Southeastern Regional CenterSoutheastern Regional CenterTennessee Agricultural Experiment Tennessee Agricultural Experiment StationStation
University of University of TennesseeTennessee
… leading the Southeast in biomass research, education, and … leading the Southeast in biomass research, education, and outreachoutreach
Tennessee Farm Bureau FederationAnnual Convention
Franklin, TN
December 4, 2006
Dr. Joe DiPietroV.P., Institute of Agriculture
University of Tennessee
Dr. Kelly TillerAgricultural Policy Analysis Center
University of Tennessee
Tennessee’s Tennessee’s Bioenergy Future:Bioenergy Future:
Opportunities to AdvanceOpportunities to Advancethe Bioeconomythe Bioeconomy
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U.S. Corn Ethanol ProductionU.S. Corn Ethanol Production
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Mill
ions
of
Gal
lons
of
Eth
anol
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
0
3,000
6,000
9,000
12,000
15,000
Mill
ions
of
Gal
lons
of
Eth
anol
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019
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 the amount of corn-based
ethanol we can sustainably produce
without disrupting the ag sector
Could potentially double corn-ethanol capacity
Tennessee crop farmers benefit from corn-ethanol, wherever plants are located
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Transportation Fuel FocusTransportation Fuel Focus
Today, 97% of our transportation fuel
comes from petroleum sources
Southeastern Regional CenterSoutheastern Regional CenterTennessee Agricultural Experiment Tennessee Agricultural Experiment StationStation
Energy In vs. Energy OutEnergy In vs. Energy Out
5.3
1.40.8
0.4
0
1
2
3
4
5
6
Fos
sil E
nerg
y R
atio
=
(En
erg
y D
eliv
ere
d to
Cu
sto
me
r / F
oss
il E
ne
rgy
Use
d)
Cellulosic EthanolBiorefinery
Corn Ethanol Gasoline Electricity
Source: J. Sheehan & M. Wang (2003)
The road to petroleumdisplacementis paved with
cellulosic biomass
* Some newer estimates of cellulosic FER >10
*
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Our Comparative AdvantageOur Comparative Advantage
Logging & ResiduesLogging & Residues
SwitchgrassSwitchgrass(2014, at $50/dt)Switchgrass Production, 2014
Dry Tons of Switchgrass
Zero
Zero to 300 thousand
Up to 1 million
Up to 2 million
Over 2 million
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.
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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 and supporting 12,000 rural jobs
– At least 4 of the biorefineries owned and operated by local farmer cooperatives, retaining an additional $40 million in local communities
Satellite co-product plants creating an additional 3,000 jobs and $2 billion in revenue
More than 20 thousand farmers growing dedicated energy crops, adding $100 million in new farm revenue
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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
– Iogen test plant running on wheat straw in Canada, commercial facility planned in Idaho
– Broin corn stover & grain facility near groundbreaking (Iowa)
– Several planned or under consideration• e.g., DuPont, Mascoma, Potlatch, Xethanol
Making cellulosic ethanol economically feasible is a major part of the President’s Biofuels Initiative– DOE projects cellulosic ethanol at $1.07/gallon by 2012
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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 fuelsS
imul
tane
ous
Dev
elop
men
t
Southeastern Regional CenterSoutheastern Regional CenterTennessee Agricultural Experiment Tennessee Agricultural Experiment StationStation
Building the BioeconomyBuilding the Bioeconomy
A key driver in
propelling the biofuels
industry forward is
the
successful
construction and
operation of cellulosic
biorefineries to
demonstrate the
technology and
improve the
economics
Southeastern Regional CenterSoutheastern Regional CenterTennessee Agricultural Experiment Tennessee Agricultural Experiment StationStation
The Tennessee Biofuels InitiativeThe Tennessee Biofuels Initiative
• Construct a demonstration-scale cellulosic ethanol facility in Tennessee
– Utilize 170 tons per day of locally produced switchgrass and wood
– Work with partner industries to generate 5 million gallons of ethanol annually for local distribution
– Refine the process for local resources to reduce costs, improve process, scale up to commercial
– Deploy the model throughout the state
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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 Process1. Preprocessing: Wood chips and switchgrass are delivered for storage, grinding, drying, and classification.
2. Pretreatment: A solvent fractionation process is used to separate the chemical components of the biomass (this step is specific to lignocellulosics).
3. Hydrolysis: Enzymes are used to break down the carbohydrates to their fermentable sugars (5C & 6C)
4. Fermentation & Distillation: Yeast converts the sugars to ethanol (or related alcohols), and water is removed to further concentrate the product.
Southeastern Regional CenterSoutheastern Regional CenterTennessee Agricultural Experiment Tennessee Agricultural Experiment StationStation
Lignin and solid residue will initially provide heat and energy for the process
Product diversification is considered important to economic viability of the biorefinery
Research will address development of chemical building blocks and novel, value-added products
Coproduct utilizationCoproduct utilization
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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 50 mile radius of
plant
• Easily supplied by a few surrounding counties• From land currently idle or in hay or pasture• Without reducing other crop or livestock production
• Forest biomass (up to 100 M tons) readily available within transport range, important for smoothing seasonality of feedstock
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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 and plant 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 harvests
per year
UT has long history of switchgrass production and market research
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TN Switchgrass PotentialTN Switchgrass Potential
549,299
915,552
374,957735,734
233,421
670,125
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
2,343,861
4,268,894
2,037,264
3,964,812
2,652,494
3,595,344
Tennessee could produce enough switchgrass by 2025
to produce more than a billion gallons 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
$263
$193
$103
$34
$97
$94
$81
$25
$0 $50 $100 $150 $200 $250 $300
S'grass(3)
S'grass(2)
S'grass(1)
Hay
Corn
Soybeans
Cotton
Wheat
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 Product
by $223 million– Generates $40 million in new
tax revenue
• Ownership of a facility by a local cooperative retains an additional $10 million per year in the local economy
• For a billion gallons of ethanol production, TN gets:
– 10,000 to 20,000 new jobs– $400 million dollars in new state &
local taxes
Cellulosic bioeconomy is an opportunity to:
– Create rural jobs, development, and wealth
– Keep money in the state that is spent today but currently flows out-of-state
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Capital Investment EstimateCapital Investment Estimate
• Estimates derived from corn stover model (National Renewable Energy Laboratory, 2002)
• Scaling factor of 0.6 used to adjust for plant volume(70M gal/yr commercial to 5M gal/yr Grassoline™ pilot)
• Added cost is factor adjusted, may require less (ca. $10M)
Total InstalledEquipment + Added Cost
(@ 42%) = Total CapitalInvestment
$23.45M $17.24M $40.69M
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Annual Operating CostAnnual Operating Cost
• Estimates derived from corn stover model (National Renewable Energy Laboratory, 2002)
• Linear scaling was used to adjust for plant volume (70M gal/yr conventional to 5M gal/yr Grassoline™ pilot)
• Assumes recoveries from product sales are reinvested in R&D
Annual Operating Estimate - $5.31M
Feedstock
SeparationConversion
Distillation
Other
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Feedstock IncentivesFeedstock Incentives
• Incentive is the difference between “operational” feedstock cost and initial farm price required to establish supply, years 1-5
• Assumes farmers initially need $55/ton to establish, requiring $28/ton initial subsidy
• The average farmer growing about 20 acres of switchgrass would receive about $3,500 in incentive payments in years 1-5
Switchgrass Incentive - $1.75M
Paid in years 1 through 5 totaling - $8.75 M
By year 6, switchgrass supplied by farmers at - $27/ton
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Project Cost SummaryProject Cost Summary
• One-time costs include pre-construction, construction, and equipment
• Recurring costs include operating, switchgrass incentive and R&D, net of ethanol market recoveries
• Plant operates on product sales year 6 and beyond (incl. R&D)
Year 1Year 1 Year 2Year 2 Year 3Year 3 Year 4Year 4 Year 5Year 5 Year 6Year 6
One-Time Costs
Recurring Costs
Total Annual
$40.69$8.57
$49.26
$ -$5.31
$5.31
$ -$5.31
$5.31
$ -$5.31
$5.31
$ -$5.31
$5.31
$ -$ -
$ -
Project Total $70.5
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A Synergistic FitA Synergistic Fit
• Builds on the UT/ORNL partnership• Unparalleled capacity for discovery and implementation
through science, engineering, and outreach• Improves competitiveness of GTL Bioenergy Center Proposal
• Southeastern Sun Grant Center is hub for regional biofuels/bioproducts research
• Significant UTIA internal redirecting and expansion in this arena
• State investments in “green corridors” for ethanol distribution
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A concept to solve America's energy needs andrevitalize rural communities with Land Grant
University Research, Education, and Extension programs
on renewable energy and biobased, non-food industries
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SE Sun Grant ProgramsSE Sun Grant Programs
Awarding grant funding throughout the Southeast for biomass R&D&E
Strengthening our ties with National Labs through faculty fellowships
Developing bioenergy curriculum
Developing online educational resources
Advancing our core research in biomass and bioenergy
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Scope of UT Biomass ProgramScope of UT Biomass Program
… … farm to farm to feedstock …feedstock …
… … to fuels,to fuels,power, products …power, products …
… … to to consumersconsumers
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UT Biomass Research CoreUT Biomass Research Core
Economic analysis &policy
Feedstock pretreatment& separation
Biotechnology & plantgenomics
Biobased materials
Biomass conversiontechnologies
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The opportunity is today!The opportunity is today!• Cellulosic ethanol represents the foundation for
a new industry sector with value-added processing of Tennessee raw materials
• The pilot-scale facility will:– Address the nuances of the feedstock and optimize
the process– Enable research to expand the biorefinery products
and markets– Resolve regulatory and logistical concerns– Streamline the processing system– Lead the commercial deployment of Tennessee’s
bio-based economy