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Cellulosic Biofuels–2012 Renewable Fuel Standard

Cellulosic Biofuels–2012 Renewable Fuel Standard

At the end of 2011, the Environmental Protection Agency (EPA) released its annual revision of the national renewable fuel standards (RFS). The annual revision, which is required by the Clean Air Act (CAA), finalized the production targets for cellulosic biofuels, biomass-based diesel, advanced biofuels and renewable fuels for 2012.

(To call the cellulosic biofuels portion of the RFS a “standard” is something of a misnomer. Generally, when regulations specify a standard of this type, it represents a goal that must be met by a certain date. In this case, however, the EPA is required to set the annual cellulosic biofuels standard to the “projected volume of production.” Instead of calling this a standard, the more appropriate name might be “estimate.”)

In the final rule, the EPA set the cellulosic biofuels target at 10.45 million ethanol-equivalent gallons, just 0.02% of the 500 million gallon standard set in the Energy Independence and Security Act of 2007 (EISA) for 2012. Still, the estimate was higher than the 2010-2011 standards: 6.5 million ethanol-equivalent gallons in 2010 and 6.0 million in 2011. At 10.45 million ethanol-equivalent gallons, however, the 2012 standard may still be difficult to reach. As a point of comparison, the EPA itself acknowledges that no cellulosic biofuels meeting RFS requirements were produced between July 2010 and June 2011.

To develop the 10.45 million gallon estimate, the EPA followed this methodology:

“[W]e researched all potential production sources by company and facility. This included sources that were still in the planning stages, those that were under construction, and those that are already producing some volume of cellulosic ethanol, cellulosic diesel, or some other type of cellulosic biofuel. Facilities primarily focused on research and development work with no intention of marketing any fuel produced were not considered for this assessment. From this universe of potential cellulosic biofuel sources we identified the subset that had a possibility of producing some volume of qualifying cellulosic biofuel for use as transportation fuel in 2012.

In today’s final rule we specify the projected available volume for 2012 that forms the basis for the percentage standard for cellulosic biofuel. To arrive at this final volume, we took into consideration additional factors such as the current and expected state of funding, the status of the technology, progress towards construction and production goals, and other significant factors that could potentially impact fuel production or the ability of the produced fuel to generate cellulosic Renewable Identification Numbers (RINs). We also considered projections of cellulosic biofuel provided by the EIA.”

Through this process, the EPA identified six facilities likely to produce cellulosic biofuels in 2012 (see table).

Projected Available Cellulosic Biofuel Plan Volumnes for 2012

Of this 10.45 million gallon total, more than half—5.335 million gallons—will be produced from wood and wood wastes originating in plantations established prior to December 19, 2007.

The vast majority of this total—4.8 million gallons—is expected to come from KiOR’s Columbus, MS facility. KiOR began building its first commercial scale facility in May 2011, and it is targeted for completion in mid-2012. Commercial production is expected to start in early 3Q. At full production, the Columbus, MS facility will produce 11 million gallons of cellulosic biofuels. As it has yet to produce a single gallon of commercially available fuel, however, the company’s ability to produce 4.8 million gallons is likely to be challenging. The key for KiOR is whether it can bridge the gap between pre-commercial technologies and commercial technologies, something that no other company in the field has yet been able to do.

American Process Inc. began construction on its Alpena, MI demonstration-scale facility in March of 2011, and production is expected to begin in 2Q2012. At full capacity, the plant is expected to produce 0.9 million gallons of cellulosic ethanol, though its RFS goal for 2012 is 0.5 million gallons.

KL Energy’s Upton, WY demonstration-scale plant is the only one on the list that is currently operational. Though its capacity is reported to be 1.5 million gallons a year, the EPA expects that the company will produce just 100,000 gallons in 2012. While the Upton facility was built to process wood initially, it converted to using sugarcane bagasse in 2011 in order to test the process it will use in a proposed joint venture with Petrobas to build a facility in Brazil. It is likely, therefore, that 2012 production will not be from wood.

ZeaChem’s demonstration-scale facility in Boardman, OR has begun operating its “core facility” and producing chemicals. According to a recent press release, the company is “further developing its integrated biorefinery through implementation of a second project to add the capability of using cellulosic biomass on the front end and converting ethyl acetate into ethanol on the back end. This separate “bookends” project is currently underway and supported by a $25 million grant from the U.S. Department of Energy (DOE). Once operational in 2012, it will result in the production of up to 250,000 gallons per year (GPY) of cellulosic ethanol.” For 2012, ZeaChem’s RFS goal is 50,000 gallons, with only 70% of that total, or 35,000 gallons, coming from wood.

Will these four projects meet the goals set out in the EPA’s final rule? That’s difficult to say. While the final tally is not yet in, some have estimated total production for 2011 was in the neighborhood of 1 million gallons, about 17% of the EPA’s estimate of 6 million gallons. On the other hand, there may be a new technology on the horizon that will be a game changer. Jim Lane, editor and publisher of Biofuels Digest, recently reported—without details—the following:

“At the Advanced Biofuels Leadership Conference this year in Washington, we are expecting to see a new technology option emerge – a new capital-light, built-in technological option for the production of drop-in cellulosic biofuels at massive scale, and with rapid scale-up options for industry.

No, it is not just an expectation that companies like Sapphire Energy and Joule Unlimited will be scaling their technologies using their advanced microorganisms – or that pyrolysis technologies like KiOR’s will find affordable project financing to massively accelerate their build-out. Just to mention a number of companies who already have known technologies that may scale drop-in fuels before 2022.

What we are expecting is a new technological option. More on this we are unable to say, at this stage, but we definitely see good reasons for industry to wait until early April to make a definitive move on RFS policy, until the new technology option is formally announced, and both the biofuels industry and its critics – who would be expected to also realign — have had an opportunity to evaluate the new options.”

Read Lane’s full article “What do we do with Rufus? RFS, that is, the elephant in the room.”