Range Fuels Plans for the Commercialization of Cellulosic Ethanol

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1 Range Fuels Plans for the Commercialization of Cellulosic Ethanol Bio-Energy Wood Supply Chain Conference: New Opportunities, New Issues Bill Schafer, Sr. Vice President, Business Development Range Fuels, Inc. Forest Resources Association April 14, 2008 Myrtle Beach, SC. Range Fuels Overview Formed in July 2006 by Khosla Ventures to commercialize cellulosic ethanol Design, build, own and operate business model Access to $82MM in federal and state funds Broke ground in Soperton, GA last November for first U.S. commercial cellulosic ethanol plant utilizing woody biomass 1

2 Partnerships 2 Increasing Ethanol Demand and Support 60% growth from 4 Bn GPY in 2005 to 6.5 Bn GPY in 2007 Strong, bipartisan support for cellulosic biofuels Recent passage of Energy Independence and Security Act of Advanced Biofuels Min. Volume Corn-Based Advanced Biofuels - Non Corn-Based Source: Renewable Fuels Association and RFS 36 DOE Est. Corn Max. Volume Higher demand for E85 fuel as FFVs are more widely adopted By 2012 U.S. automakers have committed half their production to FFVs 3

3 U.S. Cellulosic Ethanol Potential 140 Bn GPY 2005 U.S. DOE/USDA Study Agricultural 100 Bn gpy Crop residues, perennial crops, animal manure, process residues and grains used for biofuels Forestlands 40 Bn gpy Wood and paper & pulp processing residues, logging and site clearing residues, fuel treatment thinnings Total U.S. Gasoline Consumption 140 Bn gpy President s goal - 35 Bn gpy alternative fuels by Transportation Fuel Alternatives: Current Oil Corn Sugarcane 5

4 Limitations of Current Technology Current production technologies use corn or sugarcane Limited max. capacity (corn 15 BGY); high cost Import tax of $0.54/gallon Food versus fuel Low land efficiency for fuel production Sharp increase in feedstock prices Depleting water tables Wide price fluctuations due to weather Resistance from animal feed lobby Low fossil energy ratios Corn at 1 to 1.4 input to output Sugarcane ethanol at 1 to 8 Cellulosic ethanol at 1 to Corn Prices $ / Bushel Dec-04 Dec-06 Dec-08 Dec-10 Chicago U.S. No 2 Yellow Corn CBOT Corn Futures Source: Bloomberg 6 Transportation Fuel Alternatives: The Next Generation Non-Food Biomass Wood & wood waste from timber harvesting operations Corn stover Wood chips Switchgrass Miscanthus Corn stover and cobs Hybrid poplar 7

5 2 nd Generation Biomass Conversion Technologies Bio-chemical Uses enzymes and involves fermentation Thermo-chemical Uses heat, pressure and steam to produce syngas Catalyst used to convert syngas to mixed alcohols Hybrids 8 Supply of Cellulosic Ethanol in the U.S. Annual Supply (Bn Gallons) Imports 0 Forestry Resources Agricultural Resources Total Gasoline Consumption Based on conversion rate of 100 gallons per dry ton of biomass feedstock 9

6 Sustainable Supply of Biomass in the U.S. Annual Supply (Billions of Dry Tons) Forestry Resources Agricultural Resources Total Source: USDA/DOE "Biomass as Feedstock for a Bioenergy & Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual Supply," April, Net Energy Balance Comparison Fossil Energy Ratio (Output/Input) Negative More Positive Gasoline Corn Sugarcane Cellulosic Ethanol Sources: Argonne National Laboratory, "Energy and Greenhouse Gas Emissions Impacts of Fuel Ethanol" Presentation, August 23, 2005, and the Brazilian Reference Center on Biomass, "Brazilian Sugarcane Ethanol: Lessons Learned" Presentation, December

7 Greenhouse Gas Reduction GHG Emission Reduction 100% Cellulosic Ethanol 80% 60% 40% Corn Ethanol 20% 0% E85 FFV: DM Corn Etoh E85 FFV: Cellulosic Etoh GHG emission reductions per gallon of ethanol to displace an energy-equivalent amount of gasoline Source: Argonne National Laboratory, "Energy and Greenhouse Gas Emissions Impacts of Fuel Ethanol" Presentation, August 23, Range Fuels Technology Cost-competitive process Reliable, low-cost feedstock options Wood chips Switchgrass Municipal waste Corn stover Industrial waste Olive pits Manure Environmentally superior Coal Volatility: Corn vs. Pulpwood Prices $ / Ton Delivered Pulpwood GA Corn Sources: Bloomberg and Pöyry 13

8 Range Fuels K2A Optimization Plant 14 Range Fuels Approach: Novel Two-Step Thermo-chemical Conversion Process Biomass Converter Catalytic Converter 15

9 Environmentally Friendly Production Process Soperton: minor emissions source permit Only one waste stream: saleable char Lower water use 25% of typical corn-ethanol plant Reduces purification costs and impact Material land use benefits Polyculture compatible Better yields, biodiversity, low inputs ,000 Emissions Tons per Year per 100 MGY Ethanol Produced Corn-Based Ethanol Range Fuels Water Usage Gallons per Gallon of Ethanol Produced 4 1 Corn-Based Ethanol Range Fuels Land Required to Supply Feedstock Acres per Year per 100 MGY Ethanol Produced 247, , ,000 0 Corn 23,000 Woody Biomass 16 World s First Commercial Cellulosic Plant 17

10 Location: Georgia 18 Site Selection Why Georgia? In the southeastern U.S., trees are agriculture. In the western U.S., they re parks Sustainability is key! Plants cannot be economically relocated Woody biomass must be sustainably and economically available with a proven silviculture, harvesting and transportation infrastructure Competing biomes Growing season Rainfall Soils Competing tree farmers or state and federal agencies? 19

11 Feedstock: Georgia 20 Soperton, GA: World s First Commercial Cellulosic Plant 1 Wetlands: Will be protected and left undisturbed 2 Range Fuels Drive: Specially created road that separates plant operations from the wetlands Feedstock Receiving and Storage: Receipt and storage of wood chips Conveyor System: Moves feedstock from receiving and storage area to modular converters Biomass Converters: Convert wood chips to syngas Catalytic Converters: Transform the syngas into alcohols, which are then separated and processed Product Storage: Collection and storage of liquids (ethanol and methanol) Loading and Delivery: Transportation by either truck or rail 21

12 Soperton Plant Artist s Rendering 22 Groundbreaking: Georgia 23

13 Soperton Plant Groundbreaking 24 Soperton Plant Groundbreaking 25

14 Soperton Plant Site Clearing 26 Construction: Georgia 27

15 Stable Pricing, Large Availability Using Woody Biomass Over 400 MM tons of low cost woody biomass available annually High land efficiency for cellulosic crops; low water and fertilizer inputs Cellulosic availability fits demand; fewer transportation issues Intense international competitive pressure on existing woody biomass consumers U.S. Ethanol Biorefinery Locations Non-Federal Forest Land Density, Biorefineries in Production - Corn-Ethanol Production - 25,000 acres of Forest Land per dot - Biorefineries under Construction - Major Gasoline Consumption - 95% or more Federal area Source: Renewable Fuels Association Source: U.S. Department of Agriculture 28 Problems with EISA H.R. 6: The Energy Independence and Security Act of 2007 Renewable Biomass is: Planted trees and tree residue from actively managed tree plantations on non-federal land cleared at any time prior to enactment of this sentence Slash and pre-commercial thinnings that are from non-federal forestlands This definition Prohibits ANY renewable biomass from federal lands. LIMITS the renewable biomass from natural stands to slash and pre-commercial thinnings. >80% of the private timber stands in the U.S. are natural stands LIMITS the growth of energy crops to lands that nave been cleared at any time prior to the enactment of this legislation. CREATES the need for a certification process that will be expensive and cumbersome. 29

16 How Might Range Fuels Affect the Forest Industry? Timber Growers, Harvesters, and Transporters A large, new market for woody biomass New quality requirements Minimize moisture and ash Fiber structure is unimportant Focus on delivered energy cost, /mm Btus, delivered Competing Consumers Range Fuels is motivated to locate strategically to maximize access to supply and minimize price. 30 Century Race 31

17 We All Benefit 32