Interview with M&G: From polyester to 2G bioethanol

21.02.2013, News

Italy was not the most obvious place to build the first industrial second generation biorefinery. But the world's biggest PET producer did it anyway, because it took only one man to make the decision: the owner of the Italian M&G. This is the conclusion of Business Development Manager Michelle Marrone from M&G subsidiary Beta Renewables, which is the company managing the new plant in Crescentino, Italy. BioRefining Alliance has interviewed Michelle Marrone.

Photo: Michelle Marrone has worked at M & G for 9 years and moved to its subsidiary Beta Renewables, when it was founded in October 2011.

The world's first full-scale 2G biorefinery was not located in Denmark, as many might have expected, but in Crescentino in northern Italy. The plant has a Danish twist, though. Novozymes has entered a strategic partnership with M & G subsidiary Beta Renewables and will be the supplier of enzymes for the plant's bioethanol production.

The plant was completed in December 2012 and the production is just starting up.

From polyester to bioethanol

BioRefining Alliance has met Business Development Manager in Beta Renewables, Michelle Marrone, in a café in the centre of Frederiksberg, Copenhagen. She was in Denmark to give a presentation at a conference about the next generation of biofuels.

Why did M & G build a 2G biorefinery?

Italy was definitely not the easiest place. There was no specific incentives or a clear mandate for biofuels that would make M & G do this. But M & G has only one owner, Guido Ghisolfi.
Since the company is not listed, and therefore not accountable to shareholders, we could make the decision to build the plant in spite of the risks that may be involved.

M & G Group wanted to expand its polyester business with products based on renewables - starting with 2G biomass to avoid the competition with food. And we like the fact that there is a technological challenge - not everyone can do it. However, we have no plans to move away from our polyester business. On the contrary, in the long run we will complete the circle and begin to make bio-based polyester from fermented sugar and lignin.

Initially, we will sell licenses for the use of  PROESA®, which is the technology we use for our bioethanol production in Crescentino.

Photo: The biorefinery plant in Crescentino, Italy.

Met scepticism from authorities 

What challenges have you faced in the process from the decision was made to now, where the facility has been build?

The first challenge was to get the permission to build the plant. There is a great political reluctance to build incinerators. As you know we do not have an incinerator, but a biorefinery. There is a side stream of lignin, which we wanted to burn and use for electricity and heat.
To do this, we burn our lignin in a biomass  boiler, and since lignin and our technology in general was unknown to politicians, the plant was considered a municipal incinerators disguised as something else.
They believed in short, that we tried to find a way to burn waste, and we could only reply: No, we do not burn waste! It took over a year to get permission to build the plant. We had to do a lot of paperwork and to obtain several types of environmental certificates.

Local people were, however, positive. The area, in which it has been built, was once home to a steel factory, which was dismantled  in the late 1990s. So it was a slightly polluted industrial site, which could not really be used for anything else. At the same time, it was a good way to create jobs again in the area, which is a typical rural district where much rice is grown. Therefore, we will use rice straw, wheat straw and the energy crop Arundo Donax as feedstock in our ethanol production.

And achieving a consistent and long term supply of feedstock was actually our second big challenge.

How large is radius from where you collect the biomass?

We are trying to keep it  within a radius of 50 km by purchasing biomass from local farmers. 

Will you be able to use all types of feedstock at the same time?

We cannot mix the three biomasses together in the system. They must be fed into the refinery  as campaigns separately. The first years it will be campaigns of wheat straw and rice straw. The reason why it is not possible to mix the different types of biomass is because they do not have the same physical and biochemical structure – and the process conditions have to be adapted to the different properties of the biomass.

But apart from the challenges regarding certificates and biomass we haven’t had big surprises so far.

In Denmark, we expect to have an industrial 2G biorefinery ready in 2016. However, we hope that EU and preferably also Denmark will adopt a 2G binding target, so there will be reasonable certainty that it is possible to create a market for 2G bioethanol. How can you be sure that you can sell your bioethanol?

We are going to make 40,000 tons of ethanol per year. Bear in mind that this is just a drop in the ocean for the oil refineries. We have entered an 8-year off take agreement with a major European oil refinery.

As I see it, oil refineries are very enthusiastic about 2G biofuels.

I know that the political situation in Europe is unclear, but for some reason - from my experience – we do constantly have people knocking on our door and say that if we have a project, they would be interested in buying the ethanol.

We've got Letters of Intent from a number of oil refineries - including Shell, Mitsui Trading, BP. 

But why are these companies interested in it at all – is it about a green image?

They are primarily interested because of the existing double counting of 2G biofuels. They know they must incorporate a certain amount of biofuels due to mandates in the US, EU and many other countries around the world, last but not least even India has established a mandate for E5 gasoline- and of course partly because of the green image. 

Sell licenses and projects outside Europe

Moreover, we must remember that we are not only an Italian company. Our polymer business is also present in Brazil and North America - and here they are investing in bioethanol. We already know the authorities, politicians and have many contacts in these countries.
For example, in California they buy ethanol at a high price. They have something called low-carbon fuel standard. So the better a CO2-profile, your fuel has, the higher the price you get for it. Today, the market for 2G biofuel is approx. 800 euro/ton, but in California they pay 1400 USD/ton.

I have read that your cost price of ethanol would be estimated to be $1.25/gallon. Will it continue to stay on that level or is the price different now?

It sounds a bit low, but the price of ethanol will generally depend on the price of biomass. Based on an average price of $ 60/ton biomass, we expect that the variable costs will be around $1.50/gallon. When Crescentino is up in full rotation we will be able to assess what the price will be exactly.

How are you able to keep the price relatively low compared to the cost estimates from other companies that also will focus on production of 2G bioethanol?

If you are referring to the Inbicon technology - so far as I know, they are not fermenting the C5 sugars. We do. When you do not convert C5 to ethanol, you must of course use a larger amount of biomass to produce one liter of ethanol than if you used both C5 and C6 sugars.  

The plant also supplies electricity to the local area. Is that income included in the price of the ethanol?

In Crescentino we chose to maximize the production of electricity based on lignin and to produce steam from natural gas and biogas. Biogas is made from our wastewater.

This division of steam and electricity does not make the ethanol cheaper because we need to use more boilers instead of just one. This will of course make the process more expensive. So it will not lower the cost of the ethanol but it’s still revenue for Crescentino.

Because the electricity production was linked to the environmental certificates; we had a time constraint on when the system should be ready. The first boiler had to start and be introduced to the power grid before the end of the year.

However, you should keep in mind that the aim is not to make money on either ethanol or electricity in Crescentino. Our primary reason for having built a commercial scale plant, is to use it to present technology and to eliminate any errors so that we can sell licenses to the technology worldwide. Based on the experience from Crescentino, our customers can buy a tested product.

Photo: The biorefinery plant in Crescentino, Italy, from the air.

We were able to move fast

It is thanks to our owner that we have moved so fast. He is a visionary. Others have probably found it difficult to move as fast as us, as they have different concerns about risks and funding. DONG Energy, for example, is partially state-owned, so they do obviously not have the same degrees of freedom as one man does. But we cross our fingers and expect to get the first consistent production of bioethanol from Crescentino very soon!

As I mentioned before, we did not need incentives to start bioethanol production, although it would be beneficial to have both Crescentino in the south and Maabjerg Energy Concept in the north, in order to push for better conditions in EU than those we have today, where there is an uneven competition with e. g. biodiesel and used cooking oil.