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New Energy Economics: Challenges of Commercializing Cellulosic Biofuels

Cole Gustafson, NDSU Biofuels Economist Cole Gustafson, NDSU Biofuels Economist
Pyrolysis oil is a low-grade fuel.

By Cole Gustafson, Biofuels Economist

NDSU Extension Service

Two Canadian firms, UOP and Ensyn, are in a joint venture to commercialize their proprietary cellulosic biofuel. At the University of North Dakota’s Energy and Environmental Research Center biomass conference, the group discussed the challenges they are facing in trying to commercialize their process. They stated they have adequate feedstock sources, secured biofuel markets and have a technology guarantee for their process but still are unable to find commercial financing.

UOP-Ensyn uses fast pyrolysis to convert biomass to liquid pyrolysis oil. The process starts with a fluidized bed of sand that is heated to 510 degrees Celsius. The biomass then is gasified to produce the oil. A wide variety of biomass, such as wood, crop residues, energy crops and urban waste, can be utilized.

Pyrolysis oil is a low-grade fuel. A couple of its advantages are low nitrogen oxide and sulfur oxide emissions and low greenhouse gas emissions, plus its low cost. The firm estimates it can commercially produce pyrolysis oil that is 40 percent cheaper than No. 2 fuel oil. Given the high temperatures used to produce the oil, water is flashed off, so the product does not contain any moisture.

The present market for pyrolysis oil that UOP-Ensyn produces is for electric turbines. Electrical turbines can burn a wide variety of liquid fossil fuels. Since pyrolysis oil is a low-quality, high-viscosity fuel, few commercial markets exist for it. Use of the fuel to produce electricity is a viable long-term market for the product.

A significant disadvantage of pyrolysis oil as a biofuel is its acidity. The pyrolysis oil produced by UOP-Ensyn has a pH of less than 3. Given that it is very acidic, the fuel corrodes most steel storage tanks, fuel lines and engine parts. This can be overcome by manufacturing fuel storage and engine fuel systems with stainless steel, but this is costly because stainless is difficult to machine.

A second disadvantage is its high viscosity. The heavy product has almost a tarlike appearance. With a flash point around 40 to 100 degrees C, the heavy pyrolysis oil is not auto-igniting, so its use in a diesel engine is not possible. Chemically, the oil has too much oxygen to be considered a hydrocarbon. UOP-Ensyn expects to overcome these obstacles through additional research and then will develop a green transportation fuel by 2012.

Like most biofuel companies, UOP-Ensyn is having a difficult time obtaining financing to expand. Most cellulosic biofuel companies are denied commercial financing because the production technologies are unproven. However, in UOP-Ensyn’s situation, Honeywell has provided a 100 percent guarantee that the process will work commercially. UOP-Ensyn also has contracts for both the feedstock supplies and the pyrolysis oil that is produced. Even when all market and production risks have been removed, the firm still cannot obtain capital that would enable it to expand.

Pyrolysis oil represents the variety of renewable biofuels that likely will come to the marketplace in the near future. While the fuel does have several limitations, it has found a niche that deserves lender consideration.

NDSU Agriculture Communication

Source:Cole Gustafson, (701) 231-7096,
Editor:Rich Mattern, (701) 231-6136,
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