POET-DSM to pause ethanol production and revert to R&D at Project LIBERTY
In the United States (US), POET-DSM Advanced Biofuels, LLC, a joint venture of Royal DSM and POET, LLC have announced that it will pause production of cellulosic biofuels at Project LIBERTY and shift to R&D focused on improving operational efficiency. This step is a result of the US Environmental Protection Agency's (EPA) challenges with the implementation of the Renewable Fuel Standard (RFS).
The RFS was created to solidify US leadership in low-carbon fuels and drive investment and innovation as well as to make the US energy independent. It also offered new income opportunities for farmers improving the rural economy; created a use for crop residue; and encouraged commercialization of advanced biofuels that have 85-95 percent less greenhouse gas (GHG) emissions than gasoline.
Project LIBERTY has contributed to RFS goals by commercially producing and selling cellulosic ethanol made from biomass, creating jobs and furthering the move to a low carbon economy in the US.
Pause production and focus on R&D
According to a statement on November 19, 2019, the joint venture will now focus on research and development (R&D instead of cellulosic ethanol production with the goal of improving mechanical reliability, creating additional technological efficiencies and licensing technology in countries that “favorably support” the use of low carbon fuels from crop residue and other biomass.
As part of this effort, the joint venture will use biomass stored on-site or already under contract and will not purchase additional biomass at this time. The team needed to sustain R&D efforts has been evaluated and the joint venture will move forward with a reduced headcount in February 2020.
We are grateful to President Trump for his support of biofuels policies, including year-round E15 and recent efforts to maintain the integrity of the RFS. But while the White House is pursuing policy proposals to help biofuels, tremendous harm has been done. Over the last three years, EPA management of the RFS has held back cellulosic ethanol advancement, hindered future agricultural markets for U.S. farmers, and undermined what the President has promised, said Kyle Gilley Senior Vice President of External Affairs and Communications at POET.
For instance, the EPA has continuously implemented lower RVO levels for cellulosic biofuels, shrinking the market potential for this new technology. In August 2019, it announced 31 new small refinery waivers, reducing the annual blending amounts below statutory requirements, causing a “precipitous drop” in D3 RIN values removing an incentive for purchasing the product and commercializing the technology.
The EPA has blocked new cellulosic pathways by changing the approval mechanisms outside of the required legal processes, slowing the development and commercialization of processes that meet the intent of the RFS.
Because of these policy changes, the economic landscape for cellulosic ethanol in the US makes private and global investments in this technology more challenging. As a result, our joint venture is responding by temporarily pivoting and focusing on R&D efforts to improve technological efficiencies and explore additional international licensing opportunities in countries that are not choosing oil over agriculture” said Hugh Welsh, President DSM North America.
Despite downsizing and reverting to R&D at Project LIBERTY, both companies say they remain “committed to the joint mission” and will continue to build on the successes they have achieved adding that from the very beginning, the team at LIBERTY have been pioneers, and both companies are grateful for their contribution to the effort.
“Without these individuals, significant progress in commercializing a new, lower-carbon fuel would not have been achieved,” the companies stated while urging the EPA to follow the intent of the RFS, preserve US leadership in this critical effort, and provide certainty to public and private investors.
Despite the changes announced today, POET-DSM Advanced Biofuels remains committed to leading the effort to scale up this cleaner, renewable fuel as a solution to reduce carbon emissions. POET-DSM Advanced Biofuels will continue its relentless advocacy and encourage the Administration to support the intent of the RFS and put in place policies that advance renewable fuels, boost rural economies, and reverse the effects of climate change. We are proud of our achievements so far in demonstrating the efficacy of the biotechnology required to produce cellulosic biofuels at commercial scale and look forward to making additional R&D breakthroughs, said Kyle Gilley, POET’s Senior Vice President of External Affairs and Communications and Hugh Welsh, President DSM North America in a joint statement.