New Energy Blue plans Iowa biomass refinery to make cellulosic ethanol

Source: By Janet McGurty, S&P Global • Posted: Wednesday, July 21, 2021

New Energy Blue plans to build a biomass refinery in Iowa to produce renewable fuels, including cellulosic ethanol and lignin, as demand for renewable carbon-neutral fuel grows, the company said July 20.

The New Energy Freedombiomass refinery will be on a 155-acre site near Mason City and will convert 275,000 tons of crop residue – like cornstalks and wheat straw – into 20 million gallons of cellulosic ethanol and 95 tons of lignin, which can replace bitumen as a binder in asphalt, New Energy Blue said in a statement.

“Our Iowa project can keep one million tons of CO2 out of the atmosphere every year – like taking 200,000 cars off the road,” CEO Thomas Corle said. “Future refineries are expected to be twice the size of the first.

“Our cellulosic fuel can exceed California’s Low Carbon Fuel Standard policy and its rigorous air quality requirements,” Corle continued. “Other states continue to adopt similar policies, which drive the growing global demand for carbon-negative transportation fuels.’

Both Washington and Oregon already have low carbon fuel policy programs, as do some Canadian provinces.

New Energy Blue said it had completed process engineering around several different feedstocks and is “now completing a site-specific design for construction next year in Iowa.”

The company said it plans to build four more biomass refineries over the next six years

No timeline was given for when the Iowa plant would be operational and a company representative was not immediately available for comment.

Cellulosic ethanol production lags

Cellulosic ethanol production consistently has lagged the volume requirements as mandated by the Environmental Protection Agency’s Renewable Fuel Standard as specified in the Clean Air Act.

This is due to the higher cost of production than that of fuel ethanol, which is made using fermentation, and is currently used as a blend stock for gasoline to make it cleaner burning and increase octane.

The RFS gives the EPA latitude to reduce the cellulosic biofuel volume through a waiver – a provision which has been used every year since 2010.

In 2020, the RFS statutory cellulosic biofuel volume requirement was 10.5 billion gallons – requiring obligated parties like refiners to blend that volume into transportation fuels like gasoline and diesel. However, due to the lack of cellulosic biofuel volume, the final 2020 volume requirement was set at 590 million gallons, according to the EPA.

Lack of production has made the renewable credits associated with cellulosic biofuels –D3 Renewable Identification Numbers – more valuable than those of D4 biomass-based diesel RINs and D6 ethanol RINs.

The EPA’s delay in providing a 2021 RFS mandate combined with the Supreme Court decision on granting small refineries exemptions sent RINs prices to record highs 46 times in 2021, according to the American Fuel & Petrochemical Manufacturers Association.

So far in the third quarter, according to S&P Global Platts assessments, cellulosic D3 biofuel RINs are averaging $3.10/RIN, compared with the $1.48/RIN and $1.62/RIN for D6 ethanol and D4 biodiesel RINS, respectively.

The New Freedom Refinery will use Danish Inbicon bioconversion technology to break down the plant fiber into lignin and sugar, which is currently fermented into fuel ethanol, and then use enzymes to create cellulosic fuel.

Capital spending on the facility is expected at about $200 million, and the company is looking to capital markets for financing, New Energy Blue President Albury Fleitas said in the statement.

Fleitas said the US Department of Agriculture “greenlighted the project under phase-one Section 9003 for a construction loan guarantee” without providing more details about the amount of the loan.

The USDA’s Section 9003 program, also known as the Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program, provides loan guarantees to assist in the development of advanced biofuels, renewable chemicals and bio-based products manufacturing facilities.