As the first wave of cellulosic biorefineries launch is there really enough affordable feedstock for the next wave? Can growers make enough money to justify the switch…and risk?
For several years, the questions that have perplexed actors in the advanced bioeconomy have revolved around policy stability and the effectiveness of the new technology: can new advanced fuels be affordably produced and will there be a market for them?
Years ago, these were the same questions that were asked about petroleum. Today, when people talk about petroleum and long-term availability (when they choose not to focus on carbon or on energy security issues), it all relates back to feedstock cost and availability. $80 oil (good), $120 oil (bad), $200 oil (aprés moi, le deluge).
It’s not all that different with the first advanced biorefineries being built by in this first wave by the technology developers like Beta Renewables, DuPont, Abengoa and Poet-DSM. With the first locations they have chosen in places like Crescentino, Italy; Nevada, IA; Hugoton, KS and Emmetsburg, IA the feedstock supply and economics look good. Grower relations look excellent.
According to Deputy Under-Secretary for Science and Energy Dr. Michael Knotek, “we need 1000 of these”. And, true, one thousand of the POET-DSM-sized facilities would generate 20 billion gallons of cellulosic biofuels, and cover the spread between production today and Renewable Fuel Standard targets for 2022. That’s a lot of feedstock. IS there enough?
The DOE has assessed feedstock availability in The Billion Ton Study and Son of Billion Ton bottom line conclusion, not much to worry about in terms of land availability, as a billion tons would cover 1000 biorefineries three times over, or more.
So, why are we even talking about it? Little secret in Billion Ton the authors found 328 million tons of feedstock currently available. 767 million dry tons (in the baseline scenario) come from “potential resources” by 2030. And that “potential resource” drops to 46 million dry tons by 2017, if the price is $50 per ton and POET is targeting closer to $50 than $60.
Whoops. So let’s look closer at the data.
According to DuPont’s analysis, stover economics look pretty good for growers in and around their Nevada, Iowa project. Bottom line, growers can realize $36 per acre in increased profit by removing 2 tons per acre of corn stover. The increased cost of fertilizer replacement is more than offset by yield gains and stover income. And the yield gains have been confirmed in 93% of field trials.
Here’s the catch, though. Nevada, Iowa is among the most feedstock-replete areas of the country, when it comes to corn stover. What about the rest of the country?
Some data to consider:
1. National corn yields are 5% lower, at 171 bushels per acre (projected for this year by USDA)
2. 80% of farmland is in corn-soy rotation rather than continuous corn, according to USDA.
3. Roughly one-third of farmers practice no-till techniques, according to USDA.
Going back to the DuPont data, let’s note.
1. Without no-till, stover yields drop by 1.1 tons per acre for continuous corn, and 1.2 tons for corn-soy rotation.
2. Without continuous corn, stover yields drop by 1.2 tons per acre for no-till, and drop to zero with tilling.
So, let’s re-do that last DuPont chart, to show how this maps out against the nation’s supply of corn stover. The average is 0.379 tons per acre.
The stover income would fall from $36 per acre to $6.82 per acre, for the average acre.
Energy Crop economics
Let’s look at a leading energy crop candidate, switchgrass, which Genera Energy described as “likely the most studied biomass crop in the US and is one that Genera has had success with as a sustainable and economical feedstock”
In an article published this summer at extension.org, authors Susan Harlow and Richard Perrin suggested that switchgrass may well produce animal feed instead of a biofuels feedstock.
Rationale? A production cost of $65 per ton in the Upper Midwest based on yields of 3.5 tons per acre including a $200 per acre establishment cost. More importantly, the authors point out that “refineries…will have to pay at least its value as livestock feed, which is expected to be about $95 per ton of DM (equivalent to $83 per ton of 15%-moisture hay).”
And establishment opportunities may be limited, for the authors note that “marginal cropland that can produce corn at yields higher than 60 to 70 bushels per acre, corn is likely to be more profitable [than switchgrass].”
The Bottom Line
Stover economics work well in selected areas like Iowa but it’s far from universal. Roughly 6 million acres have the optimal economics (7 percent of 93 million acres) enough for 25 biorefineries of the current standard size, or about 500 million gallons. And that’s assuming that all of the optimized growers are within 30 miles of one of these biorefineries. As it happens, areas with high corn yields such as the Midwest have lagging rates of no-till farming, according to USDA.
Where corn yields drop below 70 bushels per acre, switchgrass economics are fine, says Genera. For high-yielding land using continuous corn, and no-till stover pick-up looks great. But there’s a lot of acreage in the middle where corn is going to continue to be the crop of coice, but stover is less likely to work.
For the rest, it is going to be about producing energy crops and we are looking at several years to establish those at sufficient scale to support a biorefinery.
All of which suggests that building out cellulosic biofuels is going to be a lengthy process, stretching well into the 2020s if these numbers hold up.