Analysis shows H2Bioil technology is cost competitive with oil

By Erin Voegele | June 25, 2012

An economic analysis of Purdue University’s thermo-chemical H2Bioil biofuel technology demonstrates that the process could be price competitive when crude oil is priced at approximately $100 per barrel, depending upon the method used to generate hydrogen used in the process. In the event a federal carbon tax is implemented, the analysis found the process would be even more economical.

The H2Bioil technology involves the rapid heating of biomass to approximately 500 degrees Celsius in the presence of pressurized hydrogen. The resulting gases are passed over catalysts to create molecules similar to those in gasoline. According to information released by Purdue, the technology was created in the lab of Rakesh Agrawal, the university’s Winthrop E. Stone distinguished professor of chemical engineering. The economic analysis was completed by a team led by Wally Tyner, Purdue’s James and Lois Ackerman professor of agricultural economics.

Tyner explains that hydrogen injection is one primary way in which the H2Bioil process differs from fast pyrolysis processes. Since you are injecting hydrogen into the gas stream, you are able to capture more of the carbon contained within the biomass feedstock, he said. This means that the process is able to generate more fuel per ton of biomass when compared to the amount of fuel generated in a fast pyrolysis process. The major benefit of H2Boioil is that it significantly increases yields. A potential drawback is that hydrogen is expensive, Tyner added.

The economic analysis Tyner preformed essentially determined how the method used to obtain hydrogen would impact the cost of the finished fuel, thereby impacting the economic feasibility of the technology. Hydrogen can be sourced several ways. The easiest and cheapest way is to source it from natural gas molecules. It can also be generated using coal, nuclear energy, wind energy or solar power. When generated using nuclear, wind or solar, electricity is used to break water molecules into hydrogen and oxygen atoms.

The economic analysis revealed that the H2Bioil process would be cost competitive with oil prices ranging from $103 to $116 per barrel when hydrogen is sourced from natural gas, coal or nuclear energy. Natural gas was by the most economical option. The economic feasibility drops using hydrogen sourced from wind or solar energy. For the H2Bioil process to be economical using wind energy to source hydrogen today, oil would have to be priced at $150 per barrel. Using solar, the price jumps to $200. However, Tyner stresses that as wind and solar technologies mature, the cost of the resulting power should drop. A federal carbon tax would also increase the feasibility sourcing hydrogen using wind or solar power.

As part of the economic analysis, Tyner also performed sensitivity analyses on several factors, including the price of biomass. According to Tyner, the base cost for biomass used in the analysis was approximately $85 per ton. Assuming high biomass costs of $121 per ton, the overall cost of resulting fuel would rise by about $10. This would make H2Bioil fuel producing with biomass priced at $121 per ton, and using natural gas as a hydrogen source, cost competitive with oil at approximately $113 per barrel, which Tyner notes is still far below the U.S. DOE’s reference case oil price forecasts through 2035.