Scaling up the Renewable Natural Gas Business 2017 BIO World Congress on Industrial Biotechnology Brian Foody July 25, 2017
A long time player in cellulosic biofuels Top five registered producers of cellulosic biofuels in the US 10% of all U.S. cellulosic biofuel 2004 2005 Developer of 2 nd Gen Biofuels Cellulosic ethanol Renewable hydrogen 2007 2009 Partnering with major energy companies to bring our cellulosic biofuels to market Enzyme Business: Historical relationships include: 2010 2011 2
Scaling up the Renewable Natural Gas Business Three Broad Components to the RNG / Biogas Business Raw Biogas Production Raw Biogas Gas Processing Gas Marketing Credit Generation Gas Logistics Fuel Credits RNG to Market 1. Raw Biogas Production 2. Gas Processing 3. Marketing & logistics 3
Biogas is a by-product of how society handles its wastes Biogas is a mixture of methane, carbon dioxide and other gases It is produced when household and industrial waste decay in landfills and waste digesters Landfill site in Carp, Ontario showing typical landfill gas collection wells Cut-out view of an anaerobic waste treatment digester 4
America generates a very large amount of biogas Total production is the equivalent of almost 10% of America s gasoline consumption Landfills are the largest source of methane, followed by wastewater and then manure Source Methane Potential (MMBTUs / yr) Landfills* 711,000,000 Wastewater 128,000,000 Animal manure 105,000,000 IIC organic waste 64,000,000 Total 1,008,000,000 *includes all landfills as defined by EPA s Landfill Methane Outreach Program Source: NREL 5
Biogas processing is already a significant business 650 sites in the U.S. collect, purify and use over 500 million MMBTU of biogas from landfills Product is typically worth between $2.00 and $10.00 per MMBTU, depending on purity and application Heat Projects Electricity Projects Boiler 59 Reciprocating Engine 373 Direct thermal 44 Cogeneration 47 Leachate evaporation 14 Gas Turbine 32 Greenhouse 6 Other 35 TOTAL 123 TOTAL 487 Source: EPA Landfill and Energy Project Database Renewable Natural Gas High BTU 41 Medium BTU 1 TOTAL 42 Heat: Boiler retrofitted to accept landfill gas Electricity: Reciprocating engine generators Renewable natural gas: High BTU LFG facility: compressors and gas purification 6
Biogas could also be a major co-product of cellulosic ethanol Conventional biomass processing does not have a high yield to transportation fuel Biogas upgrading could increase yields to transport fuels by 50% - boosting margins substantially Poet DSM Project Liberty in Emmetsburg, Iowa 7
Scaling up the Renewable Natural Gas Business Raw Biogas Production Raw Biogas Gas Processing Gas Marketing Credit Generation Gas Logistics Fuel Credits RNG to Market 1. Raw Biogas Production Very large volume of raw biogas is potentially available But individual sources are relatively small 2. Gas Processing 3. Marketing & logistics 8
RNG is typically made by a multi-step purification Raw biogas contains CH 4 and multiple impurities e.g. H 2 S, siloxanes, CO 2, N 2 Over 40 plants in the U.S. now produce RNG using multi-stage purification processes Numerous competitive technologies including both membrane and PSA processes Costs are scale sensitive so big projects help SCS Engineers Plant Site 9
Future Opportunities in Gas Processing? Driving down capital & operating costs Process and system simplification Scale-down to run at smaller sites Development of low cost routes to take raw biogas to liquid fuels e.g. DME, gas fermentation, refinery processes Challenging cost targets i.e. processing costs < $1.00/gal Making biogas as a co-product of cellulosic ethanol processes Large scale of cellulosic ethanol will drive process economies 10
Scaling up the Renewable Natural Gas Business Raw Biogas Production Raw Biogas Gas Processing Gas Marketing Credit Generation Gas Logistics Fuel Credits RNG to Market 1. Raw Biogas Production Very large volume of raw biogas is potentially available But individual sources are relatively small 2. Gas Processing Well proven technology to make RNG Opportunities for other products from raw biogas 3. Marketing & logistics 11
Transportation is the highest value application for biogas In 2014, EPA made biogas eligible to generate fuel credits called cellulosic biofuel RINs When used in cars and trucks that otherwise run on compressed natural gas. This application is worth $25.00+ per MMBTU, a huge premium over conventional biogas applications FedEx truck at dedicated CNG fueling station UPS truck at dedicated CNG fueling station 12
The Renewable Fuel Standard underpins this high value market America has made a big push for renewable fuels under the Renewable Fuel Standard (RFS) The RFS passed under the Bush administration and has always had strong bi-partisan support President Trump has been supportive and called it a jobs booster The express goal of the RFS is to replace or reduce the quantity of fossil fuel present in transportation fuel Cellulosic biofuels have a preferred position and get a special incentive called the Cellulosic Waiver Credit EPA recently approved biogas from landfills as a cellulosic biofuel Congress wanted a program for cellulosics that could deal with a collapse in oil prices (like we have now) 13
Fuel Price ($/gal) ~$2.00/gal Oil Price ($/BBL) The Renewable Fuel Standard underpins this high value market Congress implemented the Cellulosic Waiver Credit Program as part of the RFS Intended to top-up the price of premium renewable fuels to $3.00/gal; That makes for a $2.00/gal top-up now (or $23.00/MMBTU for biogas) $4.00 $3.50 Maximum Price Congress was willing to pay for low GHG cellulosic biofuel ($/gal) $3.00/gal + inflation $160 $140 $3.00 $120 $2.50 $100 $2.00 $80 $1.50 $1.00 Average Wholesale Price of U.S. Gasoline ($/gal) $60 $40 $0.50 $0.00 Prevailing oil price ($/BBL) $20 $0 14
Volumes in Biogas for Transport have also been growing The Biogas for Transport industry has been growing rapidly 30% annual growth in production (to the quarter ending Jun 17) The RNG Coalition reports that projects now in the pipeline will sustain this growth through 2018 Iogen currently has a 10% share of the business 15
If growth in RNG continues, CNG capacity will tighten U.S. CNG distribution capacity is filling up 16
Additional low cost options to penetrate fuel markets One example: Renewable hydrogen incorporated into gasoline and diesel Renewable Hydrogen RNG Existing Refinery Infrastructure Fuel Distribution 5+B Gal Potential 7+B Gallons Potential U.S. Patent No. 9,040,271 U.S. Patent No. 8,945,373 U.S. Patent No. 8,753,854 U.S. Patent No. 8,658,026 17
Scaling up the Renewable Natural Gas Business Raw Biogas Production Raw Biogas Gas Processing Gas Marketing Credit Generation Gas Logistics Fuel Credits RNG to Market 1. Raw Biogas Production Very large volume of raw biogas is potentially available But individual sources are relatively small 2. Gas Processing Well proven technology to make RNG Opportunities for other products from raw biogas 3. Marketing & logistics Still significant growth in CNG markets Multiple opportunities to continue growth beyond CNG 18
Thank You 19