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Failure to Launch: Why Advanced Biorefineries Are So Slow to Ramp Up Production
A common refrain is that advanced biofuels are just a few years away from commercialization—a claim that has been made for much longer than just the past few years. The U.S. EPA’s Renewable Fuel Standard, as originally drafted, assumed the same quick expansion of corn ethanol in the program’s initial years would also apply to cellulosic biofuels. Repeated revisions to the RFS’s statutory volumes reflect the harsh reality—that the program’s ambitious ramp-up of cellulosic ethanol has failed to materialize. In 2017, only around 300 million gallons of cellulosic biofuels were produced—a mere fraction of the original statutory volumes of 5.5 billion intended for that year. In fact, the largest gains in cellulosic fuel production in the U.S. haven’t come from cellulosic ethanol at all, but rather, from the reclassification of biogas as cellulosic biofuels. So…what’s the hold up for cellulosic biofuels?
While we at the ICCT have discussed some of the political and economic factors that have created substantial headwinds for advanced biorefineries at the macro level, those issues are in addition to what’s happening on the ground for individual projects. Over the past few years, a handful of cellulosic ethanol projects have finally begun production, but their rollout has been haphazard, prone to delays and cost-overruns. The much-touted Beta Renewables cellulosic ethanol biorefinery in Crescentino, Italy began operation in 2013 as the world’s first commercial-scale cellulosic ethanol facility. While the project had a nameplate capacity of over 75 million liters, the facility failed to come close to that level of production. For the first four years, the operators dealt with extensive pre-treatment issues and had to overhaul its processing procedures, particularly due to rocks and dirt entering the pre-treatment system along with the feedstock. Eventually, the operators downgraded the facility to only 50 million liters of capacity, before finally closing just 4 years later in 2017.
The issues at the Crescentino facility aren’t unique—in fact, they’ve plagued the entire advanced biofuels industry. Experience suggests that it may take up to five years to fully ramp up capacity at a facility. Due to many of the same issues with pre-treatment as the Beta Renewables plant in Crescentino, POET-DSM’s Project Liberty cellulosic ethanol plant in Iowa had to be reconfigured several times after the facility was completed in 2014. Project Liberty started biomass handling operations right away, but only began producing fuel in late 2015. There were problems with plugged pipes from feedstock impurities and poor yields from excessive chemical pretreatment. Only after more than three years did the pre-treatment system reach 80% uptime, although there were still fuel production problems. Regardless, the Project Liberty facility may be the closest to achieving full production out of any standalone cellulosic biofuel plants. In contrast, after two years of a slow ramp-up, DuPont sold its first large, 110-million liter facility and exited the business. In the three years since the opening of the POET-DSM facility, the sum total of cellulosic ethanol production in the U.S. is still less than the nameplate capacity of any one large project.
The slow ramp-up time for cellulosic biofuels means that after accounting for a few years of siting, permitting and construction, it might take the better part of a decade from when a project is initially planned before that facility begins producing fuels at its nominal capacity. Relative to the duration of some fuels policies—this is a long time indeed. The recast Renewable Energy Directive (RED II) in Europe only runs through 2030, and volumes for the RFS are only set through 2022. For a hypothetical producer, the window of time to qualify for incentives can be overly narrow.
Unpredictable ramp-up times are one of the reasons why the advanced biofuels industry struggles to overcome the so-called valley of death, or the gap between initial success at the R&D level and enduring, long-term success at commercial scales. Cellulosic ethanol and other advanced technologies have been proven at the pilot scale, but the industry still faces challenges in scaling up to commercial production. Bridging the valley requires both time and strong policy support before these companies can eventually leverage economies of scale. Longer policy timeframes, greater policy stability, and financial support from instruments like grants and loan guarantees could make the transition a bit easier.
Once pioneer cellulosic ventures successfully streamline their ramp-up processes, the knowledge gained can inform future projects. The most successful cellulosic ethanol producers to date have been smaller projects operating at below 10 million liters of capacity. These successful firms also rely on a consistent feedstock stream from an established, first-generation process, such as cellulose-rich corn kernel fiber from the corn ethanol process or bagasse (cellulosic biomass residue) from sugarcane ethanol production. These projects have been relatively fast to install and have delivered favorable economic returns, but their overall scale is much smaller compared to larger, standalone cellulosic facilities using crop residues and energy crops. The emerging success of these smaller facilities shows that cellulosic ethanol is not a dead-end. With the right pre-treatment processes and feedstock supply chains in place, it can make a real contribution to decarbonizing our fuel supply.
