MAXIMISING REVENUES AND MINIMISING WASTE IN FUEL AND FEED BIOREFINERIES

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1 MAXIMISING REVENUES AND MINIMISING WASTE IN FUEL AND FEED BIOREFINERIES Peter Milic Microbiogen Pty Ltd Sydney, Australia Bioenergy Australia Conference Adelaide December 2014

2 MBG MBG background Founded in 2001 by Dr Philip Bell & Dr Paul Attfield o Based in Lane Cove Sydney; 16 staff o Macquarie University spin-out o Series A, B & C: capital raising secured Spent over A$10M on 2 nd generation biofuels: REDI and Gen II Biofuels grants Yeast Development Company Saccharomyces cerevisiae used for global baking, extracts, brewing, fuel ethanol, distilling, animal feed applications etc. Yeast extracts provide flavor, neutraceuticals (glutathione, glucans, MOS, etc). Our core technology uses evolution and breeding to produce improved yeast strains Our core project is to develop yeast to enable ethanol to be produced from lignocellulosic waste materials (2 nd Gen biofuels)

3 MBG Microbiogen has several active yeast non-gm development programs Improved yeast for converting waste plant material to feed and fuel (2 nd Generation Biofuel) Improved yeast for the corn ethanol industry (1 st Generation Biofuel) Improved yeast for the bread baking industry Improved glutathione (antioxidant) levels for pharmaceutical and food applications Yeast for high level expression and secretion of foreign proteins

4 Current state of play 1 st Gen US corn ethanol ~200 plants produce 14 billion gpa (10% of transport fuel) Production has been flat since 2010 blend wall Expansion potential limited on corn or food based substrates US currently produces corn ethanol at US$0.60/liter or US$0.80/kg no subsidies and very competitive Margins are currently high at over US$0.10/liter Margins are high but primarily due to high value by-product sales o DDGS (distillers grains) & Corn oil MBG DDGS co-product critical for margins High margins

5 Corn industry highlights real world importance of by-products Biofuels based on new technology and non-food biomass must compete with biofuels from food (corn) Margins are high but primarily due to high value by-product sales o Without a DDGS co-product, corn ethanol facilities make little or no profit o As industry has matured more high value co-products have been developed such as corn oil o E.g. ICM Gen 1.5 technology Corn to ethanol experience highlights the benefits of a bio-refinery concept multi, high value products 2 nd Gen biorefinery needs to move beyond standard fuel (and biogas) only model - Higher value co-products - Better utilize low or negative value waste streams - Increase overall conversion efficiency - Develop synergistic processes 3

6 Current state of play in 2 nd generation ethanol... Around the world several 2nd Gen facilities have been constructed or will soon be commissioned. All produce ethanol and by-products some examples of biocatalytic projects: POET/DSM: Project Liberty, Emmetsburg, IA ethanol and biogas (to power cellulose and grain ethanol plants) Dupont: Nevada, IA ethanol and power ( Renewable Solid Fuel lignin and syrup utilised on site in a biomass boiler) Abengoa: Hugoton, KS ethanol and power Beta Renewables: Italy, Brazil ethanol and power (electricity production from lignin) (announced plans for additional plants in Slovakia, 2 x US, 3 x Italy etc) In 2nd Gen, by-products are generally low value essentiality power for the plants 5

7 Capital Cost US$M Capital Cost US$M Revolutionary Capex: Corn to ethanol is capital efficient Corn Ethanol Corn ethanol: More than double the production of ethanol Less than half the capital cost Lignocellulosic Ethanol M gallons of Ethanol 40M gallons of Ethanol

8 The cellulosic biofuels impact of by-product credits Under the POET project, returns are projected at 1.10% with no credits Add just a US$0.19/g credit and the IRR increases to 12% This shows the importance of maximising the value of products of a bio-refinery outside of ethanol Is it possible to generate higher value by-products or co-products from a 2nd Gen bio-refinery? Source table based on publicly available costs for first and Nth plants from producers that have made some of their data public. 6

9 High value co-products are possible and increase efficiency Biomass Pre-treatment and hydrolysis to sugars Conventional 2 nd Generation Fermentation Impact on yield and costs Fuel Ethanol > 30% loss Residual sugars Organism growth Less than 70% of contained sugars in biomass converted to fuel Incomplete breakdown By-products (glycerol, acetate and xylitol) Residual ethanol 30%+ of carbon to low value biogas 7

10 Maximise value and efficiency multi use yeast Fuel Ethanol Biomass Pre-treatment and hydrolysis to sugars MBG Fuel and Fuel and Feed Food Process bio-refinery fermentation Fermentation yeast Low value biogas Residual C6+C5 sugars Glycerol Acetate Organic acids High value Xylitol co-product High value feed 10 8

11 Kg of product per tonne of dry matter Kg of product per tonne of dry matter Revolutionary Maximise product available for sale Ethanol only 2 nd Gen Bio-refinery Conventional 2 nd Gen BioGas 5% more product Fuel and Feed Yeast Fuel and Feed Bio-refinery 13% less fuel 200 Ethanol Ethanol tonne of sugar cane including trash and tops (dry basis) tonne of sugar cane including trash and tops (dry basis) 0 0 9

12 US$ value generated per tonne of dry matter US$ value generated per tonne of dry matter Revolutionary Maximise value per tonne of input Ethanol only 2 nd Gen Bio-refinery $400 $300 Conventional 2 nd Gen BioGas Fuel and Feed 15% higher unit revenues Yeast $400 $300 Fuel and Feed Bio-refinery $200 Ethanol 13% less fuel Ethanol $200 1 tonne of sugar cane including trash and tops (dry basis) $100 $100 1 tonne of sugar cane including trash and tops (dry basis) Key assumptions: Ethanol Price: US$0.60/liter Yeast: US$1.00/kg Biogas: US$4.50/MMBtu $0 $0 10

13 Collaboration with the DOE via NREL* demonstrates economics The fuel and feed bio-refinery project has been in development for 10 years Organism and process refined over the 10 years Recently completed a 2 year US$5M pilot program with the US DOE where: - MBG demonstrated process and generated detailed data inputs for engineering model - DOE developed detailed engineering models based on inputs - All calculations based on real world demonstrated productivity, yields and efficiency * National Renewable Energy Laboratories 11

14 Key inputs: DOE (NREL) model Key assumptions: - Life of facility = 30 years. - 2,000 dry tonnes/day of bagasse - Dilute sulphuric acid continuous process (NREL process) - Purchased enzymes - Natural gas for heating - Ethanol yield at 0.44g/gram of sugar - Yeast yield of 0.35g/gram of carbon utilized - Production of 131M liters of fuel ethanol per year - 117,000 tonnes of dried yeast per year 12

15 Cost to produce yeast US$/kg (dry) Revolutionary Cost to produce ethanol = US$0.50/l and yeast = US$0.47/kg Cost to Produce Yeast versus Price of Fishmeal Fuel Bio-Refinery Base Fishmeal Price Marginal price benefit over fishmeal Marginal price benefit over fishmeal Note: Operating costs are estimated after crediting green coal at US$90/t Cost to Produce Ethanol - US$/liter 13

16 Implications are clear High value Bio-refineries are the future Relying on ethanol as the only high value product is a challenge - Need to make better use of waste streams not just biogas - Need to add higher value co-products or by-products - Ethanol and biogas only facilities are unlikely to be competitive in the longer term 15

17 Questions Peter Milic Microbiogen Pty Ltd Ph: