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U.S. Department of Energy Energy Efficiency and Renewable Energy

Biomass 2009: Track 5 - Biofuels Commercialization

The purpose of this track was to discuss the issues surrounding commercialization of biofuels, such as federal support, infrastructure challenges, and investment in sustainable biofuels.

Each session had a different focus, allowing for concentrated discussion on topics pertinent to biofuels commercialization. Session titles were as follows:

  • Session I—Federal Role in Fostering Investment
    To evaluate the government's role in supporting industry efforts in demonstrating and commercializing biorefinery technologies.

  • Session II—Overcoming Biofuels Infrastructure Challenges
    To highlight infrastructure challenges as well as strategies to address those challenges in order to allow efficient distribution, delivery, and end-use of renewable fuels as required by EISA.

  • Session III—Financing Sustainability
    To evaluate investment in sustainable biofuels and assess the financial costs of such efforts to reduce fuel demand and increase biofuel sustainability. A discussion of how stakeholders are investing in the switch to biofuels as awareness grows about their potential to prevent climate change and create economic opportunities in rural areas.

Presentation slides, if available, are provided in PDF format. Download Adobe Reader.

Track 5, Session I
Federal Role in Fostering Investment

Moderator

  • Jim Spaeth, Director of Commercialization, Golden Field Office, U.S. Department of Energy

Speakers

Overview

In these challenging economic times, should government's role change to support industry in demonstrating and commercializing biorefinery technologies? Jim Spaeth, Director of Commercialization at the U.S. Department of Energy Golden Field Office, moderated this session on the government's role in fostering investment.

Bill Hagy, Acting Deputy Undersecretary for Rural Development at the U.S. Department of Agriculture, gave the first presentation of the session. He covered the programs administered by the Rural Development at USDA as outlined in the Food, Conservation, and Energy Act of 2008. These programs include the Biomass Crop Assistance Program, Biorefinery Assistance Program, Bioenergy Program for Advanced Biofuels, Rural Energy for America Program (REAP) and the Biomass Research and Development Initiative. Hagy discussed the programs including funding allocated for each.

Gerson Santos-Leon, R&D Corporate Director for Abengoa Bioenergy Corporation, discussed Abengoa's biofuel involvement and its hybrid biorefinery concept. He provided an overview of Abengoa's hybrid biorefinery from pilot plant to commercialization.  Mr. Santos-Leon covered how the project has been financed and also highlighted what challenges and barriers face the industry.  Such challenges include the blend wall, indirect land use, NEPA, technology risk, raw material risk, and market risk.

Mike Rushton, Chief Operating Officer of Lignol Innovations Ltd., gave a brief overview of the company and of its biorefinery technology. His presentation focused on the technology developer perspective to commercialization of biofuels. Mr. Rushton discussed Lignol's pilot plant and demonstration plant processes and project partners. Rushton covered some of the challenges they have faced in their project development. Some of these challenges include limited major players, tight credit, lower energy prices, blend wall, and project stalling. Mr. Rushton also compared commercial projects to demonstration projects. He discussed the possibility of a DOE "dating service" to match up and join existing funding recipients into greater-funded projects.

Will Coleman, Partner at Mohr Davidow Ventures, provided the perspective of a venture capital firm investing in bioenergy. He discussed projections for world energy demands and first generation and next generation biofuels. Mr. Coleman went on to cover technologies in Mohr Davidow Ventures' portfolio. He discussed the chronology from the lab to commercial scale for the average startup, covering capital requirement, venture financing, debt, and more. He went over federal programs that focus on financing the gap in biorefinery projects and also covered some of the challenges facing the industry.

 

Track 5, Session II
Overcoming Biofuels Infrastructure Challenges

Moderator

  • Kevin Stork, Vehicle Technologies Program, U.S. Department of Energy

Speakers

Overview

The objective of this session was to highlight infrastructure challenges as well as strategies to address those challenges in order to allow efficient distribution, delivery, and end-use of renewable fuels as required by EISA. Kevin Stork of DOE's Vehicle Technologies Program moderated this session.

The first speaker to present was Mike Outlaw, Vice President of Southeast Region Operations and Engineering at Kinder Morgan Energy Partners.  Mr. Outlaw gave an overview of the Kinder Morgan pipeline system throughout the United States. He went on to cover Kinder Morgan's ethanol handling capabilities, which are predominantly located on U.S. coastlines. Outlaw summarized some of the primary issues related to ethanol and pipeline transport that needed to be addressed. After discussing the actions Kinder Morgan took to address those issues, Mr. Outlaw went on to cover transport of biodiesel through the Kinder Morgan system.

Jack Pester, Chairman and CEO of Pester Marketing Company, provided the retailer perspective of ethanol distribution in the United States. He covered some of the challenges that retailers face and indicated that, currently, retailers are not concerned with ensuring whether they are carrying a supply of biofuels or not, as long as consumers are able to access the transportation fuel that they need.  Pester mentioned that there are approximately 160,000 business people working as retailers with absolutely no incentive to date to provide biofuels in their stations.  Other challenges Pester mentioned included warranties on legacy vehicles only covering up to 10 percent of ethanol use (E10).

Brian Crowe, Executive Officer at the Iowa Office of Energy Independence, presented a state case study in biofuel distribution and end use. Crowe introduced the Iowa Office of Energy Independence as an office dedicated to helping Iowans create an economically viable and environmentally sound energy future. Mr. Crowe discussed the Iowa Power Fund, which consists of $100 million appropriated over four years to provide financial assistance to projects that will improve Iowa's biofuels, renewable energy, and energy efficiency sectors. Crowe highlighted Iowa's ethanol capacity, including a note that Iowa is the leading producer nationally of both ethanol and biodiesel and that as of November 2008, there were 35 ethanol refineries in Iowa with a total annual production capacity of 3 billion gallons. Sales of biofuels throughout Iowa were covered as well as fuel station locations. Crowe also went over the Iowa's "City to Region" approach.

Alex Schroeder, Program Director for Transportation Fuels and Nuclear Waste Transportation at the Western Governors' Association, spoke next. Schroeder summarized the Western Governors' Association's mission and relevant initiatives related to biofuels and renewable energy. He went on to discuss the Western Strategic Bioenergy Assessment with the goal to develop a biomass supply chain optimization model for the Western United States. Some of the bioenergy resources assessed include agricultural crop residues, tallow and yellow grease, forest thinnings, and municipal solid waste, among others. Conversion technologies assessed include current and future technologies, such as grain-to-ethanol and lignocellulosics-to-ethanol. Infrastructure modeling is part of the bioenergy assessment. Potential scenarios are used in the assessment, including localized distribution and the use of dedicated or existing pipelines. Schroeder also went over the Western Renewable Energy Zone initiative with a stated goal to develop a consensus proposal among the states and provinces in the Western Interconnection on how best to develop and deliver energy from renewable resource areas throughout the region to load centers.

Daniel Getman, from Geographic Information Science and Technology at the Oak Ridge National Laboratory, discussed the Bioenergy Knowledge Discovery Framework (KDF) being developed with funding from DOE's Bioenergy Technologies Office. Stated objectives of the KDF are to provide analytical and visualization capabilities for efficient planning, development, and management of the U.S. bioenergy infrastructure and to allow analysis, synthesis, and visualization of data that facilitates informed decision making. It is a collaborative tool that will "allow access to comprehensive data, modeling and visualization resources and the discovery of appropriate bioenergy infrastructure solutions."

Track 5, Session III
Financing Sustainability

Moderator

  • Darlene Schuster, Manager of Government Relations, American Institute of Chemical Engineers / The Institute for Sustainability Presentation Slides (PDF 988 KB)

Speakers

Overview

The goal of this session was to evaluate investment in sustainable biofuels and assess the financial costs of such efforts to reduce fuel demand and increase biofuel sustainability. The discussion involved how stakeholders are investing in the switch to biofuels as awareness grows about their potential to prevent climate change and create economic opportunities in rural areas. In addition to ensuring the economic viability of biofuels, these investors are working to ensure that any potential negative impacts of their funding are prevented.

Moderator Darlene Schuster, Manager of Government Relations, American Institute of Chemical Engineers (AICHE), also heads up the Institute for Sustainability (IfS), a community of sustainable practitioners. Darlene set the stage for the session with her discussion of IfS's emphasis on evaluating the triple bottom line (economic growth, social progress, environmental stewardship) from a business perspective. AICHE has developed a Sustainability Index that evaluates environmental performance, product stewardship, sustainability innovation, strategic commitment, safety performance, social responsibility, and value chain management with the overall goal to serve as an investment guide and providing benchmarks for company management.

Pedro Meirelles Villas Boas represented the Inter-American Development Bank. As a development institution, the Bank has a mandate to support investment programs in Latin American countries by increasing sustainable social and economical development, reducing poverty and creating jobs, creating environmental benefits and climate change mitigation, promoting sustainable rural development, improving competitiveness and human and natural resources, and fostering public–private partnerships. The problem that Latin American countries face is that 10 percent of the total population does not have electricity, yet energy demand will increase by 75 percent by 2030. They must work to achieve sustainability of energy supply and rational use of energy resources. IADB has also developed a biofuels scorecard.

Kathleen Robbins, formerly of Green Microfinance, came as a representative of Jatropha Pepinye, a development and jatropha project in Haiti. The project has local Haitians growing jatropha, a perennial plant native to the Caribbean and Latin America that has low moisture requirements, grows on poor soil, has a productive life of about 30–40 years, and is non-edible (so goats and cattle won't eat it).  The project runs on small-grower participation, micro-financing, and uses 3,400 hectares of land, producing 500,000 gallons of biodiesel per year.  The project's larger goal is to further develop an open trading and financial system that is rule-based, predictable and non-discriminatory, that includes a commitment to good governance, development, and poverty reduction—nationally and internationally.

Ruth Scotti of BP Biofuels discussed how biofuels fits into BP's strategic investment, with a focus on advanced technologies (lignocellulosics), advantaged molecules (biobutanol), and sugarcane ethanol (in Brazil). Ruth discussed the key drivers to sustainability—such as demand-side policies (like the RFS and blenders credits), supply-side policies (like production incentives and investment support programs)—the goals of which are to "de-risk" investing in biofuels. Her emphasis was on value proposition for sustainable biofuels.  As the advanced biofuels industry matures, innovation will drive continuous improvement in sustainability performance. Successful policies will set a clear progression of improved performance that accommodates the technical challenges associated with an emerging industry. Regulation must be set early and ensure sufficient time for industry to develop low-cost methods to achieve performance level.

Audience discussion brought up a few issues:

  • How do you prevent nationalization of these small farms? Community participation is critical; the more participation, the safer the investment is.  If you're not reaching the 80 percent of the country that is poor, it's not a long-term solution.

  • A company's willingness to adopt sustainable practices is key.

  • It is important to have realistic targets for sustainable standards from the beginning.

  • An audience opinion: Wind is not the answer because it only provides temporary construction jobs. Agriculture/biofuels can create permanent/long-term jobs.

  • It is important to not close the door on regulatory processes/frameworks.

  • Audience comment: There is disappointment in DOE's large-scale commercialization efforts. What about small regional/local distribution generation?

  • In Haiti, what are the threats facing the project? People are illegally tapping into the grid. There is also the risk of storms and hurricanes that can wipe out the crops.

  • The government of Haiti is thinking of developing a biofuels program.

  • An area in which companies get stuck is in addressing how they treat their employees. Turnover rates are affected if you don't treat employees well. Methods like mechanized harvesting were implemented in Brazil because of danger to workers in the field. Where mechanized harvesting doesn't work, there need to be stricter labor laws.

  • Full-cost accounting—some companies are taking this into account, showing a model that works, using benchmarks/scorecards to track social aspects.

  • Good employee relations is "good business."

  • How robust are the sustainable projects and sustainable business systems? Are good decisions being made using robust decision tools? What interventions are needed by the marketplace in the case of an economic downturn to keep these practices sustainable?

  • The vision has been lacking the strategic commitment. There has to be a robust value proposition if it is going to be resilient in these types of economic situations.

  • How do you keep small, indigenous businesses (i.e., the Haiti project) competitive with large businesses/corporations? Small farmers need to be "put in the game." Instead of focusing on exports, focus on providing local needs and then tie them into the world market.

  • What about the in-between (big corporations = bad; small and local = good)? Gray area in between? BP is working to bridge the gap by empowering smaller local growers.