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Below are the major technologies in more detail:

Sugar Fermentation: Regardless of the carbohydrate source, a conventional yeast fermenting sugar to ethanol already operates at the highest carbon yield theoretically possible in corn ethanol plants -- i.e., 4 out of the 6 carbon atoms from a glucose molecule -- and much of the energy ends up in a molecule reduced enough to burn in a combustion engine. For example, at theoretical yield, glucose is converted into two 2-carbon ethanol molecules, or one 4-carbon isobutanol molecule, or four carbons of a multi-carbon hydrocarbon molecule.  Without the input of carbon-free energy, it is theoretically not possible to improve upon this yield.  

Ethanol plants are able to operate at these yields in part because the yeast function without oxygen, i.e., anaerobically.  Some biological processes and end-products require oxygen (i.e., are aerobic), which can limit yield as the cells “burn” additional carbohydrate feed stock to provide the cell with energy.   Generally anaerobic or near-anaerobic/ micro-aerobic fermentation technologies can approach the maximum theoretical yield and make the most efficient use of any given feedstock. However, anaerobic processes have their own drawbacks and limitations; anaerobic processes tend to achieve lower growth rates in certain conditions (which leads to higher capex), and there are several high energy molecules that are not possible to directly synthesize through anaerobic pathways. In the end, the goal is to get to a product of commerce the lowest-cost way possible. Depending on the product, one can either take an entirely biological route, or use a mixture of biology and chemistry.

Because ethanol plants already operate at high carbon efficiency on the available feedstocks, it is reasonable to compare new technologies to these existing plants as one metric to gauge their performance.  A typical ethanol fermentation continuously produces ethanol at the rate of 2 to 3 grams of ethanol per liter of broth per hour at 90 percent to 95 percent theoretical yield.  These plants are fairly low tech and inexpensive to build -- essentially, they are just large vessels with simple distillation equipment (though distillation can be energy intensive and expensive) -- yet they still have capital costs of about $2 to $3 per gallon of annual capacity. If a new process can operate anaerobically, the capital and operating costs of that plant will be directly proportional to the performance of the new process verses ethanol production (e.g., if the production rate is half that of ethanol, capital costs are roughly doubled).  If a new process requires oxygen, additional capital and operating costs will be required to deal with mass transfer issues, compressors, gas handling, and safety concerns. There are also micro-aerobic processes. New carbohydrate feedstocks, especially sugars derived from energy crops, may require additional capital, but will reduce feedstock costs.  

In most processes, the cost of feedstock is the primary contributor to the cost of production.  Some processes can tolerate a wide variety of sugar types and purities, while others can’t; still others can tolerate complicated mixtures (like dry mash ethanol), while others require pure sugar feedstocks in order to minimize separation costs, or to make the separation of the product even possible. In determining the lowest cost route to a given product, one must consider the whole of the business system and production processes from raw material to finished commercial product.  Separation, post-processing, purity of feedstock (Virent, rumor has it, requires very pure and hence expensive sugars to preserve catalytic efficiency in their thermochemical route) and feedstock costs are additional significant considerations. 

Each process requires a different quality or purity of feedstocks, and hence feedstock costs can vary even within the same technology category. Gevo, for instance, is able to use starch directly, and their organisms can tolerate a high level of impurities. Meanwhile, HCL CleanTech’s extraction-oriented approach to making sugars appears to provide sugar feedstocks of higher purity than those coming from traditional corn or sugar cane sources, and could be significant for the long-term competitiveness of sugar fermentation platforms. In addition to using yeast and bacteria, there are companies that produce various chemicals from microalgae by fermentation, using sugars, such as Martek and Solazyme. Thus the algae in this case are just another conversion engine similar to yeast or bacteria (as opposed to what many people think of as algae which converts solar energy to lipids), by transforming sugars to fuels and chemicals. Their near-term business models are for higher value products and biofuels. The rate of yield and productivity improvements should be similar to other single-celled organisms (like e. coli and yeast), though microalgae does not have as extensive a molecular tool kit for optimization as these other two organisms.

One often-expensive part of the fermentation production process, and any other biological approach, is the separation of the final product from the fermentation broth; for example, most algae projects face this substantial challenge.  Distillation and even centrifugation are often used, which is relatively expensive.  Some companies have succeeded in engineering organisms to secrete the chemicals (e.g., LS9, Amyris), which then phase-separate, enabling cheaper separation. Others like Gevo have developed proprietary low cost, low energy separation techniques. Several companies are developing the capability to convert the fermentation product into a wide variety of chemicals and fuel end-products, though each step generally adds additional expense and yield reduction. Direct single-step production can be especially important in cost-sensitive markets like fuels.

Gas-phase technology:  Cellulosic feedstocks can be gasified and either thermochemically processed or used as a fermentation feedstock for fuels and chemicals.  Capital costs for purely thermochemical technologies are much higher than first generation corn ethanol plants, but these plants are typically powered by the equivalent of the non-carbohydrate portion of the biomass feedstock, which reduce operating costs to make total costs cheaper than corn ethanol. Bio-fermentation is currently the most promising backend to syngas production, because it can co-produce precise chemistries and hence high value chemicals and cheaper fuels than chemical catalysis, and operate cost-efficiently and with higher target molecule yields.

The big challenge here is the capex for the gasification front-end, which can be anywhere from $4 to $6 per gallon (ethanol equivalent) or more of yearly capacity but one gets the advantage of much lower opex. The economics should work well for ethanol production (where the benchmark should be corn ethanol production costs -- the cash costs for this approach should be substantially cheaper than for corn ethanol, but the economics get even better when specialty chemicals are produced using this approach. Product flexibility of the facility may be another factor that could be engineered into the design to offer lower risks for the capex. As a result of this, some gasification and fermentation companies have considered partnering, to marry efficient gasification and fuel production technologies.  Lanzatech has cut out the front end by planning to bolt on to already existing sources of raw waste gases (from steel mills and coal plants or any source that includes carbon monoxide and/or hydrogen), dropping capex substantially, with low opex.  They can use biomass gasifiers as well to produce the syngas as feedstock for their process. 

In any biological process, bug productivity is important and sometimes challenging to maintain.  Many companies maintain redundant feed streams, seed reactors, and advanced monitoring and control of any inhibitory molecules to assure continuous productivity.  In our view, the traditional path of chemical catalysis of syngas to fuels (be it ethanol or Fischer Tropsch (FT) synthesis), appear economically challenging. FT is generally the domain of old-style thinking.  It is sometimes used as a code word for coal to liquids, which does not chart a sustainable path.  Besides, we believe bio-fermentation of any type of syngas is the most cost-effective approach; most FT advocates are simply not up to date on the day-to-day developments in the leading startups.

Direct to liquid thermochemical technology: A second thermochemical route, which KiOR takes, processes solid biomass direct to liquids, while catalytically removing oxygen. Their unique approach employs a FCC-like (Fluid Catalytic Cracking) process from the oil refinery world with a special catalyst for cellulosic materials.  The input is woody biomass, corn stover, sugar cane bagasse, or any other cellulosic/hemicellulosic/lignin material. The catalytic process occurs for a few seconds at moderate temperatures and pressures.  The result is a low-oxygen, renewable crude oil (the same way nature makes crude oil from biomass but takes millions of years to process), as well as some natural gas. The oil yield is nearly 1.5bbls/ dry ton today and is soon expected to rise to 2 bbls/dry ton.

Unlike sugar hydrolysis and fermentation technologies, KiOR can convert all parts of the biomass, including lignin, without the need for separation. That capability will likely result in the highest transportation fuel yields per ton of biomass. In contrast to ethanol, their product looks and behaves like a high-value crude oil, or a diesel/gasoline blendstock after hydrotreating -- superior to traditional biodiesel and superior to typical U.S. crude oils because of its higher value fuel distillate fractions and lack of sulfur. KiOR initially intends to sell a diesel and gasoline blendstock. The company currently has a 15bbl/day demonstration plant running, and has just started construction on its first commercial-scale unit in Mississippi. The oil industry is familiar with the basic FCC process, which should result in easier acceptance.  Scalability for FCC processes is also well understood and broadly characterized. Additionally, since the KiOR oil is stable and miscible in most crude oils, no new infrastructure is required, and supply chain planning and logistics should be simplified for refineries. 

Cashflow positive facilities are small scale, requiring less than $100 million to be economic scale. Most of the associated jobs created are rural: not only in agriculture like other biofuels, but also in forestry and transportation.  This, along with energy security, are critical issues for any fuel attempting to gain political and business support anywhere in the world. Familiarity to the oil industry and hence the ability to assess, characterize and help scale it is also a major consideration, and will make capital formation easier. This approach should be distinguished from pyrolysis oil production, which is a very different process.

Solar to fuels (algae):  Microalgae-based processes pose several challenges.  Enclosed culture systems (tubes, panels, bags -- generically photobioreactors or PBRs), cannot be scaled up and have high operating and capital costs, in the range of hundreds of dollars per square meter (versus under $1 per square meter for farming). PBRs have had limited commercial success even for very high value (>$10,000 per ton) nutritional supplements. 

Essentially all commercial production for such microalgal products uses open ponds, mostly raceway-type with paddle wheel mixing.  But even the costs of such simple ponds are too high for commodities, whether feeds or fuels, due in part to the relatively small scale of current production systems and in part to the small markets for these high value algae products.  Engineering designs and techno-economic analyses suggest that much lower cost systems could be built and operated, if pond designs are simplified (e.g., earthen ponds), scales are increased (to 10 acre ponds, versus about 1 acre now) and low-cost harvesting process are developed. However, even then, production of algal feeds and fuels would require achieving very high productivities, nearly 50 tons per acre and a high oil output, about 4,000 gallons per acre. Although high productivities are possible in principle and are routinely forecast, being one of the main attractions of microalgae biofuels, they still remain undemonstrated continuously at scale, and will require considerable long-term R&D. This is to say nothing of problems such as how to actually stably cultivate and cheaply harvest the algae. General Atomics currently has a project with DARPA in Hawaii to build a 1,000-acre raceway for fuels production; this will be an interesting test case, but I am skeptical.

Thus, I hold that solar algae biofuels still require a great deal of R&D and likely are ten years out, which I do not see as attractive for a venture investment.  As for the case for fermentation processes, the path from the current high cost of commercial production to biofuels most likely will pass through intermediate stages of scale and value, such as specialty animal feeds priced at $1,000 to $2,000 per ton and with markets in the hundreds of millions of dollars. Many claim that a major benefit for microalgae, namely, that they can use the CO2 in flue gases from power plants. I dismiss this out of hand: it makes no difference whether the CO2 comes from air, as for crops and trees, or from a power plant, as for algae, except that air CO2 is free, and sustainable.  The algae doesn’t “sequester” the CO2 (or limit CO2), as its source is still a fossil fuel and its destination (as a fuel) is still the atmosphere. 

One near-term application of microalgae is in wastewater treatment, and there the algal biomass can only be used for biofuels. But these would be relatively small, dispersed facilities, and any venture in this space requires a business model to capture value from the development of such technology.  The idea that co-production of algae fuels and nutraceuticals would improve the economics is a difficult one to defend.  Though co-products are valuable, the scale of nutraceuticals is much smaller than fuels.

Before leaving algae, I must also mention seaweed; also algae, but macro-, not microalgae, which are getting some interest in Asia and Europe. DOE ARPA-E recently funded a JV of Dupont with a startup, Bioarchitecture Lab, in California, to produce biobutanol from seaweeds.  A very challenging concept, and in very early days, but that is what ARPA-E is about; I will keep watching.

Other technologies: There are also a few technologies that are “too early to tell.” One set of examples are so-called “electrofuels.”  ARPA-E just supported 13 projects with small grants that use electricity, hydrogen or ammonia as an electron source to drive fuels production. The idea is to harness new microbe pathways to form fuel molecules of various types, using only electricity, CO2 and sometimes water as an input. These efforts are extremely early, and may yield something ground-breaking.  Still, the source of the electricity matters and much of ours is still from coal (and our hydrogen is from natural gas).

The next page covers the factors which affect the attractiveness of any biofuels technology

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Tags: algae, amyris, aurora algae, biofuel economics, biofuel policy, biofuel production, biofuel research, biofuels, cellana, choren, coskata, danisco, dynamic fuels, general atomics, gevo