The picture that Stephan Tanda held up in front of delegates attending the European Forum for Industrial Biotechnology (EFIB) in Edinburgh in October 2010 could have been any grey industrial unit – except that it was sitting among fields where you might expect to see cows and hedgerows. In fact, the picture showed a biorefinery – a forerunner of the biomass-based equivalent of the traditional petrochemical refinery.
While it may not be everyone’s picture postcard idea of what a farm ought to look like, Tanda, a member of the managing board at DSM, believes that scenes like this should become a lot more common in Europe’s countryside. ‘We need both vistas,’ Tanda said, also showing more traditional farming scenes.
According to a recent Bloomberg study, Europe’s countryside already has sufficient biomass to supply around 60% of EU transportation fuels. Biorefineries will not only lead to the creation of more rural jobs, but they also promise to boost energy security and deliver environmental benefits by displacing polluting fossil fuels. Currently, less than 30% of Europe’s oil needs are generated within the EU, while the remainder is imported from countries that include Russia, Iran, Libya and Saudi Arabia, Tanda pointed out.
Integrated biorefineries capable of transforming crops not only into biofuels but other high value added chemicals, have the potential to transform Europe’s agricultural sector, Tanda believes, referring to an article in Time magazine about impoverished French farmers resorting to running B&Bs. But while the necessary technologies are ready to be implemented, frustratingly industry insiders say that they are being let down by European policies that fail to attract sufficient investment for the critical scale up phases.
Tanda estimates that the cost of a typical second generation cellulosic biofuel pilot plant is around $200-300m, while a demonstration plant may cost in the order of $0.5bn. However, wouldbe investors are put off by a lack of penalties for failure to implement EU mandates, such as the goal to achieve 10% biofuels in the energy mix by 2020. ‘Companies don’t invest in an environment where it would be nice if it happened,’ Tanda said. ‘The business case certainty in Europe today is very, very low.’ Instead, competitive technologies developed within Europe are now being developed overseas.
With limited funding from private investors, money from the European Commission and individual member states’ governments has been critical in getting projects off the ground. In March 2010, the EC announced the start-up of four EU biorefinery projects (see Box) supported by €52m over four years and with a further €28m coming from 81 partners, including universities, research institutes and industry in 20 countries. The largest share of the funding, €37.4m, is allocated to the next generation biorefinery project EuroBioRef, which involves 28 partners from 14 different countries and is coordinated by Centre National de la Recherche Scientifique (CNRS), France.
In the UK, meanwhile, money is also being allocated following recommendations in the 2009 Industrial Biotechnology Innovation and Growth Team report, which suggested that investment of £2.5–5m/year is needed for three to five years to allow industry, especially SMEs, access to demonstration facilities, according to the report chair Ian Shott. Along with a series of competitions by the Technology Strategy Board to support the development of processes to make high value chemicals, another £12m from the Department of Business, Innovation and Skills (BIS) has led to construction of a new testing facility at the National Industrial Biotechnology Facility in the North-East.
More generous funding elsewhere in Europe has also seen the start up of projects, such as BEBasic, a five-year R&D and training programme whose €250m+ cost is shared equally between universities, private parties, investors and the Dutch government, explained Han de Winde, chair of the biotechnology department at Delft University of Technology. It will also involve the construction of a tonne-scale pilot plant to test out new research ideas and a much-needed training facility to bring new, skilled chemical and biological engineers into the sector.
‘The main focus will be on chemicals, plastics etc, not biofuels, as in future we’ll need to focus more on chemicals,’ de Winde says. ‘The Dutch government is putting €100m into BE-Basic, while the EU is putting [just] €50m into three biorefineries – which is maybe an interesting point for discussion,’ he added.
De Winde’s department, in the research group of Jack Pronk, was behind the 2005 discovery of a fungus in elephant dung, which produces an enzyme that is useful for making biofuels from cellulosic plant waste (C&I 2007, 9). In more recent work, de Winde’s group is now developing processes for using the raw glycerol byproduct from biodiesel manufacture as the feed to make chemicals, including para-hydroxybenzoic acid, which de Winde claims they can already make much more cheaply than by using the conventional petrochemical route.
Cost-saving innovations such as these are key to making biotechnology investments more commercially attractive, according to Philipp Hasler, investment director at Emerald Technology Ventures, a venture capital firm that invests in clean technologies, including white biotech. Investments in stand-alone biofuel technology are not currently viable, according to Hasler. Even though enzyme costs are only a third of the cost they were two years ago, and assuming a reasonable biomass feedstock cost of around $60/t delivered to the factory gate, he pointed out that the marginal production cost of cellulosic bioethanol would be $650/t ($1.94/gal) – against a going market rate of $500–700/t. ‘It is not conceivable to see that you can make a margin on cellulosic ethanol… unless you can generate additional revenues from byproducts or if the fuel is heavily subsidised,’ Hasler said.
Investors are looking for alternative revenue streams that either make use of all the plant biomass and byproducts, including for example lignin and/or products other than bioethanol. An efficient and cost effective bioconversion process is essential, Hasler added. ‘In our view the CAPEX efficiency of bioconversion is the most significant value driver and many companies are not paying enough attention to this aspect.’
Despite the risks of white biotech, however, interestingly Hasler pointed out that the capital market values of listed biotech firms have higher multiples than traditional chemical companies. And while the sector has admittedly experienced several ‘false dawns,’ said Bruce Dale, professor of chemical engineering and materials at Michigan State University, US, current volatile and increasing oil prices mean that the momentum is likely to be sustained.
‘Cellulosic biomass is the cheapest carbon in a carbon constrained world,’ Dale said, pointing out that Brazilian ethanol from cane sugar has been cheaper than gasoline for some years: ‘If we’d done the same we could have done it too. Now we’re playing catch up.’
Inexpensive biofuels would lower the risk of international conflict; reduce the influence of petrochemicals on prosperity and politics; deliver environmental benefits; and bring about greater growth for poorer nations, he continued. ‘If we get it right, this could be a historic chance to fast forward growth in the world’s poorest countries.’ Until now, most research activities have focused on improving the plant operations, but in the near future Dale says that we will also need to start work on some of the ‘less glamorous’ aspects, such as ensuring that sufficient amounts of the correct feedstocks are being grown and transportable pelletised fuels are developed.
All of that will take time and money to develop, agrees Shott; after all, ‘modern industrial biotechnology been around only two decades whereas fossil fuels have been supplying chemicals for two centuries so there’s a lot of catch up.’
EU biorefinery projects overview
EuroBioRef will run for four years and will cover the entire process of transformation of biomass, from fields to final commercial products. It involves 28 partners from 14 countries and is coordinated by Centre National de la Recherche Scientifique, France.
BIOCORE will create and demonstrate a lignocellulosic biorefinery. It will process residues, such as wheat and rice straws and different woods. The products will be second generation biofuels, bulk chemicals, polymers, speciality molecules, heat and power. BIOCORE involves 24 partners from 13 different countries and is coordinated by the Institut National de la Recherche Agronom, France.
Star-COLIBRI promotes coordination in biorefineries research. Five industry-driven European Technology Platforms and five research partners work on concepts concerning the whole value-chain of the biorefinery concept. The consortium is led by the European Federation of Woodworking Industries and involves 12 partners from six countries.
SUPRA-BIO aims to develop a technology toolbox for conversion and separation operations that adapts to various scenarios of product mix and feedstock. The aim is to optimise utilities, minimise environmental impact and maximise value. The University of Oxford is coordinating the project, which involves partners from eight countries.