Industry welcomes federal support for biojet, marine fuel sector

By Bryan Sims | August 16, 2011

Advanced biofuels are inching closer to becoming a commercial reality for the aviation and marine fuel markets thanks in part to a three-pronged collaborative effort spearheaded by the U.S. DOE, USDA and the U.S. Navy, in partnership with the private sector, to invest up to $510 million over the next three years to jointly construct or retrofit several drop-in biofuel plants.

The initiative responds to a directive issued by President Barrack Obama in March as part of his Blueprint for a Secure Energy Future and will be conducted under the guidance of the White House Biofuels Interagency Work Group and Rural Council.

Prospective industry participants in the aviation biofuel supply chain, like Madison, Wisc.-based Virent Energy Systems Inc., are poised to contribute their unique technologies to this effort. According to CEO Lee Edwards, the announcement is a welcoming sign that indicates a level of certainty when it comes to federal policy supporting the development of a nascent sector.

“I think there continues to be a great deal of uncertainty as to where policy is going to go in this area and this [announcement] does put a bit more certainty and policy, at least for the next three years, as to drop-in fuels, feedstock flexibility and getting energy security higher up on the policy priority list and getting volumes out as quickly as possible,” Edwards told Biorefining Magazine.

For Edwards, the federal initiative plays well into some of the strengths that his company has as produces and tests biobased jet fuel at its 10,000 gallon-per-year demonstration facility in Madison, Wisc. In June, Virent received $13.4 million of DOE funding to employ its patented catalytic process—trademarked BioForming—for the conversion of corn stover to jet fuel. An active member of the ASTM testing committee, the company is currently undergoing certification of its biojet fuel so it can become an approved pathway under what would be an annex to the current specification, ASTM D7566, for an alcohol-to-jet pathway.

“What I liked about [this announcement] was that it plays into some of the products that we’re making true drop-in fuels at lab scale and it gives us some flexibility in terms of size, location and feedstock, which I think is important today for these technologies,” Edwards said. “It also gives a unique opportunity to share risk, so that it’s not just taxpayers [paying] these grants, but it’s going to be the technology companies like Virent that will bring together a cost-sharing opportunity so that it’s private and public sector funding to get these technology scale-ups delivered.”

Colorado-based biobased isobutanol developer Gevo Inc. also lauded the announcement. President and Chief Operating Officer Chris Ryan said that his company is prepared to meet the increased demand by the military and commercial airlines for its product in the coming years. Gevo’s model involves retrofitting existing corn-ethanol or petrochemical assets by integrating its unique fermentation process technology using existing feedstock supply to produce biobased isobutanol, which can be converted into biojet fuel and other chemicals. Currently, Gevo is retrofitting a 22 MMgy ethanol plant in Luverne, Minn., 18 MMgy of which will produce isobutanol owned and operated by Agri-Energy LLC with plans to retrofit a 50 MMgy ethanol plant owned by Redfield Energy in South Dakota. Gevo also partnered with a Texas-based petrochemical company to build a demonstration hydrocarbon processing plant in Silsbee, Texas.

“We feel we’ve got a great technology that can leverage existing assets to reduce capital costs and time-to-market in order to deliver a drop-in fuel that the industry needs,” Ryan said. “Because we have a technology that allows us to leverage existing assets and because that technology delivers biojet fuel in near theoretical yields from fermentation-based feedstock, we’re in pretty good shape.”

Like Virent, Gevo is in the process of certifying its isobutanol-based biojet fuel with ASTM, submitting “fit for purpose” testing in June. “That’s the piece that needs to get done before we enter the market,” Ryan said.

Not only should the federal investment benefit technology developers targeting the biojet fuel market, like Virent and Gevo, but it will also be a boon for end-users like the military and commercial airlines.

“This initiative is crucial to help turn the promise of advanced aviation biofuels into reality, enhancing America’s energy security and reducing greenhouse gas emissions while creating jobs,” said Nicholas Calio, President and CEO of the Air Transport Association of America. “We already know how to produce and safely fly aviation biofuels, so the government investment will help clear the last hurdle and make the fuels commercially viable.”

Industry supporters, such as the Advanced Biofuels Association and The Biotechnology Industry Organization, also praised the support exhibited by the federal government in an effort to spur growth in biorefining technologies and expand market penetration.

“The Obama Administration should be commended for demonstrating great foresight as it continues to make smarter investments in drop-in advanced biofuels, investments that will ultimately strengthen America’s economic and national security,” said Advanced Biofuels Association President Michael McAdams in a statement. “As we see new biorefineries going online it is essential that Washington continue to recognize not only the need, but also the promise and desire to see advanced and cellulosic replacement fuels come to the market.”

Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section, echoed McAdams’ sentiment.

“Our nation’s military is as much at the mercy of high oil and gasoline prices as the average consumer,” Erickson said. “In addition, it’s imperative that our services have access to domestically produced fuel in order to avoid supply disruptions. Drop-in advanced biofuels produced in small, strategically located biorefineries can be an important ‘force multiplier’ by increasing the military’s ability to operate where needed and reducing the costs and the number of combat forces necessary to protect energy supply lines.”

While several industry organizations support the measure, Advanced Biofuels USA says it’s disappointed because of the one-to-one matching fund ratio. “This is the same private capital market that is reeling from the downgrade of the U.S. federal debt and turmoil in the European government debt market,” the association stated. “This leads to the primary question about this White House initiative. Are they serious? Do the people who approved this proposal really think that $510 million over three years is really enough money to build the infrastructure needed to meet a significant portion of the Navy’s demand for drop-in jet and diesel biofuels?”

However, with the federal government now backing the development of the aviation fuel supply chain for the deployment advanced drop-in ready biorefineries, as well as revitalizing economic growth in areas of the U.S., USDA Secretary Tom Vilsack believes this is how the government should approach the development of an emerging industry going forward.

“What’s unique about this particular collaboration is that you’ve got three separate departments on the federal level that have coordinated their resources in an integrated fashion to address all of the risks associated with getting the industry to a point where it can deliver a product that the Navy can use on a more reliable and sustained basis and revive economic opportunity in rural areas that may be suffering economically,” said USDA Secretary Tom Vilsack during a call for media members for the announcement.

“What makes this I think a wise investment is not just simply the importance of biofuels, advanced biofuels, drop-in fuels and the national security aspect of it, but the way in which we are doing this I think provides a new model for the government doing business,” he said.