Last Thursday, the Environmental Protection Agency released its proposed rule for the 2013 Renewable Fuel Standard (“RFS2”) volume obligations. Every year the EPA is required to determine and publish the annual volume requirements for each class of renewable fuel that obligated parties will have to comply with for the upcoming year under the RFS2 program. The volumes required under the proposed rule for 2013 are as follows (generally in ethanol equivalent volume): 14 million gallons of cellulosic biofuel, 1.28 billion gallons of biomass-based diesel (actual volume), 2.75 billion gallons of advanced biofuel, and 16.55 billion gallons of renewable fuel. As always the categories are nested and the advanced biofuel volume includes the volumes set for the cellulosic and biomass-based diesel categories. The renewable fuel category accounts for all renewable fuel including traditional corn starch ethanol.
Three of the four categories are consistent with the volumes set forth by statute. The volume for cellulosic biofuel, however, is set by this rule because it must be the lesser of the statutory volume and EPA’s projection of industry production for any given year. As with each ruling prior to this one under the program, EPA set a dramatically lower cellulosic biofuel volume than the statutory volume based on its assessment of the industry’s status. Rather than 1 billion gallons as would otherwise be required by statute, EPA is requiring obligated parties to account for 14 million gallons of cellulosic fuel. Despite the dramatic reduction from the statutory requirement, this is significant because it is an increase over the 2012 standard of 10.45 million gallons that has been the subject of considerable recent controversy.
Just a few days earlier, the D.C. Circuit Court ruled that EPA impermissibly set the 2012 standard with an eye toward promoting industry growth when, by statute, the agency should have simply made an accurate projection of what the industry could produce in the given year. While petitioners in that case asserted that the EPA volume for cellulosic ethanol should be equivalent to that which the Energy Information Administration (“EIA”) projects, the court instead determined that EPA’s projected volume should be simply based on the EIA projections.
In developing the 2013 requirement for cellulosic ethanol, the EPA relied on EIA estimates but also its analysis of more than 100 biofuel production facilities. The proposed rule includes a detailed analysis of all of the plants currently registered with EPA and able to produce cellulosic RINs. Of those 6 plants, it assumes two (INEOS Bio and KiOR) will be generating cellulosic biofuel RINs in 2013 in an amount equal to 14 million gallons of ethanol. The EIA estimate for 2013 is 13.1 million gallons of ethanol – which is also nearly exclusively based on production from those two plants.
Although the EPA also has authority to reduce the advanced biofuel category based on its decision to reduce the cellulosic biofuel category, the agency decided to keep the broader category at the statutory volume based on its projections of other domestic advanced renewable fuels as well as the ability to import sugarcane ethanol from Brazil. Comments on the proposed rule must be received no later than 45 days after the rule is published in the Federal Register.
On December 2, 2010, the United States Patent Office published two Novozymes applications relating to bioethanol production from lignocellulosic biomass and an Iogen application relating to bioethanol production from lignocellulosic. On the same date, the World Intellectual Property Organization published a Solazyme application relating to biodiesel, renewable diesel and jet fuel production.
- US Patent Pub. No. 2010/0306879 (Novozymes) is directed to polypeptides having cellobiohydrolase activity useful for saccharifying cellulosic material in the production of ethanol. The patent application identifies two Family 6 Cellobiohydrolase polypeptides, one isolated from Thielavia hyrcaniae NN045097 and one isolated from Thielavia hyrcaniae NN045178.
- US Patent Pub. No. 2010/0304437 (Novozymes) is directed to polypeptides having cellulolytic enhancing activity and to saccharifying cellulosic material in the production of ethanol using an enzyme composition in the presence of a polypeptide having cellulolytic enhancing activity. According to the specification, ‘cellulolytic enhancing activity’ means a biological activity catalyzed by a GH61 polypeptide that enhances the hydrolysis of a cellulosic material by enzyme having cellulolytic activity. The specification provides a procedure for determining celluloytic enhancing activity and identifies an Aspergillus fumigatus gene encoding a Family 61 polypeptide having cellulolytic enhancing activity.
- US Patent Pub. No. 2010/0304438 (Iogen) is directed to modified beta-glucosidase enzymes that exhibit improvements in one or more kinetic parameters (i.e KG, KG2, kcat) relative the wild type beta-glucosidase. The application generically refers to modified Family 3 beta-glycosidases, which comprise genetically engineered amino acid substitutions selected from V43I, V43C, V101A, V101G, F260I, F260V, F260Q, F260D, 1543N, 1543A, 1543S, 1543G, and 1543L (TrCel3A numbering) and which have an amino acid sequence that is at least 80% identical to the amino acid sequence of the parental Family 3 beta-glycosidase from which it is derived. The application more specifically refers to modified beta-glucosidase enzymes derived from the Trichoderma reesei Cel3A beta-glucosidase and which have amino acid substitutions at one or more of positions 43, 101, 260 and 543, and optionally have further substitutions at least at one or more positions 66, 72, 96, 235, 248 and 369. According to the specification, the modified beta-glucosidases are useful in industrial process requiring efficient conversion of cellobiose to glucose, such as the hydrolysis of pretreated lignocellulosic feedstock.
- WO2010/138620 (Solazyme) relates to methods of extracting a lipid from a microorganism. The method involves: lysing a cultured microorganism to produce a lysate, wherein the microorganism has not been subjected to a drying step between culturing and lysing; treating the lysate with an organic solvent for a period of time sufficient to allow the lipid from the microorganism to become solubilized in the organic solvent; and separating the lysate into layers comprising a lipid:organic solvent layer and an aqueous layer. The specification exemplifies the use the microalgae as Chlorella protothecoides as the microorganism and coconut oil as the organic solvent. The specification also indicates that Prototheca moriformis can be preferably used and discusses methods of culturing and transforming Prototheca. The application also relates to methods for producing hydrocarbon or lipid compositions for production of biodiesel, renewable diesel, jet fuel, and lipid surfactants, the compositions having various carbon chain lengths, including C8, C10, C12, C14 and C18.
Don't forget that the deadline for Phase I grant applications under the U.S. Department of Energy's ("DOE") Small Business Innovation Research ("SBIR") and Small Business Technology Transfer ("STTR") programs is 8:00 p.m. Eastern, November 15, 2010. Qualified small businesses with strong research capabilities in science or engineering in any of the research areas identified in the September 28, 2010 Funding Opportunity Announcement are encouraged to apply. Phase I grants of up to $150,000 will be awarded in FY 2011 under the SBIR; and grants of up to $100,000 will be awarded under the STTR.
The Phase I Technical Topics document lists several areas of particular interest for the renewable energy industry. Note that the following is not an exhaustive list. The full list and descriptions can be found in the Phase I Technical Topics document.
- Advanced Cooling and Waste Heat Recovery: Advanced Cooling; Advanced Waste Heat Recovery; Geoexchange heat pump (GHP) component R&D; Innovative GHP System/Loop Designs.
- Production of Bioenergy and Biofuels from Cellulosic and Non-Food Biomass: Biomass Feedstock Stabilization and Drying; Biomass Torrefaction; Sugar Catalysis to Advanced Biofuels and Chemical Intermediates; Pyrolytic Thermal Depolymerization.
- Hydrogen and Fuel Cells: Reducing the Cost of High Pressure Hydrogen Storage Tanks; Fuel Cell Balance-of-Plant; Demonstration of Alternative-Fuel Fuel CElls as Range Extenders.
- Innovative Solar Power: High Efficiency, Low Cost Thin Film Photovoltaics; Low Cost Building Integrated Photovoltaics; Static Module PV Concentrators; Solar-Powered Water Desalination; Distributed Concentrating Solar Power ("CSP").
- Advanced Water Power Technologies: Pumped Storage Hydropower; Advanced Hydropower Systems; Wave and Current Energy Technologies; Advanced Component Design for Ocean Thermal Energy Conversion Systems.
- Wind Energy Technologies: Transportation and Assembly of Extremely Large Wind Turbine Components for Land-Based Wind Turbines; Wind Energy Capture in Non-Conventional Wind Resources; Offshore Grid Infrastructure Hardware Development; Offshore Mooring and Anchoring Technology.
Detailed descriptions of each subtopic are included in the Phase I Technical Topics document.
Below are some perspectives from the recent 2009 Northern Plains Bioeconomy Conference, as attended (and prepared by) my colleague, Joel Dahlgren.
According to Dr. Bruce Dale, a professor of chemical engineering at Michigan State University (MSU), in a carbon-constrained world, cellulosic biomass is the cheapest energy per dollar of gigajoule (GJ) of energy produced. At $60 per ton paid for biomass material, cellulosic ethanol costs $4 per GJ of energy produced, which compares to $6 per GJ for sugarcane purchased for $93 per ton, $9 per GJ for petroleum for $50 per barrel for crude oil, or $6.50 per GJ for coal purchased for $150 per ton (this price per ton includes the cost of carbon capture).
Until recently, I was under the impression that cellulosic ethanol was facing difficult obstacles. But that perception was challenged when I heard Dr. Dale’s presentation at the 2009 Northern Plains Bioeconomy Conference in Fargo, North Dakota, sponsored by North Dakota State University (NDSU). Now, I will not be surprised if within five years companies whose plans to produce cellulosic ethanol have been frustrated by the difficulty of breaking down cellulose will successfully produce cellulosic ethanol from switchgrass, corn stover, miscanthus, DDGs and other cellulosic material as well.
Dr. Dale is developing a biomass pretreatment process called AFEX (batch process) or FIBEX (continuous process) that may revolutionize the production of cellulosic ethanol. The ethanol yield from pretreated biomass is an estimated two-and-a-half times that of untreated biomass. Dr. Dale’s objective is to produce clean, fermentable sugars for an estimated six cents per pound. These pre-treatment processes are expected to be commercialized within five years if the Department of Energy (DOE) grant that these universities have applied for is approved.
AFEX/FIBEX employs a reactor to treat and explode biomass with hot liquid anhydrous ammonia for five to 10 minutes. One key advantage of the AFEX/FIBEX pre-treatment process is that it can be used to co-produce animal feed. Co-producing animal feed with cellulosic ethanol reduces the break-even point by up to 50% over a single-product approach.
Dr. Dale stressed that we are not faced with the choice of food or fuel; as a society, we can have both reasonably priced. Our society can also enjoy rural economic development, less expensive food, improved environmental conditions and a declining reliance on petroleum.
Dr. Dale is also working on a densification process that produces material that is three to five times as dense as untreated biomass and pelletizes the material for transportation and storage. A densification process allows for larger, centrally located biomass refineries with outlying pretreatment facilities. The densified biomass material is more economical to transport, and it stores more easily, much like corn or soybeans.
This project is a joint effort of NDSU, South Dakota State University (Brookings, SD) and MSU (Lansing, MI). MBI International is a member of this group as well. MBI is a 501(c)(3) that is owned by the MSU Foundation. These participants have applied for a DOE grant, and they intend to build a large biorefinery if the grant is approved by the DOE.
For additional information on this conference or on any topics discussed in this posting, please contact Joel or any of our other biofuels attorneys.
Advanced biofuels producers must enroll by August 11, 2009 to be eligible to receive payments from the USDA for FY 2009 production under Section 9005 of the 2008 Farm Bill. Eligible producers of advanced biofuels may receive payments for advanced biofuels produced from October 1, 2008 through September 30, 2009 (FY 2009). $30 million is available for distribution under this program for advanced biofuels producers in FY 2009.
The amount of payments made to individual producers will depend on the number of program participants and the volume of advanced biofuels being produced. Payments will be made in one lump sum to eligible producers after FY 2009. Contact your local USDA Rural Development State Office for application materials or to learn more.
Last week, the US EPA extended the rulemaking period on RFS 2 until September 25, 2009. This extends the period by 60 days. While this rulemaking is highly complicated and contentious, it is unclear that extending the comment period will improve this situation. In addition, the effective date of the regulations continues to be delayed. This could undermine Congress' intentions in passing the Energy Independence and Security Act that established RFS 2. Let's hope EPA is able to move quickly and efficiently in finalizing and implementing the regulations.
Last week DOE released a new funding opportunity announcement for up to $480 million for pilot-scale and demonstration-scale integrated biorefinery projects. An integrated biorefinery uses an “acceptable feedstock” to produce a biofuel or bioproduct as the “primary product.” Acceptable feedstocks include:
- Certain woody biomass
- Renewable plant materials so long as it is not generally intended for use as food
- Crop reside (cobs, stover, etc.)
- Yard and food waste
- Certain post-sorted MSW
The projects must be either pilot-scale (processing at least one dry tonne of feedstock per day) or demonstration-scale (processing at least 50 dry tonnes of feedstock per day).
The maximum award for a pilot-scale project is $25 million and the maximum award for a demonstration-scale project is $50 million. Generally, the cost share requirements from non-Federal sources are 20% for pilot-scale projects and 50% for demonstration-scale projects.
Applications are due June 30, 2009. Although not required, DOE suggests all prospective applicants submit a notice of intent to apply, which can be submitted through May 29, 2009.
The Roundtable on Sustainable Biofuels last week released Version 0.0 of its “Global Principles and Criteria for Sustainable Biofuels Production.” This diverse group includes representatives from World Wildlife Federation, BP, Bunge, the Dutch Ministry of Housing and the Environment, the Forest Stewardship Council, the University of California at Berkeley and the World Economic Forum. They have been hard at work for the past year establishing an objective framework for enabling a true cost benefit analysis of biofuels that incorporates environmental, economic and social justice criteria. They welcome input into their process and have opened the document for six months of feedback which can be provided via www.bioenergywiki.net
Hopefully, this process will yield substantial success. As an early participant in the US biodiesel industry, I can attest that the benefits of biofuels appeared quite compelling and almost self-evident as compared to conventional petroleum fuel. Those in the industry with a strong interest in environmental issues typically considered corn ethanol and soy biodiesel as transition fuels that would establish the viability of a more diverse transportation energy portfolio by leveraging the existing farm economy. After market entry with these transition fuels, the road would be paved for superior feedstocks as we are witnessing today with cellulosic material, waste feedstock material and even algae.
In retrospect, the Roundtable of Sustainable Biofuels should have been founded a decade ago rather than last year. With an earlier start, such an organization might have achieved great progress in injecting some objective criteria into the “food vs. fuel” debate and propelled the industry in a more sustainable direction. In the absence of these criteria, some of the debaters have used these crucial (and emotional) issues to advance their own agendas and the biofuels industry has lacked the framework to establish its own best practices.