Alternative Fuels’ Long-Delayed Promise Might Be Near Fruition

So far, such alternative fuels have not moved beyond small pilot plants, despite federal incentives to encourage companies to develop them.

But that could be about to change.

Officials at two companies that have built multimillion-dollar factories say they are very close to beginning large-scale, commercial production of these so-called cellulosic biofuels, and others are predicting success in the months to come.

In Columbus, Miss., KiOR has spent more than $200 million on a plant that is supposed to mix shredded wood waste with a patented catalyst, powdered to talcumlike consistency. Its process does in a few seconds what takes nature millions of years: removes the oxygen from the biomass and converts the other main ingredients, hydrogen and carbon, into molecules that can then be processed into gasoline and diesel fuel.

KiOR aims to turn out 13 million gallons of fuel a year and has already lined up three companies to buy its output, including FedEx and a joint venture of Weyerhauser and Chevron. KiOR said on Thursday that it had begun producing what it called “renewable crude” and intended to refine that into gasoline and diesel that it would begin shipping by the end of the month.

And Ineos, a European oil and chemical company, is putting the final touches on a plant in Vero Beach, Fla., that would cook wood and woody garbage until they broke down into tiny molecules of hydrogen and carbon monoxide. Those molecules would be pumped into a giant steel tank, where bacteria would eat them and excrete ethanol. The company has spent $130 million on the plant, which is supposed to make eight million gallons a year, about 1 percent of Florida’s ethanol demand. The plant is next to a county landfill, and executives covet the incoming garbage.

Both plants are far smaller than typical oil refineries, but commercial production at either one — or at any of several of the plants that are a step behind them — would be a major milestone in renewable energy.

At such plants, the goal is sometimes to make ethanol and sometimes gasoline or diesel fuel or their ingredients. The pathways to make the biofuels are varied. But the feedstocks have something in common: they are derived from plants and trees, but not from food crops like corn kernels, which are the basis of most of the biofuel currently made in the United States.

Often, the raw ingredients for the cellulosic biofuels are the wastes of farms, paper mills or households, with a value that is low or even negative, meaning people will pay the fuel producers to dispose of them. And the companies developing the new fuels say that their products produce far fewer carbon emissions than petroleum-based gasoline and diesel.

KiOR says that its fuel will release one-sixth the amount of carbon dioxide as an equivalent amount of petroleum fuel. That is mostly because every tree or woody plant fed into its process will eventually be replaced by a new tree or plant, which will suck carbon dioxide out of the atmosphere. And a byproduct of its factory is surplus electricity, which will be exported to the grid, displacing electricity that would otherwise be generated from natural gas or coal.

Ineos goes a step further, saying its production process actually reduces the overall amount of carbon in the atmosphere. “We could make the argument that we’re carbon-negative,” said Peter Williams, the chief executive. The reason, he said, is that electricity produced from its plant averts emissions that would have come from other electricity sources.

Just becoming the first company to produce commercial volumes of these alternative biofuels is no guarantee of commercial success. That depends on further optimizing production processes to get more gallons of fuel per ton of raw materials at lower operating costs.

Industry officials say that profits also depend on continued high prices for oil, the commodity that biofuels would replace, and a continuation of a federal government mandate that requires fuel blenders to mix a certain percentage of biofuels into the gasoline sold at service stations.

“Sustainability requires good economics,” Mr. Williams said.

Many companies have produced biofuel successfully, but only in quantities characteristic of a factory that makes fine whisky or perhaps perfume. The trick is to get reliability up and costs down to a level that allows operation on a large scale.

Government policy has anticipated far more technical progress than the industry has made. Congress set a goal of 250 million gallons of cellulosic biofuel for 2011 and 500 million gallons for this year, but the Environmental Protection Agency cut the requirement to six million gallons for 2012 because of the lack of commercial production.

Six governors, oil refiners and companies hurt by high corn prices have asked the agency to waive its requirements for ethanol and other renewable fuels. Some single out the corn ethanol mandate, but others want the quota for cellulosic fuels waived, too, partly because there is no actual production.

Article source: http://www.nytimes.com/2012/11/14/business/energy-environment/alternative-fuels-long-delayed-promise-might-be-near-fruition.html?partner=rss&emc=rss