Road map to the commercialization of next-generation biofuels – Part I

Feb 2009

First-generation ethanol and biodiesel production in the U.S. expanded significantly during the period from 2000 to 2008, with ethanol production capacity tripling, according to the Renewable Fuels Association, while the National Biodiesel Board notes that production of biodiesel grew to more than 450 million gallons per year (MMGPY) in 2008 from less than 10 MMGPY in 2000. This dramatic growth of production capacity was possible as the projects met some of the key criteria for rapid commercialization; their technology was well-known with a proven operating history, vendors were able to provide a turnkey plant with a performance guarantee, and the project development process was something banks and investors were accustomed to financing. All of these factors led to projects that traditional financing institutions were comfortable funding.
By contrast, the factors that allowed first-generation renewable fuels to grow at a historic rate have limited the commercialization of next-generation technologies. Many second-generation technologies have been operated at pilot scale but not at commercial scale.
There are no vendors that can provide a commercial-scale technology with a performance guarantee adequate to get standard commercial financing. As commodity prices for corn and vegetable oil limited first-generation biofuels’ economic viability, growth of non-food-based biofuels was expected to increase at a similar rate. However, a large portion of the companies remain in the development and pilot operating stages.

By: M. Warner (Harris Group Inc.)

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