Biogas! The big cellulosic fuel breakthrough?

Already, biogas as a renewable fuel is accounting for 90% of all cellulosic RIN production under the Renewable Fuel Standard.

Food and paper manufacturers, ethanol & biodiesel plants, cities, landfill operators, and animal feeding operations stand to benefit.

How does it work? We spoke with EcoEngineers CEO, Shashi Menon.

It’s the “quiet monster” that’s turning industrial, municipal and farm waste into valuable added income — ridding us of unwanted wastes, and reducing dependence on foreign fossil fuels.

“We always talk about climate change, but what do we do about it?” muses EcoEngineers CEO Shashi Menon. “It doesn’t matter if you believe in the science or not, there’s a great opportunity here.”

The potential? It’s in biogas.

“There’s been so much attention on liquid fuels that the potential that biogas fueling has to make an impact on this space hasn’t quite sunk in. The raw material to convert is huge and untapped, and ethanol and biodiesel, from what I observe, only have so much upside on starch and vegetable oils before the returns soften. But the opportunity to harness fuels from industrial, agri and muni waste — we haven’t connected it yet, and its powerful.”

Now, EcoEngineers has been in the RIN advisory business for quite a while, very respected — if you need the latest on RINs and RIN policy, chances are you’ve run into this group directly, or by reputation. But, how did that turn into a biogas advisory and project development unit?

“The 36 billion gallons mandate in the Renewable Fuel Standard — when we would ask, where is that coming from, there was never any convincing answers on how that would be filled, in a practical, project sense. It was all top-down numbers. Yet, one huge untapped opportunity was biogas, and it became obvious that to exploit the biomass potential, it was essential to install assets for anaerobic digestion.”

So, why focus on the upstream production, instead of, say, connecting producers to markets?

“There were  lot of untapped opportunities upstream, so many undeveloped area. With the amount of manure and industrial and ag waste, the American Biogas Council has said 12000 digesters could be installed. Hundreds of asset owners are simply flaring gas, or using it in inefficient power gen or boiler operations.

 

“So, we saw opportunity to create the efficiency, to take the waste streams and produce high value fuel. On the other side, CNG fuel is growing, in part because of low fossil natgas prices, and more mature companies are there and developing stations. The part that was not figured out was how do you get to the biomass and convert — the manure digester or slaughterhouse or municipal sludge. There are different strategies, and it helps a lot to understand RINs and the value equation. That was the toughest part, so we took it on.”

How does it work?

“A lot of the work is with the asset owners and also the community. We show how we can take advantage of waste residue to bring higher value, create jobs and a greater tax base and GDP growth. You can’t do that from a 30000 foot level, you’ve got to have boots on the ground and that’s what we do best, we really have people to people interaction.”

Do the opportunities surprise the asset owners and the communities?

“In some ways, no. Often, they are already using digesters, and they obviously are experts in handling their waste streams using their existing process. But a lot of people don’t know about the RFS and the biogas rule – so, people don’t know about the extent of the opportunity.

“But people are skeptical, we’re not the first to come to a farm community talking about blue sky opportunity. If you don;t have at least 12-24 percent returns, farmers don’t want the bother. If you promise more than that, they don’t believe you. They’re intelligent people who have developed strong ag industries in their townships. But business moves at the speed of trust, and you have to build it over time.”

“I am not sure if they are surprised at the values. What they welcome is that there is an investment opportunity, something they can stop viewing as a cost center, and start thinking of the municipal facility as a biorefinery. Municipalities always need more cash.”

 

What are the costs?

“The costs can range widely depending on the amount of raw material and the logistics and the loading zones and access, and connections. Plus, there’s the question of who pays, who wants ownership vs simply wanting an income stream.”

What does EcoEngineers do?

“We wear multiple hats. The first step to understand if is there a real project. It’s high level . For example, we worked with the state of Iowa to map potential in 2013-14. Iowa has all kinds of residue – rich organic material. But exactly we can site a digester or where there is an existing flare, that’s more complicated. It’s township by township, talking to stakeholders and that level of feasibility – we do a lot of that, then you demonstrate the business case at a given location.

Who’s interested in investing?

“Depending on how attractive or rich the case is, there are several funds will put money. With lower returns, if there is more patient money or an industrial pain point, a project can be done. So, we do the granular business case. We can own it, we can arrange for financing, or we can develop and manage a project for them. It’s up to the asset owner.”

Is this an Iowa phenomenon, or national?

“It’s everywhere. With Iowa we have a good relationship with the state energy office, and Iowa as a whole is very supportive or bioclusters, of exploring new ways to bring development. But we are very active in Kansas, Illinois, Nebraska, and Minnesota as well. And the potential is national.”

What’s the project activity so far?

“We have the first project in development in Kansas, and we have 4 projects in Iowa where we are conducting a feasibility study, all finishing this fall. We have another half-dozen in Minnesota, Iowa and Nebraska just starting up feasibility work and 12 in the pipeline. More than 20 all together.”

The technology, how does that work?

“We’re technology neutral – we solicit technology bids if needed, usually off the shelf – nothing radically new. There are plenty of mature vendors with good products. Occasionally there is a more creative element such as water treatment, or nutrient removal.

“The driving force to do this is RINs, we are primarily looking at it to drive towards the quota on RFS.  But there are other reasons for asset owners. For example, to mitigate odor for feed-yard, which affects quality of life, and when people want to do more animal processing, in a new location or expanding an existing capacity, there is a certain amount on NIMBYism around odor, and this is a good way to address this.

“Plus, AD is also a way to control pathogens, for example, before land-applying manure as fertilizer. Also, nutrient management, AD can have a positive impact on soil quality and nutrient management. We see a whole lot of drivers that all promote the use.

“The whole RFS program was a match to light off this entire garland of fireworks. All these other things are popping up — odor, nutrient, pathogen, a more sustainable way for agriculture — all of these positive outcomes are unexpected benefits of the push for renewable fuels.”

How do electric vehicles figure in here?

“I don’t want to create a dichotomy between methane for power and fuel. You can use electricity from biogas to power electric vehicles. There are logistics of tracking that, and there are some challenges tracking the distribution of electric vehicles and generating RINs right now. But it is not about making a jump from electrons for power and CNG as a fuel, to make money. It is about understanding and accessing RINs — if that’s better with CNG, great. But it could be about power down the line.”

How is the message resonating in Iowa so far?

“We are definitely the pioneer in Iowa. It’s not a new concept, a lot of people who have talked about anaerobic digestion and processing waste to produce electricity. The new thing is that the RFS can add greater value, and lead to the financing on new projects. The RINs and RFS are a vehicle to drive markets where there never was a well-developed investment rationale.

“Other people are carrying that message, too, all over the country. There the American Biogas Council, there are certain members of BIO, and more. What makes us different is that we are on the ground-level, as consulting engineers and consultants talking with people about solutions.”

 

Jim Lane, Biogas Digest

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