Testimony before the Senate Committee on Agriculture, Nutrition, and Forestry

on Senate Bill S935: Sustainable Fuels and Chemicals Act of 1999

May 27, 1999

Lee R. Lynd and Charles E. Wyman

Thayer School of Engineering, Dartmouth College

Summary of key points:

1. Conversion of plant biomass to fuels and chemicals offers the potential for revolutionary benefits.

2. Widely available biomass feedstocks are cost-competitive with crude oil at today's prices, hence the major obstacle to be overcome is the cost of processing. Cost competitive processes can reasonably be expected given a sufficient research effort, with biologically-based processes having particular potential.

3. The three focus areas identified in the Sustainable Fuels and Chemicals Act - overcoming the recalcitrance of cellulosic biomass, product diversification and evaluation of sustainability and economic viability - are strategically important and appropriately chosen. We urge that these areas and the balance between them be preserved as the Act progresses through legislative review.

4. The emphasis of the act on innovation and applied fundamentals sets a vital new course for the country in the area of research and development pursuant to advanced biomass conversion technologies. This emphasis is responsive to the largest unmet needs in the biomass field and restores needed balance relative to support for demonstration and commercialization. We urge that it be preserved in the final legislation.

5. The Sustainable Fuels and Chemicals Act is an appropriate investment of public funds that promises to be repaid many times over and will substantially accelerate the advancement and deployment of technology for sustainable production of chemicals and fuels.

Overview. Thank you Senator Lugar for the invitation to present our perspectives on opportunities and benefits offered by production of sustainable fuels and chemicals from plant biomass, as well as the central role of the Sustainable Fuels and Chemicals Act in fostering the realization of these benefits. Our comments are based on over three decades of combined experience in the sustainable fuels and chemicals field in academia, the National Renewable Energy Laboratory (formerly the Solar Energy Research Institute), and industry.

Plant biomass is the only foreseeable sustainable source of organic fuels, chemicals, and materials. Because of this, biomass is a central theme in both our testimony and the bill under consideration. We focus our remarks on commodity products derived from biomass on a very large scale, because such products offer the greatest benefits in terms of the underlying factors that motivate biomass utilization: sustainable resource supply, improved environmental quality, eliminated greenhouse gas emissions, strategic security, improved balance of payments, and healthier rural economies¹. Our testimony is organized into five points.

Point #1. Conversion of plant biomass to fuels and chemicals offers potential benefits to human society that can only be described as revolutionary. Driven by the imperative of industrialization and enabled by advances in organic chemistry and chemical engineering, petroleum refining became a major source of fuels, chemicals, and materials in the first half of the 20^th century. We foresee a similarly significant emergence of biomass refining in the 21^st century, with the dominant imperative being sustainability and the enabling factor being advances in biotechnology and related biochemical engineering.

In support of this vision, we note that:

• Biomass-based production of chemicals and fuels has marked potential for enabling "green" manufacturing featuring environmentally-benign raw materials, processes, and products^2,3.

• Due to the CO₂-consuming character of photosynthesis, many biomass-based processes are expected to have full-cycle greenhouse gas emissions of essentially zero^4-6. A Presidential Advisory Committee found accelerated deployment of biomass-based fuels to be one of the two most promising policy options for reducing transportation sector greenhouse gas emissions⁷.

• A forthcoming National Research Council study projects that 50% of organic chemicals and materials will be produced from biomass by the year 2020⁸.

• In Royal Dutch Shell's preferred scenario for energy supply and economic development, worldwide biomass utilization exceeds that of oil by the year 2060⁹.

Point #2. Widely available biomass feedstocks are cost-competitive with oil at today's prices, hence the major obstacle to be overcome is the cost of processing. Cellulosic materials such as grass and woodchips have particular potential as feedstocks for sustainable production of fuels and commodity chemicals because of their low cost, plentiful supply, and very large potential for R&D-driven reductions in processing costs. At a representative price of $40/delivered dry ton, the cost of cellulosic biomass is equivalent on a mass basis to oil at $6/barrel and on an energy basis is equivalent to oil at $12.50/barrel. The dominant factor impeding more widespread conversion of biomass to commodity fuels and chemicals is thus the high cost of current processing technology rather than the cost of raw materials.

Cost-competitive biomass conversion is technically feasible for a very broad range of compounds that provide functional substitutes for products currently derived from petroleum. This statement is supported both by detailed technical analyses, and by back-of-the envelope calculations based on adding typical commodity product cost margins to the cost of biomass feedstocks. We expect that biological processing will be a particularly important element of advanced technologies for converting biomass to fuels and chemicals. The economics of biologically-based processes is roughly competitive with non-biological processes today, however the potential for research-driven reductions in the cost of biological processing is singularly large. For example, we have presented an analysis in the peer-reviewed literature that projects a most likely cost of about 50 cents per gallon for mature technology producing ethanol from poplar, a representative cellulosic feedstock¹⁰. In this analysis, specified foreseeable advances lower the cost of biologically-mediated process steps by nearly an order of magnitude. Moreover, these advances are not specific to ethanol but are applicable to any process featuring enzymatic hydrolysis of cellulosic biomass.

Point #3. The three focus areas identified in the Sustainable Fuels and Chemicals Act - overcoming the recalcitrance of cellulosic biomass, product diversification and evaluation of sustainability and economic viability - are strategically important and well chosen. We urge that these areas and the balance between them be preserved as the Act progresses through legislative review.

Overcoming the recalcitrance of biomass, the first of these focus areas, is a generic obstacle impeding cost-effective production of both fuels and chemicals from cellulose-rich crops, as well as realization of value from residues associated with grain production, paper manufacture, and other agriculture and forestry-related activities. The petroleum industry has been highly successful in overcoming the recalcitrance of crude oil, which is considerable, and there is every reason to believe that we can be similarly successful at overcoming the recalcitrance of cellulosic biomass. We are confident that such success will engender a watershed of new processes for production of biomass-derived products. Indeed, if judged by the question: "How much will the world change if we are successful?", overcoming the recalcitrance of cellulosic biomass emerges as the number one research priority in the context of sustainably supplying organic fuels and chemicals.

Product diversification is the second vitally important focus area in the bill. To be cost-competitive in the long term, biomass refining will very likely have to produce a slate of co-products with diversity similar to that of an oil refinery. This diversity captures the economies of scale resulting from high-demand products such as fuels, the higher price margins available from producing lower-demand products such as most chemicals, value maximization resulting from using all chemical constituents of biomass feedstocks, and integration benefits that arise when power or animal-feed is coproduced. Research on innovative strategies for product diversification and related applied fundamentals is responsive to the needs of both the existing corn-based biomass refining industry as well as the cellulose-based industries of the future.

The third critical focus area is consideration of biomass processing in resource, environmental, and economic contexts. While biomass-based processes have clear potential for environmental and resource benefits as well as economic viability, realization of this potential cannot be taken for granted and will benefit from careful analysis. For example, we need to develop further insight and consensus on questions such as strategies to enhance the scale and sustainability of biomass utilization, and the economics of multi-product biomass refineries.

Point #4. The emphasis of the act on innovation and applied fundamentals sets a new course for the country in the area of research and development pursuant to advanced biomass conversion technologies.

Although biomass refining at a cost competitive with petroleum refining is a realistic objective, we should make no mistake: it is also a big job. In comparison to the benefits of achieving this objective and the R&D needed to get there, the United States is significantly under-invested in biomass conversion technology generally, and in research focused on innovation and applied fundamentals in particular.

In the past the strategy implicit in the Government's biomass R&D portfolio has been to devote the largest fraction of support to activities related to demonstration and commercialization so that technologies are ready to expand rapidly when the price of oil increases. Today, when oil prices are widely expected to remain low for a decade or more, large-scale realization of the numerous benefits of producing sustainable fuels and chemicals from biomass demands a new strategy. In essence, we need to bring the prices of biomass-based products down to the prices of their counterparts produced from low-priced petroleum rather than waiting until the price of petroleum increases to the point that less-than-mature biomass conversion technologies become cost competitive. To do this will require an increased emphasis on research-driven innovation.

Although some important cost savings result from progress up the learning curve that accompanies demonstration and commercialization, and support for commercialization and demonstration through existing programs should continue, a distinct and substantial category of cost savings can only result from research-driven innovation. We will need cost savings from both strategies to reach the objective of cost-competitive processing. Moreover, as commercial deployment of biomass conversion technology becomes a reality - initially based on "niche" opportunities with low-cost raw materials and other site-specific advantages - the relative importance of innovation-targeted research will only increase.

We have suggested the term "applied fundamentals" in reference to the study of the underlying phenomena operative in biomass conversion processes. Applied fundamentals provides understanding that enables innovation - and especially large innovations. In addition, it reduces risk, time, and cost associated with scale-up and commercial application. Finally, better understanding of applied fundamentals tends to be applicable to a wide range of processing strategies and technologies whereas this is much less true of demonstration and commercialization. Although critically important, applied fundamentals and related innovation-targeted research has received a small fraction of governmental support in the biomass field and has seemingly been a lost middle ground between basic and applied science as these terms are currently used in the U.S.

The bill's emphasis on innovation and applied fundamentals is one of its most important features, is responsive to the largest unmet needs in the biomass field, and restores needed balance relative to support for demonstration and commercialization. We urge that this emphasis be preserved in the final legislation.

Point #5. The Sustainable Fuels and Chemicals act is an appropriate investment of public funds that promises to be repaid many times over will substantially accelerate the advancement and deployment of technology for sustainable production of chemicals and fuels.

Compared to the private sector, government has additional incentive to foster development of biomass conversion because benefits such as reduced greenhouse gas emissions, enhanced strategic security, and domestic job creation do not accrue to the corporate bottom line. As well, government investment should be less sensitive than the private sector to the long lead times and high risk characteristic of investment in new biomass technologies. Ironically, the consensus for governmental support of R&D for sustainable resource utilization has historically been strongest during times of high energy prices, yet a good case can be made that the need for such support is actually greatest when prices are low and the private sector has limited incentive to act. Because of these factors, the rate of advancement and deployment of biomass conversion technology will be much greater with strong and well-guided governmental R&D investment than without it.

We close by noting that a substantial increase in Federal funding for biomass processing R&D and an increased emphasis on research-driven innovation and applied fundamentals is consistent with the findings of several comprehensive studies. These include the Policy Dialogue to Recommend Policies to Reduce Greenhouse Gas Emissions from Personal Vehicles⁷, the Energy Development Panel of the President's Council of Advisors on Science and Technology¹¹, a soon-to-be-released study of the National Research Council on Biobased Industrial Products⁸, and recent testimony given before a second National Research Council Review of DOE's R&D Strategy for Biofuels¹².

References.

1. Lugar, R., Woolsey, R.J. The new petroleum. Foreign Affairs. 78:88 (1999).

2. Frost, J. Renewable feedstocks. The chemical engineer. May 16, 32 (1996).

3. Lynd, L.R., C.E. Wyman, T.U. Gerngross. Biocommodity engineering. Invited paper accepted for publication in Biotechnology Progress.

4. Delucchi, M.A. Emissions of greenhouse gases from the use of transportation fuels and electricity. Argonne National Laboratory, Argonne (1991).

5. Lynd, L.R., J.H. Cushman, R.J. Nichols, C.E. Wyman. Fuel ethanol from cellulosic biomass. Science 251:1318 (1991).

6. Tyson, K.S., C.J. Riley, K.K. Humphres. Fuel cycle evaluations of biomass-ethanol and reformulated gasoline, Vol I. NREL/TP-463-4950. DOE Office of Transportation Technologies, Washington, D.C., 1993.

7. Report to the President of the Interagency Steering Committee on the Outcome of the Deliberations of the Policy Dialogue Advisory Committee to Assist in the Development of Measures to Significantly Reduce Greenhouse Gas Emissions from Personal Vehicles. The White House, February, 1996.

8. Biobased Industrial Products:Research and Commercialization Priorities. Dale, B.E., Artzen, C.E., (editors), National Research Council National Research Council, Washington (in press).

9. The Evolution of the World's Energy Systems. Shell International Limited. 1996.

10. Lynd, L.R., R.T. Elander, C.E. Wyman. Likely features of mature biomass ethanol technology. Appl. Biochem. Biotech. 57/58:741 (1996).

11. President's Committee of Advisors on Science and Technology, Panel on Energy Research and Development. Federal Energy Research and Development for the Challenges of the Twenty-First Century. November, 1997.

12. Testimony of Charles Wyman before the Review of DOE's R&D Strategy for Biomass-derived Ethanol and Biodiesel Transportation Fuels, National Research Council, February 11, 1999.

Lee R. Lynd. Dr. Lynd is an Associate Professor of Engineering at the Thayer School of Engineering at Dartmouth College. He is also a member of the Cell and Molecular Biology Program and an Adjunct Professor of Biological Sciences at Dartmouth College. Dr. Lynd serves as an Associate Editor of Biotechnology and Bioengineering, is the Manager of the Link Foundation Energy Fellowship Program, and was the biofuels industry representative on the Advisory Committee to Assist in the Development of Measures to Significantly Reduce Greenhouse Gas Emissions from Personal Vehicles (reference 7). He the recipient of the Presidential Young Investigator Award and a two-time recipient of the Charles A. Lindbergh Award in recognition of his efforts to balance technological advancement with preservation of environmental quality. Dr. Lynd has authored over three dozen research papers, five patents and several reviews, and is an active consultant to both industry and government. He holds a BS degree in biology from Bates College, MS degrees in bacteriology (University of Wisconsin, Madison) and engineering (Dartmouth), and a DE degree in engineering from the Thayer School of Engineering at Dartmouth.

Charles E. Wyman. Dr. Wyman is a Professor of Engineering at the Thayer School of Engineering, Dartmouth College. In 1997, he became the Director of Technology for BC International, a Dedham, Massachusetts Company devoted to commercial application of biomass processing technology. Over a period of 15 years prior to joining BCI, Dr. Wyman was director of the Alternative Fuels Division and the Biotechnology for Fuels and Chemicals Center, and branch manager for Biotechnology at the National Renewable Energy Laboratory (formerly Solar Energy Research Institute). He has served chairman or co-chairman of the Annual Symposium on Biotechnology for Fuels and Chemicals from 1989 to 1996. He is a member of the Board of Directors of the Biomass Energy Research Association, the industrial Board of Advisors of the Speed Scientific School of the University of Louisville, the international editorial board of Biomass and Bioenergy, and the editorial board of Process Biochemistry. He is the recipient of the Charles D. Scott award for leadership and service to the field of biotechnology for fuels and chemicals. Dr. Wyman has authored or coauthored over 45 peer-reviewed papers and holds 8 patents. He holds a B.S. in chemical engineering from the University of Massachusetts, M.A. and Ph.D. degrees in chemical engineering from Princeton University and an MBA from the University of Denver.