Steel in the Ground
Guido Ghisolfi is a confident man. A chemical engineer by trade, at 55, he’s already spent three decades leading research and development (R&D) activities at Italy-based Mossi & Ghisolfi Group, a $3 billion per year chemical firm that ranks as one of the world’s largest PET producers (a polymer used in plastic bottles and other products). M&G, which Ghisolfi describes as a family group (Mossi and Ghisolfi are his mother and father), also happens to be constructing the largest cellulosic ethanol production facility in the world to date through its subsidiary, global engineering, procurement and construction company Chemtex. The facility will be mechanically complete this summer and won’t begin producing until the third quarter of this year, but Ghisolfi says he already knows the process will work and will be cost-competitive with first-generation ethanol, and he’s ready to guarantee it. “Chemtex is ready to sell plants,” he says. “Come and see the plant and I’ll sell you one. If you want to buy one now, I’m more than happy to sell you the technology with a guarantee, and I can tell you how much it costs.”
How is this possible? Ghisolfi traces M&G’s path toward cellulosic ethanol back to 2004, when the company acquired Chemtex from Mitsubishi Corp. Along with Chemtex came corn ethanol technology it had acquired from Delta-T Corp., which brought ethanol into Ghisolfi’s interests. He began to examine the existing U.S. ethanol industry and quickly concluded that while corn ethanol production was an acceptable practice in the U.S., the process would not be viewed as positively in Europe, where food versus fuel concerns were more widespread. So M&G decided to explore other technologies to produce ethanol in a feedstock agnostic environment from strictly nonfood biomass. The firm also realized immediately that the technology would need to be cost-competitive with first-generation ethanol and other fuels. “We did our homework and the family was faced with a not simple situation, that is to say that there is a solution, but the ticket we have to pay to enter into this development path is a very expensive ticket,” Ghisolfi says. The company determined the risk was worth the cost, and M&G invested more than $200 million to fully fund its cellulosic ethanol activities, including technology development, the establishment of a pilot plant, developing biomass supplies to properly feed the technology, and, finally, the construction of a 15-20 MMgy production facility.
Of the handful of cellulosic ethanol developers making their way toward commercial cellulosic ethanol production, M&G is the first to make it this far with no outside financial support. Ghisolfi says it is because the company has self-financed everything that it has been able to make such significant progress in a short amount of time. “We were not slowed down by lack of funds or the need to raise capital,” he says. “Once the family had decided to invest a considerable amount of money, we could spend our money according to our initial plan.”
That plan includes the commercial-scale facility in Crescentino, Italy, designed to produce up to 20 MMgy of cellulosic ethanol when fully operational. Locally obtained rice straw, wheat straw and Arundo donax will serve as the facility’s primary feedstocks, but the trademarked Proesa process technology developed by Chemtex is feedstock agnostic, a quality which Ghisolfi says will be key to the technology’s wide-ranging success. “We can make cellulosic ethanol starting from any biomass, any grass, any straw,” he says. “You can run a week with rice straw, a week with corn stover, a week with wheat straw, without changing hardware and without changing enzymes. This gives a lot of flexibility because you can get different types of biomass from the area around the plant depending on the season [and] the cost.”
The pretreatment portion of the Proesa technology is also lenient compared to other processes being developed, negating the need to create uniformly sized pieces of biomass, for example. Ghisolfi likens the process to boiling spinach. “When you throw the spinach in the pot, you don’t measure the size of the spinach,” he says. “It’s the same thing here. You don’t need particular pre-handling of the biomass [to make it] one inch by one inch or two inches by two inches. The biomass can be cut by hand or by machine, cut roughly or precisely, depending on the process used by the local farmers.” The Proesa technology itself is described by Ghisolfi simply as being composed of “a piece of iron that turns.” He stresses that the process is low-temperature and doesn’t require the use of acids or chemicals. There are also no requirements for rare earth metals, which means the overall cost is lower and the potential deployment area for the technology is larger, he says. The company is partnered with Novozymes to use its enzymes in the production process but, because the technology is chemical-free, Ghisolfi says fewer enzymes are required to be used, which lowers the cost.
The only coproduct produced as a result of this process is lignin, according to Ghisolfi. At Crescentino, the company has invested $50 million to construct boilers to translate that lignin into 15 megawatts of power, enough to serve the production facility with leftover available to sell to the local utility. Because power prices are high in Italy, Ghisolfi says it was easy to determine that adding on that aspect of the project would be a worthwhile investment. It’s an optional component, however, so he expects that not everyone will be willing to up the cost of their project by one-third to produce power. He points out that without the boiler costs, the Crescentino project is on track to produce ethanol with a cash cost of production at about $1.50 per gallon, and a cost to build the plant at about $5 per gallon of annual production capacity. Ghisolfi says he expects that price to continue to go down with each consecutive plant that is built.
Ghisolfi hopes to soon see the Proesa technology at use in the U.S., but M&G doesn’t plan to operate any of the facilities. Last October, M&G formed a joint venture with TPG Capital and TPG Biotech to create Beta Renewables. The new company, led by Ghisolfi as CEO, was created exclusively to license the Proesa technology. The company is taking over ownership of the Crescentino plant, but the goal is primarily to use the plant as a showcase for the technology. “This is a plant that is large enough to be economically viable, but it will be a demonstration plant,” Ghisolfi says. “The next plants, we want to license, not build.”
Ghisolfi sees the most immediate demand for second-generation technology to come from first-generation ethanol producers and blenders in the U.S. who are seeking ways to meet the federal renewable fuel standard’s call for increased amounts of cellulosic biofuels. However, because the Proesa technology produces C5 and C6 sugars, the possibilities for end products are broad and applicable to anyone wanting to produce cost-efficient sugars. Ghisolfi predicts that by about 2014, a second wave of customers will come into view, consisting of companies that are already attempting to ferment sugars to produce everything from butadiene to acrylic acid. “So far, everybody went to Brazil because they thought there are cheap sugars in Brazil,” he says. “We hope we can make them change their minds and stay in the U.S. because we can deliver cheap sugars in the U.S. as well.” Currently, sugars can be had for about 22 cents a pound at the international level. Ghisolfi says he can beat that price by half, producing sugars using Proesa technology for 10 cents per pound. He admits his claims are met with skepticism, but he is firm in his estimates and says Beta Renewables has already begun to forge partnerships with chemical producers. Around July, when the Crescentino plant begins to continuously produce ethanol, the process will be further proved and the build out can begin in earnest, he says, although he willingly admits that there will soon be others in the same position. “I would be very happy to be the first, or one of the first, players in the market,” he says. “But I don’t pretend to have all of the market for me. If they want to buy from someone else, they will, because there will be someone else relatively soon. [But] we have a lot of skin in the game as Chemtex. We bought the plant, so we know how much it costs. I can show steel to people. We’re not talking about a hole in the ground. And if someone is, allow me the term, dumb enough to invest $100 million in the R&D for several years and $150 million into a plant, it means that this is going to be working.”
Indian River Bioenergy Center
The first U.S. plant planning to begin operating at a commercial-scale is the Ineos New Planet Bioenergy LLC facility, dubbed the Indian River BioEnergy Center, located near Vero Beach, Fla. The plant will produce 8 MMgy of ethanol and 6 megawatts of power using locally sourced municipal solid waste and vegetative waste, including some waste citrus, beginning in the second half of this year. In mid-March, the project was still on track to be mechanically complete by April and expected to meet the U.S. EPA’s expectations of producing about 2 million gallons of cellulosic ethanol this year. Last year, Ineos Bio received a $75 million loan guarantee from the USDA for the Indian River project, helping to alleviate some of the risk associated with being one of the first-of-its-kind projects, but Ineos has also invested heavily in the project and has a lot at stake in making it work. “When it comes down to it, the thing that’s completely in our control is commissioning this unit and getting it up and running and producing ethanol, and that has to be our primary focus at this moment,” says Ineos Bio CEO Peter Williams. Calls from the petroleum industry to dismantle the cellulosic biofuels portion of the renewable fuel standard are not increasing the pressure to produce, he says, adding that the time will soon come when those renewable identification numbers (RINs) will become available to them.
Other facilities on the U.S. EPA’s anticipated producer list for cellulosic ethanol this year include demonstration-scale facilities operated by ZeaChem Inc. and KL Energy Corp as well as American Process Inc., which is nearing completion on a 800,000 gallon per year facility in Alpena, Mich., which will utilize wood hydrolyzate from a nearby hardboard manufacturing facility as its feedstock. The company expects to begin operating the facility in about a month. The only other cellulosic producer expected to contribute to the RFS this year is also the only cellulosic ethanol producer that owns an existing commercial-scale facility. Fiberight LLC purchased a former corn ethanol plant in Blairstown, Iowa, several years ago and has been slowly modifying it to produce ethanol using MSW as a feedstock. CEO Craig Stuart-Paul says that work continues today, and he doesn’t expect Blairstown to produce this year, but Fiberight will begin producing batches of ethanol from its demo plant in Lawrenceville, Va., by June. Fuel produced in Virginia will be marketed by Protec Fuel Management LLC to the U.S. Navy. In March, the company was carrying out some process modifications to increase efficiency and conducting small revisions to ensure it receives a $25 million loan guarantee offered by the USDA in January. Stuart-Paul says the “post-Solyndra” environment has prompted the USDA to require more proof of process at a smaller scale before granting loan guarantees to commercialize, so therefore more emphasis is being placed on operating the demo plant at a precommercial scale for the short term. That streamlining process is expected to be finalized in June, approximately. In March, Stuart-Paul wasn’t ready to guarantee that Fiberight could produce all of the 1.6 million gallons of ethanol expected by the EPA this year, but said meeting the agency’s target is not his primary concern. “We’re in a position now where we want to do this right; we don’t want to blow it,” he says. “We will have some production, but the thing is, there is actual steel going into the ground now, we’re among them, and there will be gallons produced.” According to Stuart-Paul, the number of gallons produced is less important than the fact there will be actual production this year. “Once those first few plants begin producing and can produce successfully … look at what happened in the corn ethanol industry. Once those first few plants produced, you had a massive increase in the amount of overall production nationwide. Everyone was waiting for the first ones to come online.”
Author: Kris Bevill
Associate Editor, Ethanol Producer Magazine