Cellulosic Biofuels Outlook: Abengoa Doubts May Not Affect Biofuels Industry

by Todd Neeley (DTN Progressive Farmer) Although the cellulosic ethanol industry has had some challenges, there is hope for the year ahead. For some Midwest farmers, cellulosic ethanol's launch in the past two years has allowed them to put their corn crops to wider use by providing stover to companies such as Poet-DSM, Abengoa and DuPont.

With or without Abengoa, industry experts told DTN/The Progressive Farmer cellulosic biofuels will continue to develop if the right federal policy is in place.

Even if the industry is without the 25-million-gallon production capacity at the Hugoton plant, one industry analyst told DTN/The Progressive Farmer that EPA's decision to allow biogas production to qualify for D3 cellulosic renewable identification numbers, or RINS, means cellulosic ethanol has become a smaller percentage of the overall cellulosic volumes in the RFS.

Recent RFS cuts likely will trigger a reset provision to require EPA to make changes to the RFS statute itself. It's something industry officials say could indicate the agency is moving to further weaken the cellulosic portion of the RFS.

Tim T. Cheung, vice president and research analyst at Washington, D.C.-based research firm ClearView Energy Partners, said cellulosic ethanol currently accounts for only about 10% of qualifying cellulosic volumes.

"Changes to cellulosic ethanol production forecasts would have less impact on RFS targets than forecasts for other sources of cellulosic biofuel," he said.

The reset provision requires EPA to reset original volume targets if the agency reduces targets by either 50% or more in one year or 20% or more in two consecutive years.

"At this point, we think another rulemaking to reset RFS volumes is not likely to occur during the rest of the Obama administration," Cheung said. "The next administration, then, would be responsible for resetting volumes should it initiate such a rulemaking."

A 2016 election year means the cellulosic ethanol industry might not see any major federal policy changes in the coming months. Innovative companies spooked by the RFS debate announced plans to build second-generation cellulosic plants in other countries in the past two years.

"The technology has reached a tipping point, with the first-of-a-kind plants demonstrating commercial readiness and scalability while allowing for continued technology improvements," he (Brent Erickson, executive vice president in charge of the Industrial and Environmental Section at the Biotechnology Industry Organization) said. "Unfortunately, EPA's two-year delay in finalizing the rule created untenable uncertainty and shook investor confidence in the RFS program."

EPA delays led to an estimated $13.7 billion investment shortfall in the advanced biofuel sector in the past couple of years, Erickson said, in an industry that depends on biofuel producers' willingness to invest additional money to build out cellulosic capacity.

"And for that, they need to see long-term growth in the market that doesn't cannibalize existing capital and market share," he said. "EPA's rule sends a disastrous signal in both regards."

"The beauty of the RFS, as it was designed, was that it provided a large enough market to pull many different technologies to commercial readiness," he said. "EPA needs to correct its methodology in order to continue driving investment and scale-up of the industry."

The final RFS includes a list of companies expected to produce cellulosic biofuels by 2016 to some degree.

-- Edeniq, Nevada, Iowa, technology provider for a variety of companies producing cellulosic ethanol from corn kernel/fiber;

-- Ensyn, Renfrew, Ontario, 3 mgy capacity to produce heating oil from wood waste;

-- INEOS Bio, Vero Beach, Florida, 8 mgy capacity, ethanol from vegetative waste;

Cellulosic Biofuels Outlook: Abengoa Doubts May Not Affect Biofuels Industry

More than 50,000 articles in our online library!

Advanced Biofuels USA Policy Statements and Handouts!

Our Sponsors

FREE Subscription! Advanced Biofuels USA events calendar; policy and actions; education newsletters

Donate

ARCHIVES

CATEGORIES

tags