CORN-based ethanol is only a stepping stone to next-generation biofuels, but future production considerably lags behind the mandated levels laid out in the 2007 Energy Independence & Security Act (EISA).
According to a new report from the Economic Research Service, "Next-Generation Biofuels: Near-Term Challenges & Implications for Agriculture," many challenges prevent advanced biofuels from rapidly coming online.
"Near-term sector challenges include reducing high capital and production costs, acquiring financial resources for pre-commercial development, developing new biomass supply arrangements - many of which will be with US farmers - and overcoming the constraints of ethanol's current 10 per cent blending limit with gasoline," the report notes.
US production capacity for cellulosic biofuels for 2010 is estimated to be 10 million gal., much less than the 100 million gal. originally mandated by EISA.
Total production capacity for next-generation biofuels, including cellulosic biofuel, biobutanol and bio-based petroleum equivalents, is expected to be about 88 million gal. per year by the end of 2010 - less than the average capacity of a single new corn ethanol plant. Total sector capacity is expected to surpass 350 million gal. by 2012.
Range Fuels and Dynamic Fuels are expected to complete the first commercial next-generation biofuel plants this year. Range Fuels' plant in Soperton, Ga., will use pine tree waste as a feedstock. According to the Environmental Protection Agency, however, the plant's initial capacity has been reduced from 10 million to 4 million gal. per year, and its initial output will be methanol.
Dynamic Fuels' plant in Geismar, La., is expected to start commercial operations in the second half of 2010 and will use animal fat as a feedstock to produce a bio-based diesel fuel.
POET may be the first with a commercial plant for producing cellulosic ethanol. The facility will be co-located with one of POET's existing corn ethanol plants in Emmetsburg, Iowa, and is scheduled to be operational in late 2011 or early 2012 using corn cobs as the feedstock.
EISA establishes ambitious goals to more than triple overall domestic biofuel use to 36 billion gal. by 2022, with cellulosic biofuels making up 16 billion gal. and on a trajectory to surpass corn-based ethanol use.
Ag benefits
There are about 30 next-generation companies in the US developing biochemical, thermochemical and other processes and experimenting with a variety of feedstocks, some of which are directly linked to agriculture.
The report notes that based on company information, about 50pc of next-generation plants in 2009-10 likely will exclusively use agricultural biomass such as crop residues or energy crops, as well as vegetable oils and animal fats that typically are used for first-generation biofuels.
The proportion may be higher if some companies that reported the capacity to use multiple feedstocks actually use agricultural biomass. About 20pc of the companies reported their use or intention to use forestry products as feedstocks.
"Eventually, agriculture could play a significant role as next-generation biofuel production expands. Biomass inventory studies show that of all potential sources of biomass in the US, agricultural biomass is the most significant," the report says.
This is reflected in the number of companies planning significant biofuel production from agricultural biomass in 2011-12 (Map): POET plans to produce 25 million gal. from corn cobs starting in 2011 or 2012; Abengoa plans 11.6 million gal. from corn stover, wheat straw and switchgrass in 2012, and Verenium plans 36 million gal. from energy grasses in 2012.
Other companies developing technologies for producing petroleum-equivalent fuels and biobutanol may use first-generation feedstocks such as sugarcane, sugar beets, corn, vegetable oils and animal fats.
Key challenges
An important issue moving forward will be managing risk. The capital investment and production costs of next-generation biofuels right now are high.
In 2007, the US Department of Agriculture estimated cellulosic ethanol production costs at $2.65/gal., compared to $1.65 for corn-based ethanol.
POET recently reported that it lowered production costs for cellulosic ethanol - including capital expenses - from $4.13 to $2.35/gal. in one year, as of November 2009, at its South Dakota pilot plant and hopes to lower it further.
Novozymes, the leading producer of enzymes, recently estimated that the cost of enzymes for cellulosic ethanol production has been reduced significantly in the last two years to about 50 cents/gal., reducing total production costs in the near term to about $2/gal.
Algae has great yield potential, but production cost estimates (net of capital costs) for growing and converting algae to fuel are significantly higher, ranging from $9 to $35/gal. depending on the production technology, the report notes.
"Developing the capacity to use multiple feedstocks and to produce bio-based fuels that are equivalent to fossil fuels that can be used in current vehicles without limit and distributed seamlessly in the existing transportation sector may become the least-risky business model to pursue," the report concludes.
Read the full report at www.ers.usda.gov/Publications/BIO 0101/BIO0101.pdf
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