by Pavel Molchanov (Raymond James and Associates/Biofuels Digest) …There is no question that there have been growing pains along the way, more than we would have hoped, but the industry continues along its trajectory towards scale. We expect 2013 to be a critical period as a wide variety of Gen2 biofuels approach commercialization and companies increasingly “graduate” from the pre-revenue stage to full commercial operations.
Slow scale-up means Gen2 RFS targets won’t be met for the rest of this decade.
If you are an investor in refining stocks who is watching in frustration as refiners have to buy large amounts of RIN credits, you probably know that the problem in the corn ethanol market is too much supply, i.e. the so-called “blend wall”.
The problem in the Gen2 biofuel space is the exact opposite: the industry is behind on meeting its federal targets, particularly when it comes to cellulosic biofuels. …
In actuality, the EPA has had to practically waive the statutory targets for the past three years and again for 2013. For example, the EPA is requiring 14 million cellulosic gallons in 2013, up 61% y/y but still a reduction of 99% from the official target of one billion gallons. READ MORE and MORE
… However, there is a small, but growing, subset of companies that are developing cellulosic sugars for sale to third parties, either via direct product sales or technology licensing. Their key differentiation is in the type of hydrolysis underpinning the process: (1) acid hydrolysis, such as what’s being developed by Virdia and Norway-based Weyland; (2) enzymatic hydrolysis, such as what’s being developed by Edeniq; and (3) supercritical hydrolysis, pioneered by Renmatix. These and other players typically aim to produce cellulosic sugars in the range of $0.05-0.10/lb, which compares to the current spot sugar price near $0.20/lb. READ MORE
