E2: Advanced biofuel production likely to double in 3 years

By Sue Retka Schill | January 06, 2015

Advanced biofuel capacity topped 800 million gallons in 2014, up from the previous year and almost double the capacity in 2011, according to the E2 Advance Biofuel Market Report 2014 released by Environmental Entrepreneurs (E2), a national nonpartisan business group.

The report projects that by 2017, as many as 180 companies are expected to produce 1.7 billion gallons of advanced biofuel, doubling current capacity. It shows advanced biofuels are on track to meet targeted emission reductions for clean fuels standards in California and Oregon. “The advanced biofuel industry is meeting the growing demand for cleaner-burning transportation fuels,” said co-author Mary Solecki, western states advocate for E2, an affiliate of the Natural Resources Defense Council. 

E2 defines advanced biofuel as a nonpetroleum liquid fuel that achieves a 50 percent reduction in carbon intensity compared to a petroleum-fuel baseline, as determined by the U.S. EPA and the California Air Resources Board. Nationwide, the private sector has invested $4 billion since 2007 in the advanced biofuel sector, with more than $200 million invested in the past year. An additional $848 million in grants have been distributed since 2007.

A total of 181 companies are actively working on advanced biofuels in North America, with 167 commercial facilities and nine demonstration facilities either operating, under construction or in advanced planning stages. The majority are multifeedstock biodiesel facilities. Just five of the other, nonbiodiesel, facilities are currently operating at commercial scale or expect to begin production by the end of 2014.

For biodiesel, E2 counts the volume coming from nonvirgin feedstocks in its definition of advanced biofuels, which it estimate to be between 512 and 619 million gallons in 2014. In its projections, E2 suggests that volume could remain static at 512 million gallons by 2017 or climb to just over 1 billion gallons. The report pegs the number of biodiesel producers utilizing waste feedstocks at 123 in both 2014 and 2017.

The second largest volume of advanced biofuel capacity in 2014 was categorized as drop-in fuel, renewable hydrocarbons that can be refined into gasoline, diesel or jet fuel. The 2014 capacity for drop-in fuels was between 214 million and 216 million gallons, with a projected increase to between 319 and 347 million gallons by 2017. The low-end count for producers was 15 and the high-end 27.  That includes drop-in gasoline developer, Cool Planet Energy Systems, expected to reach commercial volumes by 2017, and renewable diesel producers currently at, or expected to reach, commercial-scale by 2017 such as Diamond Green Diesel, Cellefuel, Fulcrum BioEnergy, Red Rock Biofuels and Renewable Energy Group (through its Dynamic Fuels and LS9 acquisitions).

The E2 report pegs cellulosic ethanol capacity at 58 million gallons in 2014, increasing to between 182 million and 215 million gallons by 2017, with a count of 26 or 27 producers. In addition to the project developers with commercial capacities in 2014 –IneosBio, Abengoa, Poet-DSM and Dupont Cellulosic Ethanol – the E2 report lists several others expected to produce ethanol volumes greater than 1 million gallons by 2017, including American Process, Chemtex, Enerkem, Fiberight, Quad County Corn, plus Sweetwater Energy in New York and with its partners, Ace Ethanol, Front Range Energy and Pacific Ethanol. There may be substantially more capacity from currently undisclosed projects, the report adds, such as those utilizing corn fiber in bolt-on technology, naming Edeniq as one company developing such projects.

Other sections of the report review private investment and debt financing and the policies supporting advanced biofuels development, such as the federal renewable fuels standard and California’s low carbon fuel standard. In summarizing state incentives, the E2 report finds 49 states have one or more support programs, including tax incentives (32 states), grants and loans (23), government vehicle policies (40) and state-level fuel standards (9). 

The report also summarizes several challenges being faced by the developing advanced biofuels industry, including regulatory instability, feedstock availability, operating and capital costs. It also quickly reviews international advanced biofuels development outside North America.

In its conclusion, the E2 report points out a number of companies made solid steps towards commercialization since its 2013 assessment. Regulatory uncertainty remains a continued challenge, and is likely the cause of the decline in investments since 2012.  “E2 continues to see value in diversifying the United States’ transportation fuels, and the role that advanced biofuels can play both economically and environmentally. Despite a decline in investment and capacity projections, we see a number of companies working carefully and deliberately to overcome industry challenges.”