Advanced BioFuels USA

by Jim Lane (Biofuels Digest)  …  In short, renewable fuels has reached a crisis of growth in the United States — years of expansion have halted, and everyone is entitled to ask why.  … Let’s look at the hard data.

Demand signals

As we have observed in The Digest and in the March Madness webinar series, the floor price for cellulosic ethanol in California is around $3.74 per gallon — miles ahead of conventional fuels. So, the regulatory regimes are working as designed in terms of creating a price signal, and RFS2 itself sends the demand signal.

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EPA’s timidity

Sure, there’s some strange timidity at EPA — looking for dodgy legal theories that waive-down on renewable volumes can be justified on the basis of inadequate distribution infrastructure. After all, no one in the world thinks that there’s anywhere near the demand to handle all the oil that’s beeing pumped out right now, but we don’t anyone stepping in to limit oil production. There’s hardly a storage tank in the world right now not stuffed to the gills with excess oil production that currently has no place to go.

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The airline market as an example

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If airline demand stayed at those (elevated, summer) rates, US jet fuel supply alone could reach as much as 10 billion gallons per year, or 17 billion RINs. Presto, the gap between today’s renewable fuel distribution and the 2022 RFS targets melts away.  Not to mention the upside in biodiesel and renewable diesel.

Our conclusions

1. There isn’t an overall distribution problem, there’s a road transport distribution problem.

2. The technologies are sufficiently mature to produce non-food, in-spec, cost-competitive renewable jet fuel and renewable diesel.

So, we don’t believe the conventional thinking for a second.

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The chicken and the egg

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Will anyone build a bioconversion plant until there is abundant, available feedstock? Will anyone grow abundant, available feedstock until there is a bioconversion plant.

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So, it begins with waste.

How much waste oil feedstock is there? It’s a question open to debate — the biggest weakness we ever spotted in the DOE’s Billion Ton Study (and its successor, Son of Billion Ton) is that  waste oils do not fit into the equation. Ironic, considering that virtually every technology producting RINs at commercial scale is tapping that feedstock — and virtually none of the cellulosic feedstock identified in the report has been so far utilized.

The obvious conclusion? If feedstock is the key and sugars are going to be short, then, for fuels. the country needs more waste oils and oil-producing plants. Recycled oils, fats, greases today, and cellulosic residues today. Dedicated crops tomorrow.  READ MORE