Advanced BioFuels USA

by Todd Woody (Bloomberg Green)  To reignite the industry, biofuels need the type of government incentives that allowed solar and wind companies to flourish, analysts say. — … Technology from Honeywell’s subsidiary UOP had refined the camelina into renewable jet fuel, and as we reached cruising altitude executives settled into wide leather seats and clinked wine glasses. The trip avoided emitting 5.5 metric tons of carbon dioxide compared to a conventional flight.

“We’re ready to go to commercial scale and commercial use,” said Jim Rekoske, a Honeywell vice president.

Yet nine years later, biofuels account for only a tiny fraction of global jet fuel consumption—less than 0.1% in 2018 according to the International Energy Agency. In the U.S., the federal Energy Information Administration projects that the consumption of all biofuels will rise from 7.3% of total fuel consumption in 2019 to just 9% in 2040 if oil prices remain low. Even if petroleum prices skyrocket, biofuel consumption is predicted to increase to just 13.5% by 2050.

Global investment in biofuel production capacity, meanwhile, plunged from $22.9 billion in 2007 to $500 million in 2019, according to BloombergNEF. That has significant implications for decarbonizing transportation, which is key to keeping global average temperature rise to 1.5C to avoid catastrophic climate impacts.

“Although biofuels production has grown in recent years, the current growth is clearly insufficient to support the requirements of the energy transition,” the International Renewable Energy Agency concluded in a 2019 report.

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But many advanced biofuels startups have either collapsed or now use their technology to make additives for cosmetics, dietary supplements, and food.

What went wrong? In short, a mismatch between government policy and the investment and time needed to ramp up complex biofuel supply chains. Venture capitalists accustomed to the relatively quick returns delivered by tech industry startups weren’t prepared to finance what could be a decade-long slog to develop new biofuels. Entrepreneurs were overly confident about their technologies’ potential while government policy did not offer the types of incentives and mandates that allowed the nascent solar and wind industries to take on fossil fuels and become self-sustaining.

Above all, biofuels’ competitiveness was whipsawed by widely fluctuating crude oil prices. Now the industry faces new challenges from the Covid-19 pandemic that has devastated airlines and resulted in a petroleum glut.

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Demand remains, though. United Airlines Holdings Inc. powers flights operating out of Los Angeles International Airport with biofuels, and JetBlue Airways Corp. announced plans to start using biofuels at San Francisco International Airport this year. Qantas Airways Ltd. had previously pledged to fuel its LAX flights with biofuels beginning in 2020. On Wednesday, Amazon.com Inc. announced a 12-month deal to buy sustainable aviation fuel for its Amazon Air fleet.

And the need for biofuels hasn’t diminished. There’s currently no feasible alternative to decarbonizing two huge and growing sources of CO₂ emissions—aviation and shipping. If a Green New Deal is to spark another biofuels boom, then it’s crucial to get it right this time.

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The military is the nation’s largest single consumer of fuel, so the Navy’s purchase of 450,000 gallons of biofuel for the exercise signaled a potentially huge defense market for liquid renewables. Unlike corn ethanol, advanced or so-called second-generation biofuels use nonfood feedstocks like camelina, algae, waste oils, and tallow and don’t require modifications of engines or pipeline infrastructure.

Utilities under state renewable-energy mandates often sign decades-long agreements to buy electricity from solar and wind developers. The Navy, however, typically issues one-year fuel contracts. That left investors wary of financing biofuel refineries without some guarantee of long-term demand, says Jim Anderson, global project development director for renewables at Honeywell UOP. “That continues to be a challenge,” he says.

The Navy contracts were not only short-lived but also sporadic. It would be another three-and-half years before the Navy formally launched the Great Green Fleet on January 20, 2016, with a strike force powered by a one-time purchase of 77 million gallons of biofuel. Exactly a year later, Donald Trump took the oath of office and effectively sunk the Obama administration’s Great Green Fleet, though some financial support for biofuels continued under previously signed contracts.

Mandates like state renewable portfolio standards turbocharged the solar and wind markets by requiring utilities to obtain a growing percentage of electricity from green energy sources. Industry veterans say that instituting similar requirements that government agencies, airlines, and other fossil fuel customers use a certain volume of biofuels could spur long-term investment. “I think it certainly helps to drive the demand for biofuels,” says Anderson of sustainable aviation fuel mandates.

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With the encouragement of the Navy, Sapphire (Energy) aimed to produce 1.5 million gallons (of green crude) annually, which it said would be competitive as long as oil prices stayed at around $100 a barrel. Three years later, crude oil prices had dropped below $50 a barrel and Sapphire and other promising startups were faltering. By 2017, Sapphire was out of business.

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For solar and wind producers, feedstocks—sun and breeze—are free and inexhaustible. Feedstocks for biofuels can constitute 50% or more of production costs. “Any viable feedstock must have the potential to be available cost-effectively in very large quantities,” says Gene Gebolys, chief executive officer of biofuels refiner World Energy Inc.

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Industry analysts say that to buffer biofuels from gyrations of the oil market, liquid renewables need the type of government incentives that allowed solar and wind companies to build supply chains, production capacity, and achieve economies of scale. They cite policies such as California’s Low Carbon Fuel Standard (LCFS), which requires that petroleum refiners reduce the carbon intensity of transportation fuels at least 20% by 2030. They do that by purchasing credits generated by biofuel producers.

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In January, Norway began requiring jet fuel to contain at least 0.5% advanced biofuels, and Sweden is considering a similar mandate. The 191 member states of the International Civil Aviation Organization have agreed that biofuels should replace conventional jet fuel “to a significant percentage” by 2050.

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Los Angeles area startup, Marine BioEnergy Inc., secured a $2.1 million federal grant in 2016 to develop ways to cultivate kelp in offshore farms for harvest as biofuel.  READ MORE