While advanced biofuel production expansion seems to be moving along at a snail’s pace, there are positive signs of progress.
“The cliché about this is that it’s always five years away. Five years ago, it was five years away, and now it’s still five years away,” said Fred Iutzi, Value-Added Sustainable Development Center program manager for the Illinois Institute for Rural Affairs at Western Illinois University and chair of the Illinois Biomass Working Group.
“There are certainly legitimate questions to raise about the timetable, but as I monitor this sector, it seems to be we’re having slow and steady progress with it.”
Iutzi described the current state of biofuels markets during the recent Bioenergy Crops in Central Illinois program hosted by Argonne National Laboratory.
One indicator of the advancements in advanced biofuels production is that it currently is in line with the cellulosic ethanol mandate in the Renewable Fuels Standard.
“Obviously, there have been a lot of waivers that have needed to be granted on the production totals that we’re supposed to be generating here the last couple of years, but so far we’re holding the line on our mandate, which is ultimately going to bring cellulosic biofuel up to its quota similar to where corn ethanol is at now,” Iutzi said.
“That’s one indicator that things are moving are slowly. The other is we’re actually starting to get some steel in the ground here with cellulosic ethanol plants.
“There is one going in over in central Iowa. We also have a corn stover plant in northwest Iowa that is in its advanced stage of construction. We have small production scale facility in Kansas that’s going to be using dedicated energy crop such as prairie grasses.
“The sector is not taking over in a very fast rate of production right now, but things are happening. There’s concrete and steel going into the ground, and we’re getting to the point of having production plants out there.
“In Illinois, we have a number of prominent research and development projects that provide us some intellectual infrastructure for production plants to come in. There are a couple of university-based facilities that are important here.”
Another indicator of forward movement in the advanced biofuels arena is the ongoing conversation within the industry.
Iutzi said the company that operates the Kansas plant plans to look at options for a second commercial scale cellulosic plant, “maybe even as soon as 2014.”
“The criteria they have for the new Kansas plant is they’d like to explore co-locating with an existing corn ethanol plant, looking at areas that have existing feedstocks available and the potential to develop more like dedicated feedstocks,” he said.
“In Illinois, we have a lot of crop residue around and we have the ability to grow dedicated energy crops and a lot of people that are interested in them. It’s a positive indicator. It’s still going to take time, but we’re seeing the right signs that it’s slowly moving forward.”
A bright spot is in a niche sector for advanced biofuels in the aviation, maritime and defense sectors.
“The U.S. Navy has particularly been a leader in exploring these fuel options,” Iutzi said. “They’ve had purchases of biofuels, small on the grand scheme of thing here, but 1.5 million gallons is definitely more than a laboratory exercise. It’s a significant way sticking their toe in the water on using these fuels.”
The newly formed Midwest Aviation Sustainable Biofuels Initiative is bringing together major airlines and advanced biofuels companies to explore the fastest route to have production plants built for aviation biofuels.
“Airlines need to comply with European Union regulations about their net greenhouse gas emissions in their operations,” Iutzi said. “So they have an incentive to want to buy fuels that will make their carbon balance better, even if they’re fuels are slightly more expensive.
“That’s a bright spot, and it’s entirely possible that the first cellulosic ethanol plant that we see in Illinois or Indiana very well might be an aviation bio-jet fuel plant.”
Heat and electrical power are the other bioenergy-based output sectors active in Illinois.
“Our flagship biomass project in the state at Eastern Illinois University now has the ability to meet 100 percent of their heating needs on campus with biomass. It’s a district heating system that’s piping steam around to buildings,” Iutzi said.
“They also have an electrical generator that uses steam on its return trip from campus, and they can meet about 10 percent of the campus electric needs that way.
“It’s a gasification plant, and right now they’re using about 27,000 tons a year of woodchips that are coming in from central Missouri, but they’ve publicly expressed interest on a number of occasions of transitioning into Illinois-sourced agricultural feedstocks. It will be perennial grass or crop residue.”
Interest has increased over the last several years in producing electrical power from biomass.
“We’ve had a co-op-owned existing coal plant in western Illinois with a proposal to convert it to biomass,” Iutzi said. “Another co-op facility that would be built from the ground up, privately-owned corn stover biomass power plants, and a fairly sizeable plant in the south suburbs of Chicago.
“A couple of them were cancelled and others on pause. It wasn’t because they couldn’t imagine coming up with feedstock. It wasn’t because the technology wasn’t in place.
“It was because the price of electricity was not very impressive in terms of the actual income stream now that they could get it. In particular, the power as renewable power coming from these plants was not quite so valued in the market as it looked like it would be a couple of years ago.”
Economics currently is putting a crimp in biofuels production expansion today.
“We are in a low natural gas price phase here. This falloff in prices has a lot to do with exploiting this shale gas resource through hydraulic fracturing. It’s not going to go away real so and how do we deal with that,” Iutzi said.
He compared the prices of the fuels that are competing with biofuels.
“Coal is really cheap and has stayed cheap for a long time,” he said. “Natural gas was both expensive and volatile for a period of time not too long ago, which spurred a lot of interest in replacing it, but it has slimmed down to the point where the prices we’re seeing quoted have at times been almost as low as coal.”
He said prices of electricity, propane and heating fuel oil are at price levels where biomass could compete.
“There’s a lot more money on the table when we are looking at these consumers who are basically paying the most for energy of anybody in the economy,” he said. “So are these heating costs for small businesses and residences the low-hanging fruit that we can look to for additional biomass markets?”
Iutzi used as an example the users of electricity, propane and heating oil in a seven-county area in Illinois where if 25 percent of that energy use was replaced with biomass there would be 120,000 tons a year of biomass demand, setting the stage for expansion.
“We’re not going to cover the whole landscape with dedicated energy crops with 120,000 tons of biomass a year,” he said.
“If we have a six-ton-per-acre yield of biomass, we would need 20,000 acres or something. On the other hand, 20,000 acres sounds like an awfully good pilot-scale market for trying to get something off the ground initially and try to develop a situation for other markets that might be lagging behind a few more years.
“The overall proposition is if we look at the supply chain for heated power, for liquid fuels and to some extent for products, a lot of it is the same supply chain. There’s going to be differences.
“You’re going to have to tailor everything you do to the requirements of the end user, but the basic contours of the supply chain are very similar for these multiple end-users.
“Maybe these high prices for energy in heating, residential heating, in particular, is our way to sneak into this market and start slowly scaling it up, start building a comfort level with producing these feedstocks, be able to drive production costs down a little bit and be ready to scale up for these larger markets that are coming along slowly, but surely.”