Comprehensive Miscanthus Commercialization Model Needed

A systematic look at feedstock development offers ideas for reducing costs, ensuring success
By David R. Robbins and Stephen S. Tam | September 12, 2011

Miscanthus x Giganteus (MxG) has great potential to become the energy crop of choice in the United States. It has been explored in Europe for two decades but has not been actively pursued in the U.S. until very recently. Many reasons can be cited, such as the lack of long-term yield data in different U.S. regions, high establishment costs and the relatively low yield from direct conversion of cellulosic biomass into bioethanol based on today’s technology. Lack of political support for green initiatives such as proliferation of carbon credits adds to the woes for adoption of miscanthus as a viable energy crop of the future. The key issue to be addressed, therefore, is the apparent lack of sustainable economics.

In general, many studies have pointed to the fact that miscanthus should be a more suitable candidate than switchgrass  as an energy crop. MxG dry mass yield reaches twice that of switchgrass with a rotation cycle of up to 20 years. Typically, dry mass yield can be 12 to 20 tons per acre, with the highest reported yield of 24 tons per acre. Nevertheless, large-scale commercialization of MxG has not yet appeared, and there remain very few, if any, economically viable integrated commercialization or business process approaches.

It is crucial to the successful scalability and sustainability of MxG commercialization that the individual process MxG blocks—propagation, farming and densification—be profitable. This will significantly enable the national targets for conversion of biomass to ethanol to be achievable.

At least three U.S. companies have developed MxG commercialization methodologies that, while subtly different, can supply only a small portion of a large and growing market. In addition, through the Biomass Crop Improvement Program, the USDA has aided the establishment of four planting zones totaling 200,000 acres in the U.S. for growing miscanthus as a dedicated energy crop and feedstock for cellulosic ethanol production.  Federal programs such as BCAP, local government subsidies, carbon credits and other forms of subsidies are market accelerators, but not enablers. Key features of a successful integrated approach will lie in balancing the business risks with innovative technology and business solutions, imposing rigorous financial assessment of the returns on investment in various segments.

Challenges and Solutions

By choosing state-of-the-art technology in all stages, a robust feedstock farming operation can be built to supply hundreds of thousands of tons of biomass for multiple markets in the U.S and specifically cellulosic ethanol. Earth Sense Energy USA Inc. and other companies are developing strategies to address the challenges facing successful MxG development, including the following:

• Addressing extremely high establishment costs, often estimated at more than  $2,000 per acre, by maximizing automation to reduce labor costs, and using plantlets and rhizomes to reduce costs.

• Matching field stock genetics to geographical requirements to ensure field establishment success.

• Ensuring top yields by using precision planting technology to achieve high plant density.

• Managing market growth and nursery/greenhouse utilization by identifying a product mix for nursery business during the demand ramp-up phase for miscanthus that includes propagation  of vegetables, fruits or ornamentals.

In addition to using various technology and business processes to mitigate risks, as described above, the success of the integrated MxG commercialization model requires developers to combine knowledge and experience with MxG agronomy, plantlet multiplication rates and environmental conditions suitable for planting miscanthus. For example, it has been established experimentally that the multiplication rate of vegetative propagation can reach 90-to-1 compared to conventional rhizome field planting that can only reach plantlet multiplication rates of up to 20-to-1 in one calendar year in temperate zones. In tropical zones, however, multiplication of rhizomes can also reach 90-to-1 or higher in any one year. Attention will need to be paid, if this model is adopted, to the unit costs of production and logistics to ensure the economic success of the supplier and the customer.

Other strategies can reduce costs as well. One is to use miscanthus transplants during the seasons when rhizomes are unavailable.  Plantlets can be regenerated continuously and planted in regions that are temperate, unlike rhizomes that have a particular harvest window. By choosing farmland at various latitudes and growing zones, miscanthus planting can be performed six to 10 months per year, facilitating better crop planting schedules and equipment utilization, reducing capital requirements. Manpower can be cross-utilized between planting, harvest and densification.

Densifying feedstock minimizes logistics costs and facilitates storage. In addition, the different quality specifications for domestic and commercial heating, cofiring with coal, as well as cellulosic ethanol feedstocks, will create opportunities for developing densification product lines. Similar to the risk mitigation strategy for nurseries/greenhouses, we suggest initial densification operations be designed for multiple feedstock densification.

A profitable, scalable and sustainable MxG supply chain can be built if business risks are balanced and financial returns on the various process blocks are vigorously assessed. Table 1 shows projected investment and returns for a nursery, plantation and densification plant as individual units, as well as an integrated system. 

The commercialization of process blocks are each economically viable without government subsidies. Nevertheless, state and federal grants will be most helpful in supporting the MxG field establishment years before MxG crop yield stabilizes. Government support for carbon trading, such as through the Chicago Climate Exchange or some other federal program, would also help stabilize and enhance the income of MxG farmers. A cap and trade program to reduce carbon emissions would  accelerate the demand for dedicated energy crops. Additionally, government grants targeting  each process block will help generate innovations and lower production costs of MxG for biofuels production. For instance, BCAP will provide financial support up to $45 per ton for feedstocks for biomass energy projects.

The development of a miscanthus supply chain with a multi-objective optimization model allows an organization to determine the variety and product type of the field stock genetic material, to select the farming geography compatible with the source genetics, to utilize the most advantageous densification technology, to manage distribution costs to the served market and to participate in government support programs to make miscanthus the feedstock of choice for cellulosic ethanol production.

Authors: David R. Robbins
CEO/Cofounder, Earth Sense Energy USA Inc.
(805) 439-1154

Steven S. Tam
Chief Research Officer/Cofounder, Earth Sense Energy
+852-62120616 (Hong Kong)

Additional information was contributed by Jimmy Holliman, consultant to ESE and David Croxton, ESE director and with Renewable Energy Crops of Great Britain, a pioneer of miscanthus for biomass in the EU.