Pursued by ambitious start-ups and backed by government research support and corporate financing, these technologies aim to make plant-based fuels that so closely mimic traditional petroleum products that they can be dropped directly into the nation’s complex and highly developed fuel distribution system and run into today’s engines.
Directly replacing petroleum-based gasoline, diesel, and jet fuels would make commercially available drop-ins a major game changer—bypassing the need for massive new fuel infrastructure investment is the holy grail of renewable liquid fuels. The biggest advantage is that drop-in biofuels will have a much faster path and a far lower cost to enter the market than do other new entrants. With a swifter path to commercialization there are benefits all along the value chain—faster job growth, accelerated economic benefits, and biofuels replacing carbon-emitting petroleum more quickly and in greater amounts.
[Editor's note: This article was published in a 2012 issue of the magazine, so please be aware that some facts about companies and production may have since changed.]
The buzz is clearly growing for drop-ins. Last year, one airline after another made a news splash announcing its first commercial flight fueled by drop-in jet fuel. With high costs a major issue, these flights were demonstrations of potential only, but they successfully used drop-in fuels made from several different processes using a variety of raw material, or feedstock: Alaska Air used a biofuel blend made from cooking oil, Virgin’s biofuels mix was made from coconut and palm oil, and China Air made use of domestically grown jatropha.
Meanwhile on the ground, a University of California, San Diego student team this spring gleefully announced the fastest—and only known—100 percent algae-fueled motorcycle speed record. The top speed: 96.2 mph. Volkswagen of America says it will supply 2012 models of its Passat and Jetta cars for drop-in biodiesel test ing in its quest for cleaner emissions. And onthe seas, the U.S. Navy reported that the USS Ford, a 450-foot frigate, successfully sailed from its homeport in Washington state to San Diego using a 50/50 blend of diesel and algae-based diesel. It was, said the Navy, ”the first demonstration of the alternative fuel blend in an operational fleet ship.”
Why drop-ins instead of ethanol? Each has its merits and its challenges. Ethanol made from corn and sugar is already at use in large commercial scale, though cellulosic ethanol from non-food sources is still a step away from commercial production. But ethanol is an alcohol fuel, which raises significant problems for a system built for hydrocarbon-based fossil fuels. Without flex fuel vehicles, as are required in Brazil, ethanol can only be used as a limited blend with gasoline, typically 10 percent in the U.S. It cannot directly replace petroleum fuels, it cannot provide aviation needs or work in diesel engines, and, most critically, it is not compatible with the nation’s multi-trillion-dollar investment in the existing fuel infrastructure.
Drop-ins, on the other hand, have the potential to convert biomass into hydrocarbon fuels so that a gallon of the drop-in could supplement or completely replace a gallon of conventional petroleum fuel, whether gasoline, diesel, or jet fuel. The infrastructure problem doesn’t exist for drop-ins—cars don’t have to change; fueling stations and pipelines in place should work just fine. And drop-ins can be suitable for aviation and diesel needs where ethanol is not. But the key word for drop-ins is potential. As eagerly sought and appealing as they are, a commercial drop-in industry is far from a certain future. The early stage of development makes it difficult to predict which, if any, technologies and processes will emerge as the winners.
At this time there are dozens of important players pursuing a broad range of technologies, reflecting the early stage of the development of the industry. As progress continues the pack will be culled to a small number. As with ethanol or any other new fuel the most viable options will have to pass various hurdles. Foremost among them are cost competitiveness, proven infrastructure compatibility, an ability to reach commercial scale, and then the inevitable gauntlet of policy and regulation. And finally, they need to meet or exceed the world’s desire for sustainable, environmentally friendly fuels that substantially reduce greenhouse gas emissions.
THE BIG PUSH AND PULL
Behind all the buzz from the many companies developing technologies for drop-ins is a major push from the U.S. government and a major pull from big oil companies. The U.S. government, through the Department of Energy (DOE) and Department of Defense (DOD), has provided substantial support for advanced biofuel research and development. The DOE’s National Advanced Biofuels Consortium (NABC), a multi-year program with $35 million in government funding and $15 million from industrial participants, is specifically targeting development of technologies for drop-in biofuels that will be ready for larger-scale piloting by 2013. The Defense Department has provided R&D funding and has contracts in place to purchase drop-in fuels for small and medium-scale tests from various companies, providing both a “push” and “pull”. (See sidebar, left-hand side of page).
“Although biofuels show the potential to make a significant contribution to a sustainable transportation future, they have been slow to market for a host of reasons, not the least of which is the large capital outlays required to build greenfield conversion plants and then the downstream infrastructure to bring these new fuels to the market. Drop-in or infrastructure-compatible biofuels would be a ‘game-changer’ in that they would greatly reduce the required capital outlay and streamline the path to market by utilizing a good portion of the existing fuels infrastructure at both the conversion and distribution ends, “says Dr. Thomas Foust, director of the NABC.
Most of the oil majors, including Exxon Mobil, Shell, BP, Chevron, and the French firm, Total, have made substantial investments in biofuels R&D as well as commercial development. These are largely focused on drop-ins as they recognize the strategic and financial benefits of the lower entry barriers.
With the incentives provided by these companies with the financial resources and infrastructure to commercialize biofuels, the strong response by technology developers is no surprise.
In a nutshell, the major challenge shared by all is converting the feedstock to a hydrocarbon at high yield, whether it is sugarcane, corn, cellulosic biomass, plant oils, algae, or any other plant-based raw material. Simply put, they need to produce enough gallons of fuel per ton of feedstock to make the costs competitive with fossil fuels—or even with ethanol.
The major technical challenge is that most biological raw materials are about 50 percent oxygen whereas fossil fuels have none, containing only hydrogen and carbon in various combinations. Removing this oxygen is essential for compatibility with the infrastructure and maintaining energy content. Too much oxygen in the fuel means lower miles per gallon, problems with engine operation, and corrosion of basic elements like seals and fuel pumps.
Removing that oxygen while preserving high yields is the key roadblock to all drop-ins whether intended for gasoline or diesel powered cars, jet engines, or the heavy-duty diesel engines that are workhorses worldwide. If you can solve that, the fuel is ready for processing in existing refineries, or if it is of high enough quality, can be pumped directly into the gas tank.
Still, a big issue for some is an economic question. One leading process, for example, currently needs twice as much starting sugar to get the same amount of fuel energy as ethanol does today. The feedstock will contribute the majority of the product cost at commercial scale, so doubling the feedstock use can nearly double the cost of the fuel.
THE MAJOR PLAYERS
There are a large number of technologies being developed to get the oxygen out and the fuel yield up. The most useful way to group and compare these is by the process being pursued. In general there are three main types of process: biological, chemical, and a hybrid that combines both.
Perhaps farthest ahead, because they were the first tried, are biological processes. These convert starting materials into biofuels or intermediates through either fermentation or photosynthesis.
A second approach is chemical processes that use chemistry to convert biologically derivedstarting materials into fuels. Finally, there are some hybrid processes that combine both biological and chemical steps.
In each of these categories there are multiple companies pursuing various technologies. At this stage it is not clear what will be the most viable approach, or in fact, whether a large-scale drop-in industry will ever emerge. None of the technologies has demonstrated the ability to be commercially competitive at the scale that will make them game changers. On the other hand, for most, the research is less than a decade old and advances are moving rapidly ahead.
There are a number of companies developing biofuels produced by using an organism such as a yeast or bacteria (E. coli is common) to ferment sugars to make fatty acids, also called lipids. These include prominent Bay Area renewable product and fuels start-ups Amyris, Solazyme, and LS9.
Synthetic biology company Amyris has been developing a technology for converting pure sugar (it’s using sugarcane as a feedstock) by genetically modifying the way the organism makes fatty acids or isoprenoids to instead produce hydrocarbon molecules that can be usedin a number of products, including jet fuel and renewable diesel. Amyris’ biofuel product, farnesene, requires a simple hydrogenation to convert it to farnesane, which has been shown to be an excellent drop-in diesel fuel. The company has announced plans to build a large commercial demonstration plant in Brazil. It has major backing from private venture capital and from Total, the French oil supermajor, and also a partnership with Volkswagen of America to develop renewable biofuels.
While there have been recent challenges and delays in Amyris’ commercialization plans, including yield issues during scale-up and a decision to target higher value non-fuel marketssuch as renewable lubricants, synthetic rubber, and cosmetics, they are going forward.
The key challenge for Amyris’s technology, as with some other efforts, is the yield. In its published statements, Amyris has claimed a 15 percent yield of farnesene from pure sugarin the laboratory, but has had significant challenges in maintaining that yield upon scale-up. Even at 15 percent yield, this means that only 38 percent of the energy content of the starting sugar remains in the fuel product.
By contrast, ethanol has a theoretical yield of 51 percent from the starting sugar, and preserves roughly 85 percent of the energy of the sugar in the product. Today’s mature ethanol production routinely achieves greater than 90 percent of the theoretical yield. All of these numbers mean that Amyris needs twice as much starting sugar to get the same amount of fuel energy as ethanol does today, a major cost disadvantage.
Other important players using fatty acid pathways are LS9 and Solazyme. The natural products of these pathways are very similar as fuels to the vegetable oil-derived biodiesel available today, but these are not drop-ins. So, LS9 is using a genetic modification, adding the conversion of these oils into alcohols or hydrocarbons inside the organism. In a company press release, Solazyme says it has achieved targets that will let it make biodiesel at a cost of “$60-$80 per barrel,” cheaper than fossil fuels at today’s crude oil prices. Solazyme has been operating its technology at a larger scale and supplying significant quantities of fuel to the military for evaluation at increasingly larger scale in recent years. These government contracts have included both R&D funding and product supply agreements. Both LS9 and Solazyme have attracted significant investment from major industrial partners.
The biological process that is the alternative to fermentation is photosynthesis. This technology employs microorganisms, such as algae, to directly turn sunlight, CO2, and water into fuel products. The algae are related to the ones that we commonly see on the surface of ponds and stagnant water. To produce biofuels, they are cultivated in large ponds or in closed bioreactors (picture miles and miles of glass tubes with water and algae inside). They harvest CO2 from the air, sunlight, and water to produce large quantities of lipids internally. These lipids can be recovered and converted into oils much as the vegetable oils (e.g. soybean, rapeseed, or palm oil) that are the basis for most of today’s biodiesel. These are very similar fuels to those produced by fatty acid fermentation pathways.
There are a large number of players in this space. Sapphire and Synthetic Genomics (SGI) are two major technology developers. SGI has attracted major investment from Exxon Mobil. Sapphire has raised funding to expand its production at its New Mexico site to 1.5 million gallons per year by 2014.
Most independent analyses, including a recent study by the National Renewable Energy Laboratory, have shown that the current cost of algal biofuels is still much higher than the cost of fossil-derived diesel. “The major economic challenge for drop-in fuels from photosynthetic algae remains the cost of algae. Models that have been developed as part of the National Alliance for Advanced Biofuels and Bioproducts and elsewhere indicate the continued need to reduce capital cost and improve productivity—not as measured in carefully controlled laboratory settings but actual productivity obtained in larger- scale outdoor open ponds,” said John Holladay, operations officer in the National Alliance forAdvanced Biofuels and Bioproducts.
The alternatives to biological processes are processes that use chemistry to convert plant matter into biofuels. These operate in various temperature ranges, and many have the advantage of converting all of the components of the biomass into fuels, not just the sugars but also the woody biomass from stems, stocks, other non-edible parts of plants.
Aqueous phase reforming is a process that takes the starting materials and changes their carbon structure. It is the lowest temperature process (under 200 C.) and employs catalysts to control the chemistry. It is being developed by Virent Technologies, based in Madison, Wisc. This process converts simple sugars into hydrocarbons through a series of very low severity (low temperature and low pressure) chemical steps. It has been demonstrated at significant pilot scale, and is being adapted to process mixed sugars from non-food lignocellulosic feedstocks as part of DOE’s NABC program.
Another appeal of this approach is that it uses equipment that is both simple and low-cost. However, there are concerns about the costs for the process because of the large number of processing steps, and whether the high yields claimed on pure sugar feedstock can be maintained when feeding potentially lower-cost mixed sugars produced from cellulosic biomass. There are also concerns about catalyst cost and lifetime.
One additional obstacle is that the product mix is mostly aromatic hydrocarbons, which is a disadvantage as a drop-in biofuel. While gasoline, diesel, and jet fuels contain some aromatics, a fuel that is mostly aromatics will struggle to meet performance or regulatory requirements. For example, there has been a long-term trendworldwide to reduce the aromatics content of gasoline, driven by concerns about their toxicity.
Virent has continued to attract major financial backing, including significant investment from Shell. Virent also recently partnered with Virdia, a developer of biomass pretreatment and hydrolysis technology, to demonstrate the production of renewable gasoline and jet fuel from pine sugars supplied by Virdia. The jet fuel was tested by the U.S. Air Force Research Laboratory, which stated, “This fuel passed the most stringent specification tests we could throw at it (such as thermal stability) under some conditions where conventional jet fuels would fail. This fuel is definitely worth further evaluation.”
At intermediate severity (500-600°C) are pyrolysis processes that break biomass down into complex mixtures of aromatics, acids, and tars. These complex mixtures can then be converted into useful products downstream by other chemical and catalytic processes. Pyrolysis oils can also be combusted directly, as has been demonstrated for power generation, but is challenged by the corrosiveness of the oils, potential for chemical instability and high viscosities.
Pyrolysis processes have been investigated for several decades, and various companies have built and operated demonstration and semi commercial plants, but none has been economically or commercially successful. Downstream processing to convert pyrolysis oil into attractive fuels is costly, complex, and requires large quantities of costly and non-renewable hydrogen.
Catalytic fast pyrolysis (CFP) is also a medium severity process but employs a catalyst to direct the chemistry toward a desirable product mix. The process uses a catalyst to produce a product that is primarily aromatics and naphthalenes, which, as noted, can be problematic for drop- ins. Leading developers are KiOR with major venture funding, and UOP LLC, a Honeywell company, which announced in May that it has signed an agreement to license technology to Emerald Biofuels of Illinois to produce Honeywell-branded green diesel at a facility in Louisiana. KiOR is building a small-scale commercial facility in Columbus, Miss., that is scheduled to start up in late 2012. (Editor's note: KiOR has since gone bankrupt.) There is very little public information about these processes, but it is included in the program scope for NABC which will provide important third-party verification.
At the highest temperatures are Biomass to Liquids (BTL) processes that combine gasification with the Fischer-Tropsch process (a chemical reaction to convert gas to liquid fuels) to produce hydrocarbons. Gasification operates at 700-900°C and converts all of the biomass into a very simple mixture of CO, CO2, hydrogen, and water. After downstream processing, this is converted to synthesis gas, a mixture of CO and hydrogen, and passed over a Fischer-Tropsch catalyst to produce straight chain hydrocarbons.
These straight chain hydrocarbons are not directly usable as drop-in fuels, but can be converted into gasoline, diesel, and jet fuel drop-ins using conventional refining processes.
These Biomass to Liquids processes have been used on other feedstocks since the 1920s, mostly coal. They were initially developed in Germany pre-WWII and in apartheid South Africa in order to overcome the lack of access to crude oil supplies. The technology is basically fully developed and has been tested at significant scale with biomass. The major barriers to commercialization are economic. Capital costs are very high. Commercial plants tend to be built at very large scale to overcome this, taking advantage of economy of scale as plant size increases. However, this is not compatible with the smaller, localized scale at which biomass can be economically collected and delivered to the plant. The major players in these technologies are very large oil and chemical companies including Chevron, Shell, Sasol and GE.
NOT QUITE DROP-INS
Several major energy players are pursuing other renewable liquid fuels that are not full drop- ins but have much better compatibility and fuel properties than ethanol, the major one being butanol. Butamax, a joint venture between BP and DuPont, and Gevo are pursuing isobutanolas a more advanced entry into alcohol biofuels. Isobutanol has much broader compatibility with gasoline and lower oxygen content giving it better fuel economy than ethanol. The key issue for isobutanol is to achieve the same high yields and rapid fermentation rates as ethanol in order to be economic. Because of its lower oxygen content and better compatibility, butanol can be blended with gasoline at higher concentrations than can ethanol and it can also be used by itself.
At the same time, Cobalt Technologies is developing a biological process for n-butanol, and is working with Albemarle under a U.S. Navy contract to convert it into a jet fuel. Butamax, Gevo, and Cobalt all have credible positions in butanol with the financial backing and industrial partnerships needed to go commercial.
THE LIKELY FUTURE
The early stage of development of most of these technologies makes it difficult to predict which will be the winners. At the moment, it is worth noting that the DOE’s National Advanced Biofuels Consortium has selected Amyris and Virent as partners, and both have attracted investment from major industry. It is likely that Biofuels to Liquids technology will be commercialized somewhere, probably in Europe for security of supply reasons, although it is unclear which of the technology owners will stand out.
A shakeout among the technology developers and new investment are almost certain to come as research and development progress. Ultimately, the economic viability of drop-ins and their ability to meet greenhouse gas emission and other environmental goals are key drivers as is the direction of U.S. and international policy and regulation. Despite this host of uncertainties, however, there is clear and growing appeal for a biofuels future in which drop-ins play a major and perhaps dominant role.