Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Agricultural Policy Analysis Center ● The University of Tennessee ● 310 Morgan Hall ● Knoxville, TN 37996-4519
www.agpolicy.org ● phone: (865) 974-7407 ● fax: (865) 974-7298
TennesseeBiofuelsInitiativeTennesseeBiofuelsInitiative
March 26, 2007
Dr. Kelly Tiller
Agricultural Policy Analysis Center
The University of Tennessee
University of Tennessee… leading the Southeast in biomass research, education, and outreachUniversity of Tennessee… leading the Southeast in biomass research, education, and outreach
AA
PP
CC
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Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Motivators of ChangeMotivators of Change
High and volatile energy prices
–Relatively stable, but at a much higher equilibrium
–Subject to rapid spikes
National security, energy independence
–America accounts for 25% of global oil consumption,holds 3% of known oil reserves
–60% of world’s oil reserves are in unstable regions
Economic well being
Environmental sustainability
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
U.S. Energy ConsumptionU.S. Energy Consumption
Biomass Consumption Million dry tons/year
Forest products industry
Wood residues
Pulping liquors
Urban wood & food & other process residues
Fuelwood (residential/commercial & electric utilities
Biofuels
Bioproducts
TOTAL
44
52
35
35
18
6
190
Source: Energy Information Administration (EIA), 2006
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Transportation Fuel FocusTransportation Fuel Focus
Today, 97% of ourtransportation fuelcomes frompetroleum sources
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U.S. Corn Ethanol ProductionU.S. Corn Ethanol Production
Source: Renewable Fuels Association
2012 RFS: 7.5 B gallons
Total Capacity (as of 11/27/06) =existing + under construction +under expansion
There’s a limit to theamount of corn-basedethanol we cansustainably producewithout disrupting theag sector
Could potentially doublecorn-ethanol capacity
Tennessee crop farmersbenefit from corn-ethanol,wherever plants are located
Increases livestock feedprices
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Energy In vs. Energy OutEnergy In vs. Energy Out
Source: J. Sheehan & M. Wang (2003)
The road to petroleum
displacement
is paved with
cellulosic biomass
* Some newer estimates of cellulosic FER >10
*
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Our Comparative AdvantageOur Comparative Advantage
Logging & ResiduesLogging & Residues
SwitchgrassSwitchgrass(2014, at $50/dt)
Ugarte, et al. 2006 (forthcoming). Economic Implications to the Agricultural
Sector of Increasing the Production of Biomass Feedstocks to Meet
Biopower, Biofuels and Bioproduct Demands.
Perlack, R.D., et al. 2005. Biomass as Feedstock for a Bioenergy and
Bioproducts Industry: Technical Feasibility of a Billion-Ton Annual
Supply.
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
TN Bioeconomy VisionTN Bioeconomy Vision
Produce & consume at least 1 billion gallons of cellulosic ethanol, at$1.20 per gallon wholesale
10+ new biorefineries operating in Tennessee, employing 4,000 andsupporting 12,000 rural jobs
–At least 4 of the biorefineries owned and operated by local farmercooperatives, retaining an additional $40 million in local communities
Satellite co-product plants creating an additional 3,000 jobs and $2billion in revenue
More than 20 thousand farmers growing dedicated energy crops,adding $100 million in new farm revenue
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Cellulosic Ethanol: Good to GoCellulosic Ethanol: Good to Go
We can make lignocellulosic ethanol today
–Proven at a laboratory scale
–For $3.00/gallon or more (> double corn-to-ethanol cost)
There are no commercial facilities operating in the U.S. today
–Abengoa facility near completion in Spain, expected to produce 54 MGY from wheat straw
–Small Iogen test plant running on wheat straw in Canada
–DOE announced $385 million to fund 6 commercial cellulosic ethanol plants
•Abengoa, Colwich KS, ag residues & switchgrass, 11.4 mgy ($76m)
•ALICO, LaBelle FL, yard & wood waste, energycane, 13.9 mgy ($33m)
•BlueFire Ethanol, Corona CA, landfill green & wood waste, 24 mgy ($40m)
•Broin, Emmetsburg IA, corn stover, 26.4 mgy ($80m)
•Iogen, Idaho Falls ID, primarily wheat straw, 18 mgy ($80m)
•Range Fuels, Soperton GA, wood residues & woody biomass crops, 40 mgy ($76m)
Making cellulosic ethanol economically feasible is a major part of thePresident’s Biofuels Initiative
–DOE projects cellulosic ethanol at $1.07/gallon by 2012
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Chicken-or-egg-first problemChicken-or-egg-first problem
Sufficient, economical,sustainable sources ofcellulose material
Efficient, profitable,low-riskfuel productioncapacity
Stable, sufficient, localdemand for renewablebiofuels
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
The Issue At HandThe Issue At Hand
Sufficient, economical, sustainable supplyof cellulosic raw material (biomass)
Efficient, profitable, low-risk fuelproduction capacity
Sufficient, stable, local demand foralternative liquid fuels
Simultaneous Development
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Building the BioeconomyBuilding the Bioeconomy
A key driver inpropelling the biofuelsindustry forward is thesuccessful constructionand operation ofcellulosic biorefineriesto demonstrate thetechnology andimprove the economics
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
The Tennessee Biofuels InitiativeThe Tennessee Biofuels Initiative
Construct a demonstration-scalecellulosic ethanol facility in Tennessee
–Utilize 170 tons per day of locally producedswitchgrass and wood
–Work with partner industries to generate 5 milliongallons of ethanol annually for local distribution
–Refine the process for local resources to reducecosts, improve process, scale up to commercial
–Deploy the model throughout the state
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Facility SitingFacility Siting
Proximity to researchers(UT and ORNL)
Availability of feedstock
Transportation infrastructure
Proximity to distributors
Local cooperation &incentives
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The Cellulosic Ethanol ProcessThe Cellulosic Ethanol Process
1. Preprocessing: Woodchips and switchgrass aredelivered for storage, grinding,drying, and classification.
2. Pretreatment: A solventfractionation process is used toseparate the chemicalcomponents of the biomass (thisstep is specific to lignocellulosics).
3. Hydrolysis: Enzymes areused to break down thecarbohydrates to theirfermentable sugars (5C & 6C)
4. Fermentation & Distillation:Yeast converts the sugars toethanol (or related alcohols), andwater is removed to furtherconcentrate the product.
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Lignin and solid residuewill initially provide heatand energy for theprocess
Product diversification isconsidered important toeconomic viability of thebiorefinery
Research will addressdevelopment of chemicalbuilding blocks and novel,value-added products
Coproduct utilizationCoproduct utilization
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Grassoline™ Feedstock NeedsGrassoline™ Feedstock Needs
Requires 62,000 tons of biomass annually
•Feed plant 170 tons per day
Could be supplied with 8,000 acres of switchgrass
•Grown by about 200-400 farmers within a 30-50 mile radiusof plant
Easily supplied by a few surrounding counties
•From land currently idle or in hay or pasture
•Without reducing other crop or livestock production
Abundant forest biomass readily available withintransport range, important for smoothing seasonalityof feedstock
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Switchgrass SuitabilitySwitchgrass Suitability
Well suited to the Southeast
–Currently, ~6 tons/acre in TN
–Potential for 12+ tons/acre
Warm season, native, perennial grass
Highly resistant to many pests andplant diseases
–Low use of chemicals or fertilizers
Tolerates poor soils, flooding, drought
1-2 year establishment, replant year 11
Production/harvest practices similarto hay
–Working toward multiple harvestsper year
UT has long history of switchgrassproduction and market research
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TN Switchgrass PotentialTN Switchgrass Potential
by 2012
by 2025
• Dry tons of switchgrass
• Assuming $40 dt at the farm gate
• Assuming yields around 6 dt/acre
• Without disrupting sector balance
Tennessee could produceenough switchgrass by 2025 toproduce more than a billiongallons of ethanol annually
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A Profitable AlternativeA Profitable Alternative
At current yields (6 tons/ac) and $40/ton, competes with corn, cotton, soybeans for acreage
Significantly higher returns than hay, on similar acreage
With yield improvements, returns potentially more than double traditional row crops
Specialty crops can return $1,000+/acre, with significantly higher risk, limited opportunities
Returns above variable costs, Tennessee, 2006
(2): 6 dt/ac, $55/dt
(3): 10 dt/ac, $40/dt
(1): 6 dt/ac, $40/dt
Source: UT Extension Crop Budgets, 2006
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Economic BenefitsEconomic Benefits
Each commercial facility:
–Directly employs 200
–Supports 1,400 jobs indirectly
–Increases Gross State Productby $223 million
–Generates $40 million in newtax revenue
Ownership of a facility by alocal cooperative retains anadditional $10 million per yearin the local economy
For a billion gallons of ethanolproduction, TN gets:
–10,000 to 20,000 new jobs
–$400 million dollars in new state &local taxes
Cellulosic bioeconomy is anopportunity to:
–Create rural jobs, development, andwealth
–Keep money in the state that is spenttoday but currently flows out-of-state
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Project Cost SummaryProject Cost Summary
•One-time costs include pre-construction, construction, and equipment
•Plant operates on product sales year 6 and beyond (incl. R&D)
•Plant reaches 5 mgy capacity in year 3
Year 1Year 1
Year 2Year 2
Year 3Year 3
Year 4Year 4
Year 5Year 5
Construction
Operating Costs
Total Annual
$40.69
$1.25
$45.69
$ -
$2.25
$6.00
$ -
$3.50
$7.25
$ -
$3.50
$7.25
$ -
$3.50
$7.25
Project Total
$73 million
Farmer Incentives
$1.75
$1.75
$1.75
$1.75
$1.75
Research
$2.00
$2.00
$2.00
$2.00
$2.00
Million $
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A Synergistic FitA Synergistic Fit
Builds on the UT/ORNL partnership
•Unparalleled capacity for discovery and implementationthrough science, engineering, and outreach
•Improves competitiveness of GTL Bioenergy Center Proposal
Southeastern Sun Grant Center is hub for regionalbiofuels/bioproducts research
Significant UTIA internal redirecting and expansionin this arena
State investments in “green corridors” for ethanoldistribution
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
A concept to solve America's energy needs andrevitalize rural communities with Land Grant UniversityResearch, Education, and Extension programson renewable energy and biobased, non-food industries
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
SE Sun Grant ProgramsSE Sun Grant Programs
Awarding grant funding throughout theSoutheast for biomass R&D&E
Strengthening our ties with National Labsthrough faculty fellowships
Developing bioenergy curriculum
Developing online educational resources
Advancing our core research in biomassand bioenergy
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Bioeconomy ConsiderationsBioeconomy Considerations
1.Plants must play an important role
–Biomass is easily transformable
–Plants are stores of chemical energy
–Biomass can substitute for petrochemical products
2.Agriculture-centered
3.Potential for significant environmentalconsequences
–Requires sustainable production systems
4.Requires balancing agriculture uses
–Food, feed, fuel, clothing, construction, paper,chemicals
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Bioeconomy Considerations (cont’d)Bioeconomy Considerations (cont’d)
5.Biomass is not the energy silver bullet
–But it likely can reduce dependence on oil
–Focus on displacing transportation fuels from oil
6.Biomass will be the minor partner in a dual-fueled transportation energy strategy
–Electric powered transportation system moreefficient and environmentally benign
7.Profound impacts on agriculture, ruraleconomies, and word trade
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Bioeconomy ChallengesBioeconomy Challenges
Proof of science
Improving the economics
Optimizing systems
Environmental sustainability
Developing protocols, regulations
Consumer acceptance and use
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
Scope of UT Biomass ProgramScope of UT Biomass Program
… farm tofeedstock …… farm tofeedstock …
… to fuels,power, products …… to fuels,power, products …
… toconsumers… toconsumers
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UT Biomass Research CoreUT Biomass Research Core
Biomass conversiontechnologies
Biotechnology & plantgenomics
Feedstock productionsystems, pretreatment
Biobased materials
Economic analysis,policy, logistics
Southeastern Regional CenterTennessee Agricultural Experiment StationSoutheastern Regional CenterTennessee Agricultural Experiment Station
The opportunity is today!The opportunity is today!
Cellulosic ethanol represents the foundation fora new industry sector with value-addedprocessing of Tennessee raw materials
The pilot-scale facility will:
–Address the nuances of the feedstock and optimizethe process
–Enable research to expand the biorefinery productsand markets
–Resolve regulatory and logistical concerns
–Streamline the processing system
–Lead the commercial deployment of Tennessee’sbio-based economy