advanced biofuels Archives -

Algae biofuels at a critical juncture point as a viable clean transportation fuel

Algae Prius A few years ago, algae biofuels and oils looked like ideal options for the future of clean transportation. For those objecting to corn-based ethanol, or concerned about traditional biodiesel, algae fuel was showing a lot promise for passenger cars and commercial vehicles. Appealing factors have included emission reductions and the ability to tap into the renewable fuels and oils through plants.

Algae are photosynthetic organisms related to plants that grow in water and produce energy from carbon dioxide and sunlight. For transportation fuels, they’re primarily used as biodiesel, but have other applications for cars, jets, and military vehicles. Algae can be grown rapidly and produce large amounts of fuel relative to the resources used to grow them – but it does need significant investment and supporters who will continue to back it over several years.

Lately, the future of algae biofuels has become open to debate and may stand a better chance of succeeding in other markets beyond automotive and transportation. However, algae fuel still has several deep-pocket investors and industry groups supporting it as a clean fuel option.

One of the surprises happened earlier this year with Solazyme renaming itself TerraVia, which will no longer focus on its fuels and industrial businesses. The new corporate identity means that it will supply its algae oil to the food and personal care industries for use in products like cooking oil, protein powders, and face lotion. Based in South San Francisco, Solazyme had been a staunch advocate of algae biodiesel for years. The company did split off a separate unit called Solazyme Industrials, offering its Soladiesel product, Solajet, and military-grade fuel; but the original company’s focus appears to be weighted on TerraVia.

Last year, Volkswagen of America had successful completion of its Renewable Diesel Evaluation Program in collaboration with Solazyme and Amyris, Inc., another algae fuel supplier. Beginning in 2012, Volkswagen measured the environmental impacts from the use of pre-commercial renewable diesel formulas in a 2012 Passat TDI, and found that it was producing significantly less in emissions than traditional diesel. VW displayed this car, fueled with Solzyme’s Soladiesel product, at ride and drive events around the country. VW still shows support for algae fuels as part of its clean fuels strategy in the post-diesel emissions fraud reporting scandal, along with its ambitious plug-in electric vehicle launch lineup.

Soladiesel was impressive enough to earn a fuel pump and marketing campaign with Propel Fuels. In California during 2013, Propel Fuels and Solazyme announced that sales grew by 35% at Propel stations, offering SoladieselBD in a B20 blend during a 30-day retail pilot program, compared to non-test sites.

Amyris, one of the two biofuels supporters of VW’s test project, applies its bioscience solutions to convert plant sugars into hydrocarbon molecules, specialty ingredients, and consumer products. On the transportation fuel side, the company is currently selling renewable diesel in metropolitan areas in Brazil and renewable jet fuel with its partner Total in markets around the world.

Another major biofuels company that still supports algae as a transportation fuel is Algenol Biotech. Last year, Algenol entered an agreement with Protec Fuel Management to market and distribute a new type of ethanol from Algenol’s Fort Myers, Fla., commercial demonstration module. The companies say it’s the first time that ethanol made from algae will be available commercially. Protec Fuel will distribute and market the fuel for E15 and E85 applications for both retail stations and general public consumption, as well as fleet applications. The partner companies will also offer Algenol’s future 18 million gallons per year from its commercial plant, which is planned for development in Central Florida this year and in 2017.

Algenol has been developing its Direct to Ethanol technology, which uses sunlight, algae, non-arable land and carbon dioxide to economically produce ethanol. Of particular interest to the company are those chemicals traditionally derived from petroleum-based propylene. As with ethanol, production of these chemicals using Algenol’s proprietary technologies could displace more expensive petroleum based chemicals in an environmentally friendly way, the company says.

Denso Corp., a major supplier of fuel injectors, air conditioners and electronics to Toyota and other OEMs, announced last fall that it’s getting into the algae biofuels space. The company was scheduled to open a cultivation and testing center in April 2016 in Japan that will have three oval ponds for growing algae. The company has been working on microalgae test projects since 2008, and sees the biofuel as an excellent option to reduce dependence on petroleum products and carbon emissions.

Algae biofuel falls under California’s Low Carbon Fuel Standard requirements, and had three backers on the list of supporters released last week – Algae Biomass Association, Advanced Biofuels Association, and Global Algae Innovations. Based in San Diego, Global Algae Innovations is considered to be a leading supplier of low-cost algae production technologies. These three entities were among 57 fuel producers and trade associations who wrote to California Senate President Pro Tem De León and Speaker Rendon, urging support for the California Low Carbon Fuel Standard.

On the federal front, algae is still receiving support. On July 14, the U.S. Department of Energy announced funding for up to $15 million for three projects aimed at reducing the production costs of algae-based biofuels and bioproducts through improvements in algal biomass yields. The goal of the funding is to advance the research and development of advanced biofuel technologies to speed the commercialization of renewable, domestically produced, and affordable fossil-fuel replacements.

Algae fuel has been included in the revised and finalized volumes for the federal Renewable Fuel Standard. One change made to the revised RFS was to clarify that only biofuels produced from oil from algae grown photosynthetically qualify for the RFS program under the algal oil pathways. Two companies have been approved by the U.S. Environmental Protection Agency as completing pathways assessments: previously mentioned Algenol Biofuels and Bedford-Mass.-based Joule Unlimited Technologies, Inc. The companies are being allowed to generate D5 advanced biofuels renewable identification numbers (RINs) for their algae-based ethanol under the RFS.

As far as the pro and con debate on the future of algae fuels, here are a few of the arguments:

Microalgae is less land-intensive than corn production and less thirsty than corn ethanol; as revealed in a pro-corn ethanol study showing corn ethanol uses 2.8 gallons of water for every gallon of fuel refined, and is outclassed in efficiency by algae-based fuels. For example, Algenol converts saltwater into biofuel with yields nearly 17 times higher than those of corn, while producing 1.4 gallons of fresh water per every gallon of fuel produced.
Dual-fuel vehicles and plug-in hybrids using algae fuel could be a good way to go for consumers and fleets. For example, what if you were to drive a bi-fuel CNG Chevrolet Impala that was also built on the Voltec plug-in hybrid drivetrain (if GM were to roll out that vehicle in the future)? That would offer the driver an opportunity to power the car on natural gas (which emits about 25% less greenhouse gas than a gasoline-engine vehicle), battery power (zero percent emissions). That might be ideal for fleets that worry about having drivers stuck out on roads. In the next few years, there will be a lot more clean fuels out there, including algae biofuel, along with cellulosic ethanol, dimethyl ether (DME), biogas (renewable natural gas), biodiesel, and renewable diesel.
University of California San Diego professor Stephen Mayfield believes enough in the fuel to start up a company to bring it to market. The UCSD biology professor, who has spent the past 25 years experimenting with algae, now focuses on extracting crude oil from green algae to create biofuel. The research completed at Mayfield’s lab has helped his company, Sapphire Energy, convert algae into biofuel. Sapphire Energy is getting more attention in media and industry conferences as a leader in algae fuels. “Petroleum is from algae, so when we make gasoline from that and when we take oil from algae, it’s kind of the same,” Mayfield said. “We make what is called a fungible, or a drop-in fuel from algae.”
In the past decade, vast amounts of money have been invested in the development of algae for biofuel production. Shell and ExxonMobil were investors, seeing algae biofuel as a pipeline for moving forward in a non-petroleum product. But these oil giants and several other major companies have been abandoning their investments lately. Algae biofuels producers, in many cases, haven’t provided good return on investment for corporate backers. Producers struggled to retain their high productivity at a larger scale and found predators often contaminated their farms. They also found that building the ponds in which to grow the algae and providing enough light and nutrients for them to grow proved too expensive.
Another cause of the algae downturn has been plummeting oil prices.
As mentioned about the Solazyme corporate identity changeover, algae can be used to make a diverse range of products. For example, algae can produce large amounts of omega-3 fatty acids, an important dietary supplement. This means it could be a sustainable, vegetarian source of omega-3, which is otherwise only available from fish. Algae is being used more as a sources of vitamins, minerals and proteins. Species found in algae, such as Chlorella and Spirulina, are commonly being consumed for their health benefits.
In February, researchers at the National Renewable Energy Laboratory reported a breakthrough system that ramps up the efficiency of the algae-to-ethanol process to a significant degree. The new algae biofuel process builds on NREL’s previous work with two algae strains, Chlorella and Scenedesmus. The challenge has been getting it up to commercially competitive scale. The conventional approach leans heavily on increasing the lipids content of algae. NREL has been focusing on a whole-body system that extracts lipids, carbohydrates, and proteins for further processing into marketable products.

Propel Fuels and Neste Oil bring price-competitive renewable diesel to California

For fleets, transportation companies, and individuals based in Northern California driving diesel-engine vehicles, there’s now a renewable diesel available at fuel stations for about the same price as traditional diesel. California Air Resources Board (CARB) studies show that this renewable diesel can reduce greenhouse gas emissions up to 70% compared to petroleum diesel; and offers significant reduction in nitrogen oxide (NOx) and particulate matter for those concerned about air quality and health issues in regions with high output from commercial trucks.

Propel Fuels has brought this renewable fuel, called Diesel HPR (High Performance Renewable), to 18 fuel stations in Sacramento, San Jose, East Bay, Redwood City, and Fresno. Diesel HPR was created by Finland-based Neste Oil using that company’s NEXBTL renewable diesel. Diesel HPR is a low-carbon renewable fuel designated as ASTM D-975, the standard for ultra-low sulfur diesel fuel in the US. It’s also recognized as “CARB diesel” by the state agency, and is a certified fuel with the US Environmental Protection Agency. A complete list of Diesel HPR fueling locations is available at dieselhpr.com/locations.

Diesel HPR comes from renewable biomass including recycled fats and oils that can originate from sources such as waste fish oils and vegetable oils. It’s refined from renewable biomass through Neste Oil’s advanced hydrotreating technology that meets the toughest specifications required by automotive and engine manufacturers. Like biodiesel, the fuel offers fleets and consumers the advantage of using a clean fuel in vehicles without paying for vehicle conversions. Diesel HPR can be used by any diesel vehicle. “It’s a clean, clear, odorless fuel that’s highly refined and has low sulfur and carbon,” said Rob Elam, CEO and Co-Founder of Propel Fuels, during a phone interview. “Diesel HPR exceeds conventional diesel in power, performance and value.”

Elam says there’s been tremendous interest in the fuel from owners of diesel-powered cars with Bosch technologies (such as Volkswagen, Audi, and Mercedes-Benz diesel-engine models) that have “No Biodiesel” stickers. Using biodiesel would threaten their warranties. “They’re excited to see Diesel HPR launched,” Elam said.

The fuel’s high-blend rate with reduced greenhouse gas emissions has made it very appealing to corporate and government fleets, he said. “Many fleets are moving towards the state’s Low Carbon Fuel Standard, so low carbon diesel makes sense,” Elam said. Bakeries with a fleet of Sprinters are very interested in the fuel, as are companies in the heavy-duty long-haul trucking business.

While the EPA is still mulling over 2014 production volumes under the Renewable Fuel Standard and its RIN credits, California’s Low Carbon Fuel Standard and cap-and-trade credit market makes the state an appealing place to launch renewable transportation fuels. Clean Energy Fuels would attest to that through its Redeem renewable natural gas; that product is finding interest by fleets wanting to comply with California standards and utilize clean fuels to meet emissions targets.

The Renewable Fuel Standard and RIN debate has been a major concern to the biofuels industry. There has been enough interest in renewable fuels for Neste to bring a large volume of its fuel to California, Elam said. This is the first time renewable diesel is being offered as its own product; it has cost parity with regular diesel in California but its weights and measures are still being worked out by the agencies, he said.

“This renewable diesel joins a growing suite of new, cleaner transportation fuels in California thanks to our Low Carbon Fuel Standard and forward thinking companies like Propel,” said California Air Resources Board Chairman Mary Nichols, in the press release.

Propel Fuels started up in 2004 when it set up the very first public biodiesel station in Seattle. Passage of AB 32 in California motivated the company to bring renewable diesel, ethanol, and biodiesel to fuel stations across California. Oregon has passed a low-carbon fuel standard and the state of Washington is considering one. The company will expand into others states as market demand grows, but as for now, there’s “plenty of growth in California,” Elam said.

Boy, was I wrong about KiOR as a biofuels success story

KiOR Inc., which operates a commercial-scale cellulosic biofuel plant, may be closing its shutters very soon. Backed by venture capitalist Vinod Khosla, there’s been a lot of hope in KiOR as a symbol for possibility in advanced biofuels as a clean transportation fuel. Its catalytic process converts woody biomass and non-food crops into gasoline and diesel and can be fueled through the existing US infrastructure. Khosla just made a commitment for near-term financing, but the company needs more additional capital by April 1 to stay in operation. The company needs to meet certain milestones to bring in at least $25 million by the end of this month; part of that milestone performance is bringing its Columbus, Miss., biofuel plant through an upgrade. If additional funding doesn’t come through, it’s likely to default on its debts and may file for bankruptcy. All of this was announced not long after the company reported a $347 million loss for 2013.

In October, this advanced biofuels producer received $100 million from Khosla Ventures LLC and Gates Ventures LLC to expand production at the Columbus plant. As I wrote about back at that time, it looked very promising for KiOR, being the first US company to build its own commercial scale cellulosic biofuel plant – creating jobs, economic growth, and clean transportation fuel. If KiOR goes belly up, it will provide more ammunition for biofuels critics (and there are quite a few out there). The biofuels industry has only produced a small fraction of the level envisioned in 2007 by the renewable fuel standard. Even with the US Environmental Protection Agency’s cutbacks on ethanol blend and advanced biofuels proposed in November, that’s not the real problem. It’s a startup industry that needs more success stories, so this one would hurt. For several months, I had KiOR on the green transportation stock market index that I show monthly in Green Auto Market Extended Edition. The company’s stock has not been performing well lately. The company may need to be removed from the chart.

How the troubles at KiOR will affect the advanced biofuels industry is still unknown. There are a few biofuels companies that are performing very well financially, and are giving hope to investors. One of them, Aemetis, another publicly traded company, also produces advanced biofuels for the US market – and deployed commercial-scale production in the past two years. Aemetis recently announced record quarterly and annual gross profit. It’s used a different business model than KiOR, and there are several other highly profitable domestic biofuels producers, according to Biofuels Digest’s Jim Lane.

Are advanced biofuels really just fading away?

The battle over the amount of ethanol that the US Environmental Protection Agency (EPA) is targeting for production this year and next is still being fought out in Washington; then there’s always the question of whether advanced biofuels have any shot at being produced at scale and selling enough volume to make the investments profitable. Initially, the Renewable Fuel Standard had ambitious goals for next-generation biofuels made from corn stalks, switch grass, wood chips, municipal waste, and other biomass to produce cellulosic, algae, and other advanced biofuels. The EPA has cut down the production volume numbers for advanced biofuels including cellulosic.

For now, the US is focused on corn ethanol and biodiesel, and Brazil on sugarcane ethanol. Biofuels have a much broader future than ethanol, according to Thomas Foust, director of biofuels development at the National Bioenergy Center, which is part of the National Renewable Energy Laboratory. He thinks that new methods of making fuels directly from biomass “look promising from an economic perspective.”

The appeal of advanced biofuels has been very strong to many people – it’s considered greener and more efficient than ethanol. It’s much cleaner and more domestic than gasoline and diesel, and could play a sizable role in reducing transportation’s carbon footprint. There are lots of companies out there gaining investors and building facilities in the US, Europe, and Brazil, with the benefits of job creation and producing fascinating, advanced, clean fuels. Still, the challenges are great with many of these companies failing financially, and others taking a long time to build commercial production plants and find the right client base to purchase the fuel.

Advanced biofuel companies have ramped up production to the development stage and have had large financial backers from brand-name equity partners; some have gone public in the past three years. They’re being taken a lot more seriously now for transportation, including jet fuel. The advanced fuels do have their share of skeptics and critics who have watched several companies fail financially in recent years. Biofuel advocates have their own skepticism and arguments over what methods make the most sense; for example, cellulosic ethanol is thought by some analysts to be far too expensive, but other cellulosic fuels make a lot more sense.

Here’s the latest on companies worth following and on a trade association that you should know about……

KiOR: As mentioned recently, this company that produces and sells cellulosic gasoline and diesel from non-food biomass has been getting financial backing from one of the leading venture capitalists out there, Vinod Khosla. The company is doing much better now facing challenges including a class-action lawsuit by investors unhappy with the company. The company operators one of the nation’s first cellulosic facilities in Mississippi, and just had its best production quarter ever – 324,000 gallons of fuel from woody biomass that’s identical to gasoline and diesel and is called drop-in fuel. KiOR shipped 245,000 gallons to customers in the oil industry during that quarter. The company just received $100 million in committed equity commitment for its Columbus, Miss., production plant. About $85 million of it came from Khosla Ventures and other Khosla entities.

Novozymes: is in partnership with Italian biofuels company Beta Renewables and will be opening in northern Italy what could be the world’s largest biofuels facility. Made from agricultural residues and energy crops at a commercial scale, the facility is expected to product over 20 million gallons of cellulosic ethanol a year. Novozymes’ role is providing the industrial enzymes needed to break down materials that the Italian plant will be using.

Solazyme: The company’s proprietary technology produces renewable oil and bioproducts from a range of plant-based sugars. The company has provided algae diesel with Propel Fuels, other ground transportation clients, and for air travel. The company is set to reach commercial-scale production in the US and Brazil in the first quarter of 2014. California-based Solazyme has custom-made algae tanks to develop better biofuels, and it has sold thousands of gallons to the Navy for use in its ships. Solazyme has also branched into making oils for higher profit products like cosmetics, food, and petrochemicals. The company will provide about three million gallons of algal oil for Unilever’s consumer products.

Gevo: A lot of the company’s business comes from providing isobutanol for the specialty chemicals market and converting it into bio-based jet fuel for the US military including the US Air Force and US Army. In September, Gevo signed an agreement with the US Navy to supply them with 20,000 gallons of Gevo’s alcohol-to-jet-5 fuel. The company previously supplied AT J-8 jet fuel – 56,000 gallons to the US Air Force and 16,150 gallons to the US Army. Gevo will supply the US Coast Guard with up to 18,600 gallons of finished 16% renewable isobutanol-blended gasoline. Gevo has also signed a contract to supply fuel to The Coca-Cola Co.

Amyris: has produced products such as squalene for the cosmetic industry and renewable diesel for Brazilian transportation authorities. Brazilian airline GOL will be using Amyris’ renewable jet fuel in 2014. GOL and Amyris will work together to establish a framework for bringing Amyris renewable jet fuel produced from Brazilian sugarcane to GOL’s flights following regulatory approvals by standard-setting bodies.

Advanced Biofuels Association (ABFA): Nearly every one of these companies listed above are members of ABFA. The organization helps members meet the Renewable Fuel Standard (RFS) for advanced biofuel consumption in the US. Members have built or purchased commercial-scale plants as advanced and/or cellulosic under the RFS; many of the members will be bringing commercial plants in operation by 2015. It’s membership is impressive; along with leading companies listed above, the list includes Intertek, which provides testing, inspection, and certification for advanced biofuels – and also plays a leading role in testing electric vehicles and charging stations; Oberon Fuels, which has the big dimethyl ether (DME) contract with Volvo and Mack trucks; Sapphire Energy and its algae and replacement transportation fuels; and Cool Planet, which converts non-food biomass into gasoline.