Advanced BioFuels USA

by Jim Lane (Biofuels Digest)  A mere “The Year in Rewind” as we sail into 2021? Not the good ship Digest! Instead, we dust off our crystal ball and offer our predictions for the year ahead.

As the sunset of 2020 gives way to the dawn of 2021, once again roll the dice as we list the Digest’s 10 Top Advanced Bioeconomy Markets and Predictions for 2021. READ MORE

10. The Electrify Everything Movement Gains More Traction

With the election of Joe Biden to the U.S. Presidency, look for a coalition of auto makers, environmental groups and utilities to press for a series of measures to accelerate the conversion of transportation from Internal Combustion Engines (ICE engines) to electric motors. There are good energy efficiency reasons to quickly electrify transport, and good energy storage and “greening the grid” reasons to go slow. So, there will be pushback from oil & gas interests and those who don’t like the prospect of the $7500 per vehicle tax incentives being given to millions of new car owners. Renewable fuels have a dilemma — they are low-carbon technologies often greener than electric mobility options, and they offer lower upfront conversion costs, support for rural economies and can be carbon-negative sky-cleaners, too. They have a good story, but renewable fuels are uniquely tied to oil & gas because they are usually (not always) blended with fossil fuels, and some important voices view renewable fuels as a means of perpetuating fossil fuel dominance. Under a Biden administration, the forces petitioning government have the size (automakers, utilities) to gain a hearing and (automakers, environmentalists) they have deep experience in influencing government policy, and (automakers, utilities, environmental groups) have built-in platforms and budgets for messaging consumers.

9. India Rocks, Europe Re-Tools, US Re-Thinks

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8. Hydrogen Transport Sputters, but Green Hydrogen Zooms

For all the excitement over the transportation options associated with hydrogen, we can’t find a single independent expert who believes in a big future green hydrogen transport. Really. The issues are a) infrastructure and b) cost. There are lots of ways to make green hydrogen by splitting water (experts are less enthused about making hydrogen from biomass, except as a byproduct) — but the high cost of converting to a) new production, b) new vehicles and c) a new distribution infrastructure — well, they are daunting, and green hydrogen for transport will need all three. We’re somewhat more enthused, here at the Daily Digest, about green hydrogen for heavy transport — primarily, marine and heavy-duty road transport, where infrastructure is less daunting and the problem for battery electricity storage is more perplexing. That doesn’t mean we dislike green hydrogen for every transport application — after all, we need green hydrogen to make green hydrocarbons. Fuel cell technology, though, we don’t see getting into the sedan market any time soon.

Yet, the world cannot get enough green hydrogen ….

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7. The DOE Loan Guarantee Program re-invented, re-programmed, re-vived

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6. Big Renewable Diesel Buildouts and Busts a’comin

We love renewable diesel! While it does not have all the environmental benefits of America’s favorite advanced biofuel, biodiesel — it has proven easier to deploy as a 100% drop-in alternative fuel, and it has proven easier to construct massive facilities that achieve some impressive economies of scale. 100 million gallons is a huge biodiesel or ethanol plant, but some renewable diesel plants are on the drawing board that will produce as much as 800 million gallons per year. That’s 50,000 barrels per day — that’s a decent-sized petroleum refinery.

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The trouble is, where’s all the affordable feedstock going to come from.

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5. Energy Wars: The Forest Awakens

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4. The Vegan Foods Shakeout

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3. Every Dairy Becomes a Heat & Power Producer by 2030

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2. Oil Majors Return to Biofuels

So, around 2007 we saw a move by oil majors into renewables — BP, Valero, Shell, Marathon, Total, ENI, Petrobras, Reliance, Indian Oil, Sinopec, Chevron to name a few. BP and Shell eventually entered into sugarcane biofuels in a big way in Brazil, and Valero bought a good-sized fleet of ethanol plants and partnered with Darling at the dawn of renewable diesel, Marathon keeps a handful, and Total and ENI maintained a huge focus on advanced. But they were on lonely quests, more or less. BP backed out of 2G, Shell slowed to a “where is it?” crawl, Valero and Marathon became “Repeal the RFS” stalwarts, Petrobras exited, and the Indians waited around for the government to make up its mind. By 2017, the field was winnowed.

Now, that’s changed. Total and ENI continued to deploy, BP’s back with renewable diesel, Shell continues to develop and has become a major distributor in aviation biofuels, the Indians have grown gritty and determined to deliver 2G ethanol. Phillips 66 has gone big into refinery conversion, Marathon is converting a refinery, Alon divested two refineries to World Energy and Global Clean Energy Holdings and World Energy has converted and is now expanding. The big oilcos see a future as integrated energy companies with fleets of recharging stations, renewable power production, and even some advanced biofuels. We’re only going to see more in 2021 as the U.S. rejoins the Paris Climate Agreement and reducing carbon becomes part of the everyday conversation of managing an energy company.

1. Paying for AgTech Innovation via Carbon Pricing

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The idea is simple. If a farmer produces low-carbon corn by deploying new technology, that will result in a lower carbon intensity score for the ethanol that’s produced, and a higher value in LCFS markets. POET is proposing to share back revenue to growers that they gain in California — that’s good for POET (more low carbon fuels to sell), good for growers (new revenue, and a justification for deploying advanced agtech). It’s not too bad for Farmer’s Business Network either — it is a way to show how a Silicon Valley tech company can realize its promise of becoming a bridge between growers and advanced technologies and services.

So, it’s a powerful start, but as they say in the world of Ginzu knives, wait, there’s more.

After 20 years of argument over the Renewable Fuel Standard and 10 years of squabbling and watching as Low Carbon Fuels standards deployed in the U.S. and Canada, there’s no doubt now that the California carbon market is stable enough, big enough and lucrative enough that private companies are now innovating as everyone thought they would in 2007 when the RFS was first passed. Now, everyone wants in. Not just fuels companies. Not just POET. Now, agtech has a way in through the LCFS via low-carbo fuels.

But the conversation is going to expand, and in 2021. Chemicals companies want access to carbon credits for delivering low-carbon chemicals. Materials companies, the same. Food companies, too. In short, where the conversation will start to head in 2021 is an economy-wide low-carbon scheme. Not a mandate, but a vibrant market where no one has to deploy anything, but those who deploy low-carbon solutions will find higher prices in the marketplace through trade-able carbon credits.

They say that crypto currency is the finance story of the 21st century. We disagree. We think Carbon Dollars may be the ultimate world currency — after all, they are global, fungible, and tied to real value and thereby hedged against runaway inflation. Whether that comes to pass or not, we see the POET-FBN deal as the most significant deal that has been struck in the bioeconomy, ever. It’s the beginning of a tsunami of good things.

Last Year’s Predictions

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