Cobalt, American Process to launch first cellulosic biobutanol plant

Biobutanol from wood biomass; 470,000 gallon facility to switch to biobutanol in April 2012

In Michigan, Cobalt Technologies and American Process announced an agreement to build the world’s first industrial-scale cellulosic biorefinery to produce biobutanol.

Rick Wilson, CEO of Cobalt, and Theodora Retsina, CEO of American Process, will join 120 other C-level advanced biorefining executives and a total of 450 delegates at the Advanced Biofuels Leadership Conference, which kicks off this morning in Washington, DC with a half-day workshop on government and policy.

Under the Cobalt-API agreement, the companies will integrate Cobalt’s patent pending continuous fermentation and distillation technology into American Process’s Alpena Biorefinery, currently under construction in Alpena, Michigan. Slated to begin ethanol production in early 2012 with a switch to biobutanol in April 2012, the API Alpena Biorefinery will produce 470,000 gallons of biobutanol annually, which will be pre-sold to chemical industry partners.

API’s GreenPower+ proprietary process extracts hemicelluloses sugars from woody biomass using steam or hot water and converts them to fermentable sugars in a cost effective and technically robust process. The extracted biomass is returned- with consistent low moisture composition- to the biomass boiler for the production of steam and/or electricity – while sugars are converted to final bio-products.

Funded in part by an $18 million U.S. Department of Energy grant and a $4 million grant from the State of Michigan, the API Alpena Biorefinery will demonstrate the conversion of hemicelluloses extracted from woody biomass, to fermentable sugars that can be used for production of ethanol and, via Cobalt’s technology, will demonstrate that these sugars can also produce butanol.

“It’s a 150x scale-up for us, that we will run for up to two years,” said Cobalt CEO Rick Wilson. “API’s CEO, Theodora Retsina, is one of the most under-recognized people out there. She’s world renowned in processing biomass and making sugars, and arguably the world leading expert in creating energy efficiencies in pulp making. And API, they’ll be the first one out there with cellulosic ethanol at the kind of scale they will produce at. Overall, API is perfect for getting things done, and yin a situation where you will make or lose money based on your energy balance, who better to tie up with?”

The Long Demonstration

Cobalt’s decision to go with a lengthy demonstration stage puts it at odds with companies such as Gevo who have done shorter demonstrations, or companies whose demonstrations are missing key front-end or back-end components and are demonstrating only the core process.

What’s the argument for the longer demo, which slows down the rate of return for investors? “if you don’t do a demonstration,” contended Wilson,” well, in the case of one project I recall from my Amoco days, it added 18 months to the process and cost three times as much.”

How it Works

The process significantly increases overall profitability of the site by converting hemicelluloses into fermentable sugars, which can be converted to high value biofuels and biochemicals. The GreenPower+™ technology is applicable in any industry employing biomass boilers or having organic effluent.

Cobalt’s technology converts sugars from non-food feedstock, such as forest waste and mill residues, into biobutanol.  Cobalt’s continuous butanol production system is based on advancements in biocatalyst selection, bioreactor design and process engineering, resulting in a highly productive, capital-efficient, low-cost solution. This foundation ensures the production process is able to scale up quickly while maintaining capital efficiency.  Cobalt’s technology reduces lifecycle greenhouse gas emissions by up to 90% versus the production of gasoline.

$5 chemicals vs. $2 fuels

Wilson has been at the vanguard of CEOs who have described cellulosic fuels as an unfeasible target in the near-term, suggesting that companies that focus on the “hard problem of cellulosic conversion, realize that the best thing to make from wood biomass is pulp, and
once the pulp market is saturated then the next best thing are chemicals. Cellulosic is the hardest part, fuels are the lowest cost; its a fallacy to make fuels from cellulosic biomass, in that it will take forever to get there, and no one will make real money at it.”

“These processes, and those of my competitors, can make fuels from cellulose, and if you secure a lot of biomass you can make a lot of fuels. But as a company our goal is to make money and provide a return, and that means making higher-value chemicals

As far as the production of biobutanol from cellulose, as opposed to production from corn or cane sugars, Wilson described the current price pressures on grains and cane sugars as “oppressive.”

“Our key story is feedstock,” he said. “Now, look at ethanol from sugarcane ethanol trading at prices as high as $4, with corn ethanol at $2.50. The US is now exporting corn ethanol, and what is the result of opportunities like that? Along with other demand pressures, that will eventually drive corn prices to where it is impossible to compete.”

The Alpena Biorefinery: API’s take

“This partnership will demonstrate that GreenPower+™  Biobutanol is an attractive value-added technology for biomass power projects worldwide,” said Theodora Retsina, CEO of American Process. “At American Process, our focus has been the production of fermentable sugars from lignocelluloisc feedstocks and Cobalt’s participation in the Alpena plant validates that we are on the right track.  Cobalt’s biobutanol technology is a perfect complement to our GreenPower+ technology and we believe that the combination will appeal to customers.”

The Race for Biobutanol

Gevo will be out sooner, with biobutanol production starting in Q1 of next year, but this is cellulosic biobutanol. As Cobalt says, “our key story is feedstock”.

Now, Gevo’s Pat Gruber rightly warns that it is unsophisticated to simply compare the $250 per ton cost of field corn, to the cost for wood biomass, and calculate the advantages of producing 87 gallons per ton of biobutanol from wood biomass instead of corn sugars. Gruber points out the opportunities that remain in the co-products that can be produced from other fractions of the corn kernel.

But Wilson makes an effective case for chemicals, versus fuels, in the nearer term, if a company has the opportunities from its process.

“We see costs there in the $60 per ton for wood biomass, $40 for bagasse and $20 for glycerol,” Wilson told us last month. “Those change, but there’s a significant enduring advantage compared to the cost of sugarcane or corn, which are well over $200 per ton. That’s lower than the cost of crude oil, but when you take into account the amount of energy you can access in corn or cane, the cost advantage can be minimal unless you have very high oil prices sustained for a very long time. The markets, for us, are the $7 billion n-butanol market, for acetates, acrylates, and glycerol esters, where the current pricing is $2300 per metric ton. Compare that to diesel or gasoline, both under $1000 per ton.

The Digest’s Take

Long term demonstrations?  The money to develop the company will face a tougher rate of return calculation, but  making cheaper plants, faster in the long term makes it easier to finance projects at scale. It’s short term pain, long term gain, we sure like the spread between $60 wood biomass and $2300 n-butanol, more than, say, $250 corn and $700 corn ethanol.

Today at ABLC in Washington

Today’s speakers on the opening day of the Advanced Biofuels Leadership Conference include:

Bill Brady, CEO, Mascoma
John McCarthy, CEO, Qteros
Ed Dineen, CEO, LS9
Lee Edwards, CEO, Virent
Jonathan Wolfson, CEO, Solazyme
Eran Baniel, CEO, HCL CleanTech
Jim Lambright President, Sapphire International

Paul Bryan, DOE Biomass Program Manager;
Bill Hagy, USDA Director of Alternative Energy Policy
Mark Iden, Deputy Director, Operations, Defense Logistics Agency – Energy
Carl Burleson, FAA Deputy Assistant Administrator
Chris Tindal, US Navy Director for Operational Energy
Mike McAdams, President, Advanced Biofuels Association
Bob Dinneen, CEO, Renewable Fuels Association
Mary Rosenthal, Executive Director, Algal Biomass Organization
Brooke Coleman, Executive Director, Advanced Ethanol Council
Barbara Bramble, Board Chair, Roundtable on Sustainable Biofuels
Brent Erickson, Executive Vice President, Industrial and Environmental Section, Biotechnology Industry Organization