Biochemicals at a Crossroads as Cellulosic Ethanol Facility goes on Sale

28 November 2017

The future of the biochemical industry became less certain last month, when two of the industry’s major players, DuPont and Beta Renewables announced that they are ‘pulling back from agricultural waste to ethanol’ technology. This has led many chemical suppliers and raw material manufacturers to wonder if cellulosic ethanol production is economically viable.

The fact that DuPont is trying to sell its Nevada, Iowa facility will come as a shock to many, as DuPont has long been a supporter of the use of plant waste as a chemical feedstock. As the chemical industry journal C&EN notes, the company has already invested, “more than $200 million [in the Iowa plant], which was intended to be the first of a string of facilities that would use DuPont enzymes and yeast to turn corn cobs, stems, and leaves into ethanol.”

While DuPont has downplayed the news, stating in a press release that, “we still believe in the future of cellulosic biofuels,” the sale announcement came at the same time as news that Beta Renewables has become financially uncertain. This is because Mossi & Ghisolfi, the parent company of the Italian cellulosic biofuel manufacturer, has declared bankruptcy, leaving Beta Renewables’ ethanol production plans unclear.

Meanwhile, another cellulosic ethanol plant, this time in Hugoton, Kansas, was sold last year by bankrupted Abengoa. This is adding uncertainty over the viability of cellulosic ethanol production as the buyer, Synata Bio, plans to “convert the plant into a natural-gas-based chemicals and fuels facility.”

These developments clearly show that bioethanol is struggling to compete with traditional chemical producers, and has many wondering what path biochemicals will now take.

In May 2017, a study was published in the scientific review journal, Current Opinion in Biotechnology, which found that the current state of technology for bioethanol was not price competitive with fossil fuel alternatives. The analysis was conducted by a team from the University of California, the National Renewable Energy Laboratory, Argonne National Laboratory, & Thayer School of Engineering, entitled, Cellulosic Ethanol: Status and Innovation. It reviewed the current economic viability of technology, as well as studying scientific developments and their application to real-world industrial chemical production. The research concluded that, “Although the purchase price of cellulosic feedstocks is competitive with petroleum on an energy basis, the cost of lignocellulose conversion to ethanol using today’s technology is high.” The study goes on to report that, “Cost reductions need to be pursued via innovation, for example, consolidated bioprocessing using thermophilic bacteria combined with milling during fermentation (cotreatment).”

If this study is accurate, then ‘paradigm innovation’ is required to make bioethanol the normal chemical production route. The alternative is if public opinion towards fossil fuel use changes, and demand for cellulosic ethanol and similar biochemical raw materials grows.

At present, cheaper production of ethanol from fossil fuel is more popular, but opinion is changing. A recent survey by bioengineering firm Genomatica in cooperation with ICIS, found that “Producers report that 65% of their customers are interested in sustainably-produced chemicals. While 63% report a higher level of interest from their customers than three years ago.”

While the opinion of chemical buyers is adjusting to environmental concerns, technology is also lowering costs, making bioethanol an increasingly attractive option. As the environmental journal, Earth Island, reports, “[America’s] National Renewable Energy Laboratory (NREL) has been working on cellulosic ethanol since 1980. The tedious process of turning cellulose into biofuel involves breaking up the complex cellulose-hemicellulose-lignin structure before fermentation begins. A big part of the challenge for researchers has been finding enzymes to facilitate this process.”

The cost of these enzymes makes a significant difference at the marketplace, as the journal makes clear, “A decade ago, the enzymes to produce cellulosic ethanol cost $3 a gallon. [But now] NREL has reduced the cost to 30 cents, and is figuring out how to cut that amount in half by bioengineering more effective enzymes that will accelerate the process.” Adding that, “Over the past decade, NREL has brought down the cost of cellulosic ethanol from about $10 a gallon to $2.15 a gallon, primarily by bioengineering better enzymes.”

With costs falling and technology providing newer, more cost-effective enzymes every year, there is good reason for supporters of bioethanol to be hopeful. Even despite DuPont and Beta Renewables problems with greener industrial chemicals, Clariant is moving ahead with the construction of a cellulosic ethanol production plant in Romania. As the industry journal Chemicals-Technology reports, “With an annual capacity of 50,000t, the plant will use Clariant’s sunliquid technology to produce cellulosic ethanol from agricultural residues, including wheat straw and corn stover that will be sourced from local farmers.”

The success of this facility remains to be seen, but the history of companies attempting to break fossil fuels grip on chemicals production is not promising. As Forbes magazine reported last year, “the advanced biofuel sector has proved to be a good way for investors to lose money. KiOR (now renamed Inaeris Technologies) is probably the most famous publicly-traded example, going from an IPO that valued the company at $1.5 billion in 2011 to being bankrupt in 2014. Other companies that have competed in the advanced renewable hydrocarbon space have seen 90% or greater losses since their IPO (e.g., Solazyme, Gevo, Amyris).”

The report continues by giving the layman’s reason for such dismal results, stating that, “Advanced biofuels are attempting to compete with petroleum, but the reality is that with petroleum, nobody had to plant or harvest the biomass, and nobody had to apply the heat and pressure to convert it into an energy-dense liquid fuel. With biofuels, you have inputs of energy and manpower at every step — and the cost of those inputs adds up. That’s why petroleum made from ancient algae can be produced for a couple of dollars per gallon, but renewable petroleum produced from algae can be more than 10 times that cost. That’s why you don’t see many large-scale biofuel operations.”

And until key changes are made in this situation, biochemicals will never compete on price with petrochemicals.

Photo credit: Agrinet, HoosierAgToday, autoblog