Fla. firm starts commercial production of cellulosic ethanol from agricultural wastes

Source: Tiffany Stecker, E&E reporter • Posted: Wednesday, August 7, 2013

In 2010, INEOS Bio took a shuttered grapefruit juice plant and began laying the groundwork for a million-dollar cellulosic ethanol plant. On Wednesday, it announced it had started commercial production.

Last week, INEOS Bio Vice President Dan Cummings told a full ballroom of attendees at the Energy Department’s Biomass 2013 event that the company, an offshoot of European chemical manufacturer INEOS, would soon ramp up to produce 8 million gallons per year of ethanol from the abundant yard and wood waste around the plant site in Vero Beach, Fla. That’s more than half the number of gallons U.S. EPA has proposed for the entire country in 2013

“It’s been a great journey,” Cummings said, to the applause of many proponents who, year after year, have expected commercial production of cellulosic fuels to be just around the corner. INEOS Bio’s Vero Beach plant, the Indian River County BioEnergy Center, will also produce up to 6 megawatts of renewable electricity. Boosted by a $50 million DOE grant in 2009, the center cost $130 million to build.

INEOS Bio will use these plants for commercial production of cellulosic ethanol out of agricultural wastes, including orange grove remnants. Photo courtesy of INEOS Bio.

The announcement came at a pivotal moment for the industry. INEOS Bio is the first company to produce cellulosic ethanol at a commercial level and the second to make cellulosic fuel. The first, KiOR Inc., successfully reached commercial production of cellulosic diesel and gasoline at its Columbus, Miss., plant earlier this year.

Three more biofuel plants are feverishly building toward large-scale production, despite delays. Ethanol company Poet LLC and Dutch life sciences firm DSM are together building a 25-million-gallon capacity plant in Emmetsburg, Iowa; chemical giant DuPont is constructing a 30-million-gallon plant in Nevada, Iowa; and Spanish company Abengoa Energy is building a 23-million-gallon facility in Hugoton, Kan. All three will use agricultural waste like corncobs and stover to make fuels.

“At a certain point, we’ll all be competitors, but at this point, we’re all working together to make sure the industry gets up and going,” said Steve Hartig, general manager of Poet-DSM Advanced Biofuels LLC.

Meanwhile, the battle in Washington, D.C., over the federal renewable fuel standard — the policy that requires the nation to produce 36 billion gallons of renewable fuels by 2022 — is fiercer than ever, with calls for changing or repealing the RFS. The House Energy and Commerce Committee has made the RFS a priority, stating recently that it would seek to reform the policy with the backing of both Republicans and Democrats.

While the criticism around the RFS varies widely, a top complaint has been the slow development of cellulosic fuels. According to the 2009 RFS mandate, there should be 1 billion gallons of cellulosic biofuels made this year. EPA has proposed that number be revised down to 14 million — less than 2 percent of what EPA had projected four years ago. The Abengoa and Poet-DSM cellulosic plants have pushed their opening dates from this year into next year.

Making citrus waste into energy

In 2011, oil refiners received 4.2 million credit waivers because they were unable to comply with the RFS for lack of cellulosic production. At least two petroleum companies, Royal Dutch Shell PLC and BP PLC, have publicly backed the RFS. Both companies have investments in biofuels ventures, but the trade groups that represent them have called for a repeal.

“Despite promise after promise from the ethanol industry, commercial production has failed to materialize. The mandate remains unrealistic because EPA sets the required level at higher levels than are actually being produced,” said Carlton Carroll, a spokesman for the American Petroleum Institute. “It is effectively an added tax on gasoline creating an unnecessary burden on consumers.”

Located roughly between Orlando and Palm Beach, Vero Beach is in the heart of Florida’s orange-growing country, a region that took a direct hit when the North American Free Trade Agreement drove up the relative cost of Florida citrus and drove many farmers to reduce their acreage.

“They essentially turned the water off in their fields,” Cummings said. As the trees died off, Indian River County faced a mounting problem with green waste. The county sent out a request for proposals for new technologies that would provide a long-term solution to the waste. Since INEOS Bio established itself in town, the local benefits have been huge, said Helene Caseltine, economic development director for the Indian River Chamber of Commerce.

“The economic impact is incredible,” she said. INEOS is one of the highest taxpayers in the area. It has spent $130 million in capital investments and millions more for permits and land planning. The plant employs 65 people on site, with many dozens more employed indirectly, she added. The average wage for workers is $50,000 per year, about $16,000 more than the county average.

Aside from the hard numbers, Caseltine said, the company is bringing in people to visit the plant, who will stay in the area hotels and pump money into the local economy. INEOS Bio has also sponsored school programs and integrated well into the county’s network.

“They’re really good community partners,” Caseltine said. “They’ve been a really good addition to our corporate landscape.”

INEOS Bio’s technology relies on a gasification-fermentation technique that took more than 20 years to perfect. The company acquired the technology five years ago from James Gaddy, a chemical engineer at the University of Arkansas, Fayetteville.

5 plants laying the groundwork for cellulosic

In the facility, plant waste reacts with oxygen to create a synthesis gas of hydrogen and carbon monoxide. That gas is cooled and fed to bacteria, which converts it into ethanol. Later this year, the plant, which is located next to a landfill, will begin incorporating municipal solid waste to the mix.

Once the process digests the wood waste into fuel, Cummings believes it will exceed a greenhouse gas savings over fossil fuels of more than 90 percent. The International Energy Agency, a policy adviser for industrial nations, estimates that 27 percent of road fuels must be biofuels by 2050 to meet climate goals.

Growth to commercial scale isn’t a linear pattern, said Jeremy Martin, senior scientist in the Union of Concerned Scientists’ Clean Vehicles Program. These cellulosic plants that achieve commercialization will grow logarithmically, and INEOS Bio is likely to ramp up to its 8-million-gallon goal quickly.

“It’s a really important milestone,” he said. “Between these five plants, we’re really laying the groundwork.”

But despite the excitement, none of the companies — KiOR included — has reached nameplate capacity, or the full production potential of the plant. Until then, investors are likely to lose interest in cellulosic fuels, said Daniel Choi, a researcher on the alternative fuels team at Lux Research.

“That would be the biggest turning point for the industry, if someone can prove they are operating at nameplate capacity,” he said. “Until there’s a success story, no one is going to invest further.”

KiOR, the only publicly traded company of the five leaders, will announce its quarterly earnings Thursday and declined to comment on its progress until the announcement is made. Pavel Molchanov, senior vice president and equity research analyst with investment firm Raymond James and Associates, says investors have maintained support of biofuels at all levels. Since 2007, the year the RFS was signed into law, not only have biofuels benefited from a federal mandate, but technologies have promised to be viable.

“The venture capitalists have stayed committed,” Molchanov said. “There’s a lot of interest from strategic partners,” including the oil companies that have been portrayed as enemies of the RFS.