Energy | Ecotrope

5 Things To Know About ZeaChem's Biorefinery

Ecotrope | Jan. 30, 2012 1:25 a.m. | Updated: Feb. 19, 2013 1:32 p.m.

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ZeaChem CEO Jim Imbler led a tour of his company's demonstration facility in Boardman Thursday, when Agriculture Undersecretary Dallas Tonsager was in town to announce a $232.5 million federal loan guarantee for the company to build a commercial-scale biorefinery in Boardman.

ZeaChem CEO Jim Imbler led a tour of his company's demonstration facility in Boardman Thursday, when Agriculture Undersecretary Dallas Tonsager was in town to announce a $232.5 million federal loan guarantee for the company to build a commercial-scale biorefinery in Boardman.

There’s a lot to know about ZeaChem’s $390 million plans to build a commercial-scale biorefinery in Boardman.

I made the five-hour round-trip to Boardman last week to learn more about why the U.S. Department of Agriculture has decided this company is worthy of a $232.5 million loan guarantee. And the more I learned, the more I wanted to know.

Here are five things I think you should know about this project:

1. It’s making cellulosic ethanol:

Is that different from corn ethanol? In terms of the final product, no. It’s identical. But there are some really key differences. One, you’re using wood and farm waste – not a food crop – so you’re not competing with other businesses that need corn for feeding livestock or making food products.

ZeaChem’s commercial-scale plant will be capable of making 25 million gallons of cellulosic ethanol a year. They have a unique process that allows them to make ethanol with part of the plant material and make other products like acetic acid and ethyl acetate – used to make lacquers and paint thinners – with the rest of the plant.

A key reason Colorado-based ZeaChem has chosen to build a biorefinery in Boardman is because of the Greenwood Resources poplar plantation nearby. The plantation supplies wood for furniture, and the leftover wood chips will supply 70 percent of ZeaChem's feedstock for making ethanol fuel and ingredients for lacquers and paint thinners.

A key reason Colorado-based ZeaChem has chosen to build a biorefinery in Boardman is because of the Greenwood Resources poplar plantation nearby. The plantation supplies wood for furniture, and the leftover wood chips will supply 70 percent of ZeaChem's feedstock for making ethanol fuel and ingredients for lacquers and paint thinners.

The U.S. needs cellulosic ethanol for fuel. That’s not my opinion; that’s federal policy. The Obama administration has set targets for homegrown ethanol made from plants – in addition to the ethanol made from corn kernels. Unfortunately, those targets have not been met. Not even close, actually (more on that later).

2. It taps the power of termites:

The ZeaChem biorefining process uses a bacterium found in the stomachs of termites, and it produces fewer carbon dioxide emissions than other types of biofuel.

Plant cells have that distinctive cell wall that’s made out of cellulose. And for a long time now scientists have been trying to find a way to break that down efficiently to make ethanol that we can use in our cars.

In ZeaChem’s process, the termite microbe does a lot of the work to turn plant sugars into ethanol, and they can keep reusing the same bugs over and over again. They also use chemicals and heat – “brute force” as company CEO Jim Imbler put it – to gasify the really tough lignin that holds the plant together. The parts of the plant that don’t get made into ethanol become ingredients for other products, which adds to the efficiency and cost-effectiveness of the whole biorefining process.

When all is said and done, the company says its ethanol can compete with $50 a barrel oil – under $2 a gallon – with minimal greenhouse gas emissions in the refining process. Most corn ethanol is fermented with yeast that produce carbon dioxide.

3. It has a leg up:

Just east of Boardman on Highway 84, you can see thousands of acres planted with poplar trees at a plantation run by Greenwood Resources.

Just east of Boardman on Highway 84, you can see thousands of acres planted with poplar trees at a plantation run by Greenwood Resources.

ZeaChem got a $25 million grant from the U.S. Department of Energy to build the recently completed demonstration facility in Boardman. It’s basically a miniature version of the commercial-scale plant. The company also got a $12 million share of a larger grant from the U.S. Department of Agriculture to produce jet and diesel fuel at the demo facility.

There are federal alternative fuels targets and state mandates for ethanol use that will continue to provide a marketplace for the product they’re creating, though there are competitors out there. And ZeaChem’s ethanol is approved for use under California’s low-carbon fuel standard.

One of the reasons the company thinks its plan is going to work so well is because 70 percent of its feedstock is coming from the Greenwood Resources plantation. Greenwood Resources got a $17.1 million grant from the USDA’s biomass Crop Assistance Program to grow 7,000 acres of hybrid poplar for the commercial-scale plant.

So…that’s a lot of government oomph going into this project. And at least part of the reason for that is that the U.S. is WAY behind in meeting its alternative fuel targets for cellulosic ethanol. The government had targeted 500 million gallons of cellulosic ethanol production for 2012. But the Energy Information Administration estimates there will only be 7 million gallons produced for the market.

4. It’s not guaranteed to succeed:

ZeaChem may have a loan guarantee from the USDA, but that’s no guarantee the project will be successful.

The company’s private loan is $232.5 million, and the government is guaranteeing 60 percent of that – with conditions. The total project will cost $390 million. So, there’s still quite a bit of private investment needed to get this job done – even beyond the $232 million loan. The company’s CEO Jim Imbler was very clear about the fact that they still have a lot of work to do to make this happen.

With loan guarantees, the government is taking a risk. I talked with Agriculture Undersecretary Dallas Tonsager, and he acknowledged that. ZeaChem’s loan guarantee is about as big as they get under the Department of Agriculture’s Biorefinery Assistance Program. But if you remember the Solyndra debacle, that loan guarantee from the U.S. Department of Energy was $500 million. So, if for some reason ZeaChem’s project doesn’t work out, the stakes aren’t quite as high in terms of the amount of money on the line.

5. It still has its critics:

Critics of biofuel in general have raised concerns about using land and water to fuel our cars. With enough pressure to produce biofuel, some forested land could be converted into crop production, and feedstocks could become a drain on water resources.

One critic already weighed in here on the blog. As Royj commented: “Ethanol from cellulose is a seriously bad idea. Cars don’t belong in the food chain at the bottom, competing with soil life, any more than at the top competing with people.”

ZeaChem says its process promises to produce 135 gallons of ethanol per bone dry ton of plant material. That’s a lot relative to other technologies, Imbler said, and the high yield means more fuel can be produced with fewer land impacts.

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