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Biomass Oil Analysis - Research Needs & Recommendations NREL
June 2004 report (116 pages, PDF)
Executive Summary & Recommendations
EXECUTIVE SUMMARY
The United States Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy (EERE) invests in research to achieve the following goals:
• Dramatically reduce, or even end, dependence on foreign oil;
• Spur the creation of a domestic bioindustry.
The Office of The Biomass Program (OBP) within EERE invests in technology research and development (R&D) to support those goals and to achieve the following outcomes:
1. Establish commercial biorefinery technology by 2010
2. Commercialize at least four biobased products.
These outcomes can be achieved by concentrating investments in research platforms that show the highest likelihood of success and/or the largest impact. OBP faces a large portfolio of R&D options with limited resources. As a result, only those investments that offer the largest benefits can be funded. This analysis provides inputs for the decision-making process.
The biomass feedstocks evaluated in this report are lipids from animal fats, fish and poultry oils, plant oils, and recycled cooking greases. These feedstocks shall be referred to as biomass oils.
The conclusions of this analysis can guide OBP R&D investments in alignment with their goals
• Biomass oils can displace up to 10 billion gallons of petroleum by 2030 if incentives or mandates are used to promote fuels and biobased products produced from biomass oils.
• Biomass oils can be used as fuels in a variety of ways: directly as boiler fuels, processed into biodiesel (fatty acid methyl esters), or processed into “bio-distillates” via refinery technology.
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• With incentives, both biodiesel and bio-distillates offer major oil displacement potential.
One fuel is not exclusive of the other, as regional and local market conditions may favor one fuel over the other.
• Blends of biomass oil fuels with petroleum fuels offer the best commercial potential because blends offer superior performance and lower cost than the straight biomass oil fuels themselves.
• The oleochemical industry has already commercialized biomass oil biorefineries. This mature industry consumes 2.6 billion pounds of biomass oil and produces nearly 4 billion pounds of biobased products, chemicals, fuel additives, and biodiesel annually.
• Oleochemicals compete with petrochemicals in many markets on a price and
performance basis (detergents, lubricants, solvents, coatings, polymers, etc). Biobased purchasing incentives or financial incentives that reduce biomass oil feedstock costs visà -vis petroleum feedstock costs could increase demand for oleochemical products and displace some petrochemical products. There is some potential to increase the oleochemical content of some petrochemical products as well.
• Methyl esters (aka biodiesel) is one of two primary platform chemicals for the oleochemical industry. The production of methyl esters is highly efficient (yields exceeding 99.7%) and their total average production costs are minimized given the constraints of feedstock costs and economies of scale. Investments in processing technology have a limited impact on production costs.
• Glycerin (a crude mixture of glycerol and other impurities) is an inevitable coproduct of biodiesel and oleochemical production. Federal investment in biodiesel catalyst R&D, in particular fixed base catalysts and fixed dual-purpose acid-base catalysts, can improve glycerin coproduct quality and reduce glycerin-refining costs. In turn, this can expand the ability of biodiesel plants to produce glycerol-base coproducts and generate higher values for their glycerol streams.
• Biodiesel expansion will flood the United States and international markets with glycerin.
Federal investments in new uses for glycerin and new products produced from glycerol
can enable the rapid expansion of a biodiesel or oleochemical industry.
• Methyl esters are used to produce a wide variety of fatty acid coproducts, however, fatty acid coproduct revenues cannot be leveraged to reduce methyl ester production costs. Oleochemical firms will not use coproduct profits to subsidize fuel prices (the breakeven approach to fuel cost estimation). Coproducts generate profits, increase returns to equity, and generally attract investment in biobased product expansion.
• The mature status of the oleochemical industry stymies the typical rationales for biobased product investment. There are opportunities to invest in new oleochemical technologies, particularly in research focused on unsaturated fatty acid feedstocks. However, it is difficult to make the argument that the oleochemical industry lacks the technology or resources to make these investments themselves. Federal investment in fatty acid product research should be focused on displacing petroleum by displacing petrochemicals, reducing energy processing costs, or both to bring investments in line with EERE goals.
• Federal investment can expand the future supplies of biomass oils through crop R&D with a focus on increasing yields and reducing costs of high oil seed crops (canola, sunflower, etc.) increasing oil content of soy beans, increasing demand for soy bean meal, and investments in manufactured oils from yeasts, fungus, bacteria, and similar microorganisms that can be produced with minimal land or sunlight investments.
• Federal investment can reduce the cost of biomass oil feedstocks (for fuel and biobased products) through R&D to increase crop yields and reduce production costs of high oil content seeds (canola, sunflower, etc.), increasing demand for soy bean meal via coproduct development, and investments in manufactured oils from yeasts, fungus, bacteria, and similar microorganisms that can be produced with minimal land or sunlight investments.
• Unless an industry partner is willing to assume the costs of commercializing new fuel or fuel additive products, federal investment in these two areas should be avoided. The commercialization costs of new fuels and fuel additives can equal or exceed $30 million.
• Federal investments in lubricants, fuels, and other products should be compared on a basis of petroleum displacement ($/bbl) to determine the value and rank biobased product and fuel programs.
Recommendations
In order for biomass oils to displace large quantities of petroleum there must be a well-coordinated research program between USDA and DOE. In addition, there has to be a clear policy environment that encourages the use of biomass oil fuels and products using tools such as purchasing incentives, tax credits, or mandates. Mandates will be the least expensive of the options but incentives are more politically popular. Some realignment of other subsidies, such as oil and soybean export incentives and farm support payments could be redirected into incentive programs. Long-term incentive costs depend on the differential between biomass oil prices and
distillate prices as crude oil prices rise.
Without incentives, there is no justification for significant DOE R&D in an oils platform, because OBP-funded research can minimize but not eliminate feedstock and production cost barriers for biomass oil fuels and products. Most biomass oils feedstocks exceed distillate prices, limiting petroleum displacement. Without financial incentives, biomass oil fuels will remain niche market fuels where there are environmental or political incentives to use them.
Government purchasing preferences may increase demand for some oleochemical products.
If incentives or mandates are instituted, then there are clear priorities for OBP R&D investments.
The R&D areas that have the most value to OBP are ranked below from highest to lowest.
1 Demonstrate and optimize commercial bio-distillate production (industrial partnership)
2 Demonstrate and optimize CO2 oil extraction technology (program R&D and or solicitation)
3 Develop and optimize fixed base and acid-base esterification catalysts that reduce glycerin refining costs (program R&D and or solicitation)
4 Support industry development of coproducts from glycerol or glycerin (solicitation)
5 Support industry development of industrial products from meals (solicitation)
6 Increase oil supplies by developing closed loop microorganism production systems
(program and solicitation) Bio-distillation: Bio-distillation converts biomass oils into hydrocarbon fuels using existing petroleum refinery technology with minor modifications. Researchers in Canada and the United States have demonstrated the potential of this approach on a small scale. Bio-distillation was ranked number one for several reasons. The benefits of this approach are significant in that production and distribution costs can be minimized, the existing infrastructure is used (no duplicate infrastructure), and key political barriers are addressed. The technological barriers and limits need to be identified and understood. Among these questions are concerns about technical limits on refining volumes of biomass oils; is it limited to 2% or is 10% an attainable goal? Will this technology maximize oil displacement or must we also encourage biodiesel production?
What are the feedstock quality issues and are they significant barriers in terms of reducing oil displacement potential or raising costs? What level of incentive would be necessary to break even with vegetable oil feedstocks (the only expandable feedstock supply)?
Oil Extraction Technology: Since biomass oil extraction can cost 20 to 44 cents per gallon of oil and up, it provides a large target for cost reductions. Only oil seed costs are higher. Improved oil extraction technology could benefit the existing crushing industry by developing a process that does not use toxic compounds such as n-hexane. Improved extraction technology can also reduce oil pretreatment costs, for an additional feedstock cost savings.
Super critical CO2 oil extraction technology offers some benefits in terms of lower costs, higher oil quality (less pretreatment required), and is suitable for smaller plants. Crown Iron Works has demonstrated this technology in a 50 ton per day crushing pilot plant in MN. The process can accommodate a seed moisture content up to 11% (saves on drying costs), does not require purified CO2, and the oil quality is similar to refined, bleached, and deodorized soy oil (RBD soy oil). Internal cost estimates indicate that this process can be more cost effective than small mechanical crushers that produce crude oil (typically smaller than 500 tons per day). Additional savings are generated because the processes that are typically used to create RBD oil from crude oil are avoided, saving as much as 5 cents per pound or 38.5 cents per gallon of RBD oil.
This technology requires demonstration and optimization. The EPA is pushing the industry to develop a viable non-hexane substitute so there may be a timely window of opportunity to adopt new technology throughout the entire industry. In addition, new technology would lower the cost structure of the entire United States crushing industry and provide it with a competitive advantage once again.
Industrial Meal Coproducts: Developing new meal coproducts will stimulate the existing crushing industry, expanding oil supplies and reducing their costs. Demand for soybean meal drives the U.S. crushing industry; demand for oil has no real effect on supplies of soybean oil because it’s a minor byproduct representing only 19% of the soybean by weight. If the demand for meal in industrial coproducts or applications is stimulated, crushing capacity utilization will increase and the amount of oil produced will increase. The price for oils may fall as oil supplies
and crusher’s revenues expand. There are large numbers of new uses for soy meal in human food, health products, and industrial products. USDA supports food product development and DOE could support industrial product development. A solicitation may be offered every year until a large market meal coproduct is identified that meets OBP’s needs. There are numerous industrial partners with solid credentials to work with in this category (United Soybean Board, Battelle National Laboratories, ADM, Cargill, Bunge, AGP, etc.).
Reduce Glycerin Refining Costs: An inevitable byproduct of biodiesel production is glycerol—about 0.73 pounds per gallon of biodiesel. The expansion of biodiesel production worldwide is driving down the value of glycerol and reducing byproduct revenue of biodiesel and oleochemical producers. Further expansion of the biodiesel industry will produce as much as one billions pounds of glycerol and reduce its price to a point where it may become a useful platform chemical. However, biodiesel-derived glycerol is poor quality and requires expensive refining before it is suitable for new product technologies. Glycerol refining technology is relatively
mature and requires significant economies of scale to be economical.
The potential research avenues are:
1. Produce products from crude glycerol in situ followed by product separation
2. Improve biodiesel technology to produce higher quality glycerol
3. Develop glycerol-refining technology suitable for small biodiesel producers.
Of these options, the one that can simultaneously reduce biodiesel production costs, glycerol refining costs, and increase byproduct revenues is the second option above. A new technology that eliminates mobile catalysts and replaces them with fixed catalysts, or a catalyst-free technology will achieve that goal. These topics could be included in SBIRs and other solicitations to promote improvements in the biodiesel industry.
Develop Glycerol Coproduct Technology: The target markets for glycerol coproducts must be large, as future supplies from a biodiesel driven industry will create billions of pounds of glycerol. Typical prices for chemicals produced in these large volumes rarely exceed 50 cents a pound. There are three directions that research could focus on:
1. develop new market uses for crude (unrefined) glycerin
2. develop new chemistry or products that are chemical derivatives of purified glycerol
3. develop new chemistry or products from crude glycerin in situ.
Near term DOE assistance can be provided through SBIRs or solicitations with industry partners. As industry identifies products or product chemistries with large-scale market potential, the research needed to move these concepts into commercial status will be better defined, and the role of DOE can be identified.
Fuel uses for glycerin are attractive from a large market perspective but should be avoided unless there is compelling evidence that 1) the glycerin does not cause long term engine damage as seen in previous research studies, 2) the price structure of the resulting compound can be supported by the fuel market and 3) the industry is willing to partner with DOE to support the $30 million dollars required to commercialize a new fuel or fuel additive.
Oilseed Crop Improvements: Expanding supplies are necessary to maximize petroleum
displacement potential. Improvements can also reduce oil production costs. Other than crushing, the single largest cost to produce biomass oils is the production cost of oilseeds ($0.75 per gallon oil to over $1.00). Many of the potential activities in this arena are best suited to the USDA.
However, there is one promising area that is suitable for OBP investments.
Yeasts, molds, fungi, and bacteria can be genetically optimized and used to produce oils in closed manufacturing systems using inexpensive biomass substrates such as crop residues, wood wastes, MSW biomass, or even pyrolysis oils. The non-oil portions of these organisms can be recycled back into production systems, making them truly closed looped. These organisms offer a couple of key benefits compared to the previous EERE micro algae program—major land resources and water resource are not required and the genetically modified organisms are not exposed to the open environment, wildlife, or accidental release. In addition, many of these organisms do not require sunlight for photosynthesis.
Since closed looped production of micro organisms resembles manufacturing rather than
agriculture, it is one feedstock supply research role that might be best suited to DOE. Particularly since DOE has already invested research in some of these areas in the past and has a significant body of knowledge to start from. Some inexpensive stage gate analysis and solicitations could be undertaken in the near term to collect information and assess possible pathways for closed loop production of microorganisms. This will lay a foundation for program elements when they
become necessary. If these early analyses reveal major benefits (significant oil supplies at exceptionally low costs) then the priority of this program element can be raised and research accelerated.
Program Costs: Because the cost of these research elements will be defined in proposals as a result of solicitations and then balanced against other program needs, it is difficult to estimate program costs in advance. Historically the biodiesel program, and its successor, the Renewable Diesel Program that supported these research areas, operated on a budget that varied from $750,000 to $1.5 million per year. Most of the funding was directed towards technical barriers facing the use of biodiesel and E-diesel fuels, since this budget level was too small for process
demonstrations and optimization. If OBP focuses a fraction of their program towards production technology in the areas identified above, $2 to $5 million per year may be sufficient with careful time phasing of priorities and a focus on only one key element at a time.
Program Timing and Life: The objectives of this research program are relatively concrete and have definite termination points.
See full report (PDF) here
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