Dec. 11 (Bloomberg) — Cellulosic biofuel companies will
boost production almost 20-fold in 2013 as the first high-volume
refineries go into operation, signaling a shift from an
experimental fuel into a commercially viable industry.
Production of the fuel made from crop waste, wood chips,
household trash and other non-food organic sources will reach
9.6 million gallons (36 million liters) in 2013, up from less
than 500,000 gallons this year, according to data compiled by
the U.S. Energy Information Administration and obtained by
Bloomberg News.
That gain will leave the industry short of the government’s
target for 1 billion gallons that gasoline and diesel producers
are expected to blend into their products next year under a
federal energy regulation. The industry may not meet those
targets for another five years, and companies from Kior Inc. to
Abengoa SA are closing the gap.
Kior opened the first commercial cellulosic biofuel plant
in the U.S. in October and will break ground early next year on
its second facility, which will be able to produce about 40
million gallons a year, Kate Perez, a spokeswoman, said in an e-
mail yesterday. “We believe that there will be ample
opportunity in this space for many years to come,” she said.
At least four more companies expect to open refineries by
the end of next year and two additional plants are scheduled to
begin production the following year. They probably won’t make
enough fuel to meet the 2014 targets, and the industry will
“catch up in the next three to five years” to the
requirements, said Adam Monroe, North America president for
Novozymes A/S, the Danish company that supplies ethanol
companies with enzymes.
“We’ve moved beyond lab and pilot and we’re now into
commercial phase,” Monroe said in an interview. “You’re seeing
the commercialization and the first wave of plants coming on.”
Fuel Law
Under the federal Renewable Fuel Standard, gasoline and
diesel producers are required to blend 36 billion gallons of
biofuel a year into their products by 2022, including 16 billion
gallons of cellulosic fuel.
The targets rise each year on a schedule set by a 2007
energy law, and the Environmental Protection Agency has the
authority to lower them annually to reflect the industry’s
actual output. The EPA cut the 2011 cellulosic biofuel
requirement to 6 million gallons from 250 million gallons and
reduced the 2010 mandate to 6.5 million gallons from 100 million
gallons.
It cut this year’s target to 10.5 million gallons from 500
million gallons and hasn’t revised its goal for 2013.
Kior’s Columbus, Mississippi, plant will eventually be able
to make as much as 13 million gallons a year. Ineos Bio’s plant
in Vero Beach, Florida, is due to go into operation this year
with annual production capacity of 8 million gallons. Both will
run at about 50 percent of capacity next year, according to an
Oct. 18 letter from EIA.
Additional Plants
Abengoa is expected to open a plant next year in Kansas
with capacity of 25 million gallons a year. Poet LLC is on track
to open a facility in Iowa that will be able to produce 25
million gallons a year, and Fiberight LLC will open one in Iowa
with about 4 million gallons of capacity.
The EIA didn’t include these facilities’ expected output in
the 2013 forecast in its letter.
DuPont Co. is scheduled to open a facility in 2014 with
annual capacity of 30 million gallons and Chemtex International,
a unit of the Italian chemical company company Gruppo Mossi &
Ghisolfi will open one with 20 million gallons
Unrealistic, Unfair
The gap between the RFS requirements and the industry’s
actual output prompted oil and gas trade groups to call for the
policy to be repealed. The American Petroleum Institute filed a
lawsuit in September calling the requirement unrealistic and
unfair, and said Nov. 27 that the RFS is “unworkable” and
should be repealed by Congress. The House of Representatives is
considering a bill that would limit the EPA’s authority to set
cellulosic biofuel targets.
Policy certainty is necessary to ensure investments
continue in cellulosic biofuels, said Novozymes’s Monroe.
Novozymes provides enzymes to Poet, Fiberight and Chemtex.
He compared the industry to standard, corn-based ethanol,
which surged in production from 2005 to 2008. The RFS caps its
requirement for corn ethanol at 15 billion gallons a year and
the fuel has “almost completed in its mission,” he said.
To contact the reporter on this story:
Andrew Herndon in San Francisco at
aherndon2@bloomberg.net
To contact the editor responsible for this story:
Reed Landberg at
landberg@bloomberg.net
