DOE and Abengoa Launch Biorefinery in Kansas

Kansas is a political mess right now, and its leaders have hardly been hospitable to sustainable development, but a new biofuels project underway, close to the border with the Oklahoma panhandle, shows that new clean energy technologies do have a future. This morning the Department of Energy and the Spanish multinational Abengoa are officially kicking off the company’s first commercial-scale biorefinery in Hugoton. Once known as Kansas’s natural gas capital, this town of 4,000 may very well become known as the catalyst for next-gen biofuels, such as cellulosic ethanol, finally scaling and becoming cost-competitive with other fuels.

So why would a €7.8 billion (US$10 billion) company be bothered with this corner of the prairies? A conversation I had with Chris Standlee, Abengoa’s executive vice president of global affairs, shed some light on the future of cellulosic alcohol—which could finally play a role in diversifying our country’s energy portfolio, reduce carbon emissions and generate revenue for farmers. According to Standlee, Albengoa’s investment in the Hugoton plant reflects the company’s confidence that cellulosic alcohol is finally becoming a more cost effective option.

The new biorefinery was completed in August and started production late last month, and according the company, will be able to produce as much as 25 million gallons (95 million liters) of fuel annually. The plant collects agricultural waste, mostly the stalks and leaves that comprise corn stover and other residues, from farmers within 50 miles of the plant—paying local farmers as much as $17 million annually for that feedstock. The company expects to process 1,000 tons of biomass daily. One challenge with biofuels, of course, is the question whether a company would be able to source enough feedstock for the long run. Standlee assured me that the amount of waste Abengoa is collecting only scratches the surface: about 300,000 tons out of the 15.3 million tons of agricultural residues generated within 50 miles of Hugoton annually.

Waste from corn, wheat and sorghum production, as well as switchgrass, is rich in sugars, but (in layman’s terms) they are trapped in cellulose, and breaking through those stubborn cell walls has long been the bugaboo of ethanol production—which is why for decades the U.S. has favored corn ethanol while Brazil has had a 40-year history of advanced sugarcane ethanol production. But as Standlee explained to me, advancements in enzymes are proving to be the big difference. Four years ago, enzymes accounted for about $1.85 of the cost per gallon of cellulosic ethanol, which is why costs hovered between $6 and $8 per gallon. Albengoa manufactures their own enzymes, hence one reason why those costs have gone done as much as 30 percent since 2010. And Standlee claims the cost of enzymes per gallon of production could hit as low as 50 cents in a few years. The result: a gallon of cellulosic alcohol costing $2.30 a gallon in 2016 is not unrealistic—and could be very attractive considering fossil fuel’s price volatility.

The results are higher yields: in 2010 a ton of agricultural waste yielded about 55 gallons of fuel. Now that amount is up to 75 gallons, and Standlee sees that figure increasing to 85 gallons within two years. The company has invested at least $100 million over 10 years in its research and development of cellulosic alcohol. Full disclosure: the DOE did provide Abengoa a $132 million loan guarantee and $97 million in grants. But to keep this in context, annual federal government subsidies for fossil fuel production in the U.S. range from $10 to $52 billion; this year that figure could reach $21 billion.

This Kansas plant is only one cog in Abengoa’s biofuels portfolio. The company is also testing generating ethanol from municipal trash, and is also investing in biofuels for airplanes as well as bioplastics. The ability to create fuels out of what would otherwise be waste could make a huge difference by the end of this decade—and also help make a dent in the food-vs-fuel debate that have spooked many investors, and governments, away from biofuels.

Image credit: Abengoa

After a year in the Middle East and Latin America, Leon Kaye is based in California again. Follow him on Instagram and Twitter. Other thoughts of his are on his site, greengopost.com.