million gallon project in Convent.

[Over in Pollock, Vanguard's been up to good things, too — introducing their own 2nd gen technology thermo-chemical solution (more about it here). Word is from Vanguard that they have the only catalyst that produces four non-sulfur alcohols simultaneously: 40% Ethanol, 40% Methanol, 15% Propanol and 5% Butanol. ]

In all, that’s just on 90 percent of the activity in the state. Most of the remainder comes from the Sundrop Fuels project near Alexandria. Using forest waste and hydrogen from natural gas, the plant will produce up to 50 MGy of renewable gasoline.  The biofuels plant will salvage wood waste in Central Louisiana and adjacent regions and also will extract hydrogen from abundant supplies of Louisiana natural gas, combining the hydrogen in a proprietary reactor with carbon extracted from wood waste. Construction is expected to be complete in 2014.


The projects pale with the scope of Sasol’s proposed $21 billion gas-to-liquids and ethane cracking plant proposed for Louisiana — but it goes to show you that there is nothing that stimulates activity more than an abundance of low-cost feedstocks.

2. In grease, color matters

 

White grease bad, yellow grease better, brown grease best.

Generally speaking, traditional biodiesel plants utilize choice white grease if they can utilize grease at all. Only a few companies have pioneered cost-effective technologies for making FAME biodiesel out of yellow greases — that been one of Renewable Energy Group’s great advantages, for example.

These days, white grease is expensive — and you don’t see much traditional biodiesel capacity being built in the bayous as a result.

Yellow greases — the economics used to be wonderful — now, not so much. Projects like Dynamic Fuels were based on those feedstocks — but these days, the price of the feedstock has made renewable diesel a tough economic proposition unless the RIN prices for renewable fuel credits, and other incentives like blenders credits, are available.

The next yellow grease project to come online will be Diamond Green Diesel, capable of producing over 9,300 barrels per day or 137 million gallons per year of renewable diesel on a site adjacent to Valero’s St. Charles refinery near Norco, Louisiana.  The facility will convert grease, primarily animal fats and used cooking oil supplied by Darling. Completion of the facility is expected to be imminent.


But the future may well be in brown grease – the really tough to use material – sludgy and klugy. That’s said to be the strategy for D2 Renewable, developing a 70 acre energy park, located in Convent, Louisiana.  The energy park will ultimately consist of five 30 million gallon refineries producing ASTM D 975 Renewable Ultra-Low Sulfur Diesel fuel.

3. RFS2 matters, RINs matter

 

As mentioned above, yellow grease is a tough business without good RIN prices and a strong RFS2 mandate to drive RIN values.

In December, Dynamic Fuels filed this with the SEC:

“The economics of the U.S. biomass based diesel industry are currently challenged by significantly lower RIN (renewable identification number) prices. D4 RIN prices averaged $1.39 for the first six months of 2012. As of December 10, 2012, the D4 RIN price was $0.56.   RIN prices at these levels have not been seen since the implementation of the RFS2 program by EPA in July of 2010.

“The regulatory framework underpinning biomass based diesel production remains intact.  The biomass based diesel mandate for 2013 is 1.28 billion gallons, or 28% above the 2012 mandate.  We expect markets to adjust positively in 2013 due to the higher mandate.”

Since then, Syntroleum has not indicated that they have re-started production.

4. Creative financing matters

Two of the most creative financing efforts in recent years are behind two of the next projects to come online in Louisiana.

Myriant’s Lake Providence, LA commercial plant will produce 30 million pounds of bio-succinic acid annually and construction is on-schedule for the planned commercial start-up in the first quarter of 2013.  Myriant is the first bio-based chemicals company to receive funding from USDA’s B&I Rural Development Loan Guarantee program — and a bond issue sold in by Stern Brothers.

As we wrote last June “We’re heard about the “3 Impossibles” for some time. Impossible to get a project without the term of the offtake being at least equivalent to the term of the debt. Impossible to get a project funded without the feedstock contracts covering the entire portion of the loan.

Impossible to get a project funded without the offtake 100% covered by contracts.

That may remain true for the bank side – but over here in bond world – the three Impossibles have been converted into the three “you’ll pay more, but it’s do-ables”. Here, there was first-timer risk.

Technology risk. Market risk. All absorbed in the rate.

Bonds are also expected to provide financing magic for Sundrop’s 50 million gallons renewable gasoline plant. Using forest waste and hydrogen from natural gas, their plant will produce up to 50 MGy of renewable gasoline.  The plant will cost $450 to $500 million to build and will be financed in part through the sale of tax-exempt Private Activity Bonds.

5. Long-term — diversify feedstocks

You’d think that with all that natgas, rendering grease and hydrogen that the state would rest on its laurels. Not so. In fact, the state has seen enough in the potential of renewables to double down on support for developing dedicated energy crops.

In January, the LSU AgCenter officially opened its pilot plant. The plant focuses on sweet sorghum, energy cane and other grasses to produce convertible sugars, fiber and bioproducts and can be scaled up to any capacity. The project is part of a larger USDA-funded five-year, $17.2 million grant.

Switchgrass is particularly in focus, as the grass is native to the Cajun prairie, and test plots are being co-planted with eastern cottonwood trees that could also be interesting feedstocks for the region.

The bottom line

The trend is clear. Assess immediate opportunities in abundant, low-cost feedstocks — but develop others with an eye on the future.

Be careful with technology development so that you can continue to access the lowest-cost feedstocks and use RINs as an equity sweetener for shareholders rather than as a necessary component of production – else you will see fits and starts in production, and costs will soar.

Above all, tap in to the bond market where possible and be as a creative in financing as you are in technology and feedstock. Put them all together — you might see a hundred-fold increase in capacity, as is expected for Louisiana — and ensure that that capacity once taken online, stays online.