Vinod Khosla on the Technology Pathway to Biofuels

by Vinod Khosla (Green Tech Media) Part 1: Production technologies: where are we? The financial crisis of 2008 set back a number of projects and slowed actual construction of pilot and demo plants like it did in all industries, be they biofuels or traditional fossil energy projects. That, coupled with the negative press for corn ethanol, slowed progress and funding of biofuels to a crawl, causing delays of up to two years in many business plans. But despite these challenges, entrepreneurs have persevered and in many cases are further along than expected in achieving practical economics that now justify their first commercial units (FCUs).
FCUs are particularly hard to fund given that they are first-of-a-kind technology, and there is now a risk-averse capital funding environment. Further, FCUs are generally of smaller size than the optimal scale commercial plant, are not “value engineered” (the goal of the FCU should be, in my view, cash break-even or better, and proof of technology, not cost optimization), and hence their output suffers from more challenging economics in commodity product markets.
...Table 1 summarizes the major technology pathways
...Some technologies, like Gevo, LS9 and Amyris, focus on creating a single molecule, whereas other technologies, such as KiOR, create a diverse mix of chemistries (much like crude oil has) but at lower cost that can be blended with crude oil and dropped directly into a refinery, or if hydrotreated can be used as gasoline or diesel blendstock. These processes result in a range of production costs,...
...For example, at theoretical yield, glucose is converted into two 2-carbon ethanol molecules, or one 4-carbon isobutanol molecule, or four carbons of a multi-carbon hydrocarbon molecule. Without the input of carbon-free energy, it is theoretically not possible to improve upon this yield.
Ethanol plants are able to operate at these yields in part because the yeast function without oxygen, i.e., anaerobically. Some biological processes and end-products require oxygen (i.e., are aerobic), which can limit yield as the cells “burn” additional carbohydrate feed stock to provide the cell with energy.
...Because ethanol plants already operate at high carbon efficiency on the available feedstocks, it is reasonable to compare new technologies to these existing plants as one metric to gauge their performance.
...(M)ost FT advocates are simply not up to date on the day-to-day developments in the leading startups.
...Engineering designs and techno-economic analyses suggest that much lower cost systems could be built and operated, if pond designs are simplified (e.g., earthen ponds), scales are increased (to 10 acre ponds, versus about 1 acre now) and low-cost harvesting process are developed. However, even then, production of algal feeds and fuels would require achieving very high productivities, nearly 50 tons per acre and a high oil output, about 4,000 gallons per acre. Although high productivities are possible in principle and are routinely forecast, being one of the main attractions of microalgae biofuels, they still remain undemonstrated continuously at scale, and will require considerable long-term R&D.
...New fuel molecules require EPA approval, though there are a long list of registered fuel additives for diesel and gasoline. Even drop-in molecules require testing and requalification, but those tests are much less onerous compared to those trying to introduce new molecules. Ultimately, large differences exist in time to market of new fuels molecules.
...FDA/USDA approval for co-product use as animal feed is required.
...All stakeholder positions must be understood (who benefits and who is harmed by adoption of new fuel) and value must be provided to critical stakeholders for new products to be adopted. For example, an ethanol producer will, to repurpose a plant, require at least similar margins and other de-risking (such as long term off-takes) to switch to a new fuel. Don’t count on a “green” premium, other than regulatory benefits like mandates and financial incentives. For this reason, a new technology that gets market acceptance or large off-take agreements up front can significantly de-risk their company’s future.
...And large partners like Shell and Exxon will show conservatism, further slowing down development. My experience indicates that dependence on large corporate partners will sometimes delay technologies by years as they tend to be slow and overly risk averse. READ MORE and MORE (Robert Rapier/Stumbleupon)