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March 9, 2018
Two recently announced major joint ventures from ethanol producers – one in the cellulosic and another in the first-generation space – are aimed at selling biofuels in California, specifically. Driven by the state’s Low Carbon Fuel Standard (LFCS), ethanol producers can derive additional value from selling low carbon biofuels specifically into the California fuels market and capturing the value of LCFS fuel credits.
According to the Biofuels Digest, cellulosic ethanol is currently worth $3.00 more per gallon than conventional ethanol in California. Taken together with other states mulling low carbon fuel standards and the increasingly stringent carbon reduction goals of the California LCFS, it stands to reason that the biofuels industry would aggressively push to produce the lowest possible carbon intensity for their ethanol and, in particular, squeeze as many gallons of cellulosic fuel as possible from their operations.
ELEMENT: Lower Carbon Corn Ethanol Could Displace Brazilian Ethanol Imports in CA
On March 6, biofuels technology provider ICM and agribusiness and ethanol company The Andersons announced their new joint venture, ELEMENT. The 70-million-gallon-per-year biorefinery will be located in Colwich, KS, next to ICM’s headquarters and is expected to be operational in 2019.
What will set ELEMENT apart from the typical corn ethanol facility is the integration of a variety of technologies aimed at significantly driving down the carbon intensity of the finished fuel and increasing the amount of co-products; meaning less corn is making more products. On a recent press call about the project, Mike Irmen, President of the ethanol group at The Andersons stated, “ELEMENT’s use of several ground-breaking technologies produces more volume, higher quality product, or both, all in a much more environmentally friendly way.”
While recent research from the USDA points to an average actual carbon reduction from corn ethanol relative to gasoline of 43 percent versus the 20 percent required by EPA, the integration of additional renewable energies and other technologies can further reduce first-gen ethanol’s carbon footprint below this average. Significantly, the fuel produced at the ELEMENT facility will have a lower carbon score than Brazilian sugarcane ethanol in the California market. ELEMENT’s parent companies are hoping they can replace those gallons in California’s more lucrative market.
How will they get there? Using combined heat and power, ELEMENT will use local wood waste to power the plant, thus reducing natural gas use by 70 percent and fossil-based electricity demand by 80 percent. Additionally, the ELEMENT plant will be the largest producer of cellulosic ethanol from corn kernel fiber, using ICM’s Gen 1.5 cellulosic process, to separate corn fiber from the cornstarch and convert to cellulosic ethanol. The Element plant will produce 3.1 gallons of ethanol from every bushel of corn, as well as co-products. For comparison, as of 2016, the industry average was 2.8 gallons of ethanol per bushel. According to The Andersons, not only will the plant produce some of the lowest carbon corn ethanol around, there will also be a 10- to 25-cent increased profit margin per gallon over the typical corn ethanol plant.
Aemetis: From Trash to Treasure in Central California
Also on March 6, Aemetis, a Cupertino, CA, ethanol and biotechnology company, announced it had met a major milestone at its demonstration facility. Aemetis is working with InEnTech and LanzaTech to build a $153 million cellulosic ethanol facility in Central California, and based on the production milestones at its demonstration facility, it is now eligible for a Biorefinery Assistance Program guaranteed loan, a program of the Farm Bill’s Energy Title (Section 9003). The facility is expected to produce 12 million gallons of cellulosic ethanol as well as fishmeal and biogas from wood waste and nutshells in the agriculturally rich Central Valley of California.
According to Aemetis CEO Eric McAfee, “With 1.5 million acres of almonds and walnuts in the Central Valley generating about 1.6 million tons of wood waste and nutshells each year, about 160 million gallons of cellulosic ethanol needs to be produced to eliminate the air pollution from burning or decomposition of this material.”
The 40-million-gallon-per-year facility near Modesto, California, is slated for opening in 2019. Aemetis will use a gasification process to produce synthesis gas, which is then converted to ethanol. A significant additional benefit of the project is it will help address the serious air pollution that is caused by burning orchard waste in the Central Valley.
Facing uncertain times with regards to export policy and the Renewable Fuel Standard, the Andersons made it very clear that their fuel is destined for California. On a recent press call, Pat Bowe, President and CEO of The Andersons, stated, ELEMENT “really targets the California market and the CARB market there. It’s different than your conventional ethanol market. In many cases [it] would replace Brazilian imports as it has a lower CARB score… We’re excited about addressing that market… as well as several states are looking at adopting similar legislation.” Similarly, Aemetis can derive additional value from cellulosic LCFS credits.
With uncertain times ahead for both the Renewable Fuel Standard (RFS) as well as trade policy anxiety, state-level low carbon fuel standards may be the name of the game for both conventional and cellulosic ethanol producers for the foreseeable future.
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