Robert Rapier: A Critical Look at Biofuels Costs

On the topic of advanced biofuels, Robert Rapier is one of the few internet commenters with both the expertise and the objectivity to provide an intelligent and trustworthy judgment. Robert published a recent column on a DOE presentation dealing with various methods of advanced biofuel production, and the associated costs -- both capital costs and operating costs.

I want to share several slides from the presentation to give an idea of what the DOE thinks about the costs for producing biofuels via the various pathways. The first slide below shows the projected cost of production of biofuels via MTG, pyrolysis, and FT for the “Nth Biorefinery Plant” — which is defined as the projected fuel cost after a number of plants have been built and the learning curve has been mastered.

This slide projects a future best case scenario of about $3.50/gallon for the MTG route, $2/gallon for the pyrolysis route, and $5/gallon for the FT route. So if that is for the Nth plant, where do costs currently stand? _Robert Rapier

This slide shows that in 2009 they were estimating costs of production for biofuel based on pyrolysis of $7.68/gallon. By this year (2012) they projected the cost dropping to $4.55, and then over the next 5 years they project costs will fall to $2.32 (again, the Nth plant cost for pyrolysis was projected at $2.00/gallon). They project that the largest savings will come from the upgrading step.

So what do they say about fuel from algae? _Robert Rapier

This slide shows the 2012 selling price for algal products in four categories: Triglycerides (TAG) from open ponds (OP) at $9.28/gallon and from photobioreactors (PBR) at $17.52/gallon, and then the finished diesel (which requires hydrotreating the TAG) at $10.66 from OPs and $19.89 from PBRs.

The following slide projects future algal fuel costs under a number of different scenarios: _Robert Rapier

.... I think the real story from this presentation is the DOE’s projections of the pyrolysis to fuel route. They clearly believe that this route can ultimately be competitive with petroleum. The technology currently exists to convert pyrolysis oil into transportation fuel, but it is fairly new and therefore should have room for some improvements. This is the type of route that KiOR is pursuing. A partnership between UOP Honeywell, Ensyn Corporation (those two formed a JV called Envergent) and Tesoro was awarded a DOE grant to build a demonstration facility based on pyrolysis at Tesoro’s refinery in Hawaii.

The overall ranking in terms of future costs would appear to be: pyrolysis < MTG < FT < OP algal << PBR algal. _Robert Rapier

More at the link above.

This is basically the same type of recommendation that Al Fin Energy analysts have been providing for a number of years, with the exception of the MTG process, which we have mainly looked at in conjunction with GTL and CTL processes.

It has been well over a year since one of our analysts discussed the idea of algal biomass pyrolysis for biofuels production with Robert Rapier, who stated that he was unfamiliar with that approach to algal biofuels, at that time.

The conventional approach to algal biofuels -- conversion of triglycerides to hydrocarbons or biodiesel -- suffers from too many problems for it to be considered viable before approximately 2020, if not later. Biomass pyrolysis to biofuels, on the other hand, is very near to viability today, with the proper catalysts.

And since micro-algae and macro-algae are two of the most prolific forms of biomass known, it makes sense that they would be used as feedstock for advanced catalytic biomass to biofuels pyrolytic processes.

Will it take 5 or more years to get production costs for advanced biofuels from catalytic pyrolysis below about $2 per gallon? Difficult to say. Certainly the explosion of dirt-cheap unconventional methane complicates the equation a bit.

It is likely that many operators will pursue F-T and MTG fuels from methane alone or from coal alone (or the two combined). But it is also likely that some operators will work on ways to combine biomass to liquids (BTL) with either GTL, CTL, or both. Yet other operators will attempt to create viable processes for BTL alone, without combination with either methane or coal. All of these approaches -- as well as all the the approaches to BTL discussed by Robert Rapier -- will have to shake themselves out in the market place. Unfortunately, government mandates, carbon taxes, credits, subsidies, and brainless regulations will also intrude on the market processes. But that is the world we live in.