One Small Step for Torrefaction, One Giant Leap for the Bioeconomy

What to do with all these wood chips?

One Small Step for Torrefaction, One Giant Leap for the Bioeconomy

By Matt Lucas, PhD, Managing Director, Business Development

Moonshine: It might not sound synonymous with the bioeconomy, but at a massive scale, the fermentation of traditional sugar to create ethanol was where the bioeconomy got its start. Leaving behind tasty feedstocks and inebriating bioproducts until happy hour, today we see that the bioeconomy includes a growing and wide variety of feedstocks, processing technologies, and products. Importantly, when the feedstocks are cost-advantaged wastes that are converted into value, the bioeconomy is good for both commercialization and environmentalism.

One processing technology of the bioeconomy is torrefaction, a member of the trifecta of dry thermochemical waste processing technologies, which also includes gasification and pyrolysis. With the completion of the Restoration Fuels (RF) commercial scale torrefaction facility in Grant County, OR, the US now has a complete set of all three technologies in or nearing commercial operation. Each process has its own strengths and weaknesses, but all of them are important contributors to a new wave of bioeconomy innovation.

What is torrefaction?

Torrefaction is a thermochemical process where organic material feedstock (“biomass,” e.g. wood chips) is heated in the absence of oxygen to drive off water and volatile organic compounds (VOCs). The VOCs are burned to provide process heat, but the vast majority of the feedstock’s mass remains in solid form and exits the process as the product. The product, termed “bio-coal,” is more energy dense than biomass, is hydrophobic (important for shipping and storage), and is far more resistant to rotting (important for storage). Bio-coal is used as a drop-in replacement for coal as a global energy source, more on this below.

Torrefaction’s thermochemical counterpart, gasification, instead applies an oxidant to the feedstock so that most of it converts to a gaseous product stream. (Gasification makes gas, go figure.) The other counterpart, pyrolysis, uses the same oxygen-starved environment as torrefaction but typically operates at higher temperatures to drive further reactions that convert more of the feedstock to gases and liquids. (The meaning of pyrolysis is “pyro” for heat and “lysis” for break down. Incidentally, to torrefy means to roast, so I like to loosely think of torrefaction as the slow-cooker barbeque in the bioeconomy kitchen.)

What happened?

In 2019, the RF commercial-scale torrefaction facility started operations. The facility is co-located with an existing lumber mill. It processes forest residues from a forest restoration project on public lands, making use of what would otherwise be wasted or what would become a wildfire hazard. This is the first commercial-scale torrefaction facility located in the US.

The project had been a long time coming. It originated from the Consortium of Advanced Wood-to-Energy Solutions, a public-private partnership between the US Forest Service and the US Endowment for Forestry and Communities, a non-profit. The Consortium supported bio-coal production for a test campaign at Portland General Electric’s Boardman power plant.

Bio-coal as a coal substitute?

The bioeconomy has long been making inroads as a source of fossil fuel substitutes. Ethanol displaced gasoline (within limits). Biodiesel displaced diesel (within limits). Then renewable diesel came along to displace diesel entirely (without limits). Also, various biofuels can blend into the aviation fuel supply. Finally, let’s not forget renewable natural gas, which displaces fossil natural gas.

But throughout this bioenergy revolution, coal remained untouched. And that makes some sense. Coal is cheap and already losing ground to other fuels, so why chase a replacement for the lowest-margin product in a declining market? However, there actually are compelling reasons to pursue bio-coal. The coal-fired power generation fleet in much of the world is still young and critical to national grids. There are calls for a just transition from coal, which means prioritizing workers and keeping their jobs. A drop-in replacement, bio-coal, lets that happen, but also allows for these fleets to be an integral part of the energy transition. RF’s new facility takes advantage of this upside.

Lessons learned

Although it was ultimately successful, the reality is that RF had a tough time getting to market. What lessons can we learn? New Energy Risk’s products and some more general lessons from project financing could help for future projects:

  • No offtake: RF didn’t have a long-term purchase agreement to enable project financing of their facility. For new products where market demand is not yet clear, it can be tempting to build an entirely merchant project. If possible, it is more desirable to establish market demand and a fit between your product and your customers’ specifications at sub-scale before the big dollars are at risk. Fortunately, subsequent torrefaction projects are securing letters of interest from overseas utilities for bio-coal, so we feel hopeful about the potential for creditworthy offtakes to support future projects.
  • Minimal scale: RF can process 100,000 tons of feedstock per year, which is modest for a bioeconomy facility. Thermochemical processes almost always see improvement in capital efficiency at larger scale, so a larger facility would likely have been cheaper. RF has stated that part of their thesis is to match facility size to the local forest residue resource, so they targeted a smaller facility near a smaller forest. Luckily, there’s an opportunity to co-optimize facility sizing and location with forest restoration contracting. New Energy Risk’s insurance solutions can facilitate the technological and financial de-risking required to unlock larger capital projects.
  • Feedstock uncertainty: The site that hosts the RF facility almost shut down in 2012 owing to a lack of wood fiber from the public forest lands in the area. The need for certainty in a long-term feedstock supply is critical to project financing. New Energy Risk is developing insurance solutions to help mitigate feedstock risk.

At New Energy Risk, we’re excited to see the trifecta of dry thermochemical processes-gasification, pyrolysis, and torrefaction-reaching commercial scale to support the waste-to-value and bioeconomy sector. These projects are even more impactful when the feedstock comes from forest restoration, both reducing the risk of wildfires in the forest while creating bioenergy and bioproducts. It’s an uncommon win-win for forest managers, coal workers, and environmentalists alike; may they celebrate together with a glass of moonshine and a toast to the future of the bioeconomy.

###

Originally published at https://newenergyrisk.com on November 5, 2020.

New Energy Risk helps insure technical risk for breakthrough tech to optimize cost of capital, accelerate time to market, and provide certainty of execution.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store