Public Investments, Public Oversight

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This week the US Dept of Energy released the findings of its 2017 Peer Review of the Bioenergy Technologies Office (BETO) research portfolio.  I had the honor of serving as Chair of the Steering Committee for this review, and I wanted to share some insights from the process and the resulting report.

The Process

The BETO Peer Review is a model for transparency and accountability in government research investment.  Every two years, the DOE pulls together several panels of experts from across industry, government, academia and civil society to review the portfolio of almost $700M in projects that BETO is supporting.  During an intense week-long event, all projects are reviewed by these panels, with detailed written feedback provided to both the research PIs and program leaders within BETO, The Steering Committee also provides feedback at the overall portfolio level.

In a follow up Management Review, BETO staff and management meet face to face with the reviewers for a chance to delve deeper in the feedback provided, and offer a dialog around how the Office intends to put the review findings to use moving forward.

The Output

The report that was published this week clocks in at over 700 pages, indicating just the level of detail that the review process has delved into.  To those with a technical interest, there is much to dive into and the review sections split up by technical area are available to download separately.  Along with the other members of the Steering Committee, the section that we contributed to was the overall programmatic evaluation.  At the highest level we recommended:

  • Enhanced interaction with industry
  • increased international collaboration
  • Focusing on near-term wins
  • Developing an innovation pipeline
  • Continued risk-sharing with industry
  • Moving beyond drop-in solutions

We also provided feedback on budgetary allocations, communication strategy and the appropriate levels and avenues of coordination across other government agencies.

Observations

It is very heartening to see a government agency being so open about the performance of its investments, and welcoming the input of a range of expert stakeholders to help improve the work it does.  This is my second time participating, and it is gratifying to see recommendations we made in 2015 having been acted upon in the intervening years, and seeing real improvements in the effectiveness of the portfolio already.

Even more impressive in this review process was just how well the Office management listened to the reviewers during the week long review, so that by the time the Program Management review rolled around a few months later, many of the recommendations that had been discussed verbally were already being acted upon.

Resources

The commendable transparency of this whole review process creates a very valuable by-product:  every project review presentation is publicly available for download on BETO's website.  This is a phenomenal resource of unparalleled technical depth for those who have a strong interest in the technologies that are driving the emerging bioeconomy.

Thanks

I want to give a shout out of appreciation to my fellow steering committee member, who put a lot of thought and effort into delivering input that will help shape the investment strategy for the Dept of Energy over the coming years.

Stephen Costa, U.S. Department of Transportation

John May, Stern Brothers & Co.

Shelie Miller, University of Michigan

Dawn Mullally, American Lung Association

Bob Rummer, University of Kansas

Bob Wooley, Biomass ad infinitum LLC

I also want to thank the BETO Staff for inviting me to particpate for a second time around, and to all the supportin staff who pulled off a complex and large scale feat. It was a fantastic experience.

The Solutions and Problems of Negative Emissions - Part 1

The climate clock is ticking loud and clear. Of late it seems even louder and clearer, as recent projections and analysis paint a dire picture of the global future if we continue on a “business-as-usual” approach to climate change mitigation, relying only on low-carbon (i.e. biofuels) and carbon-neutral (i.e. wind, solar) solutions. Current CO2 trajectories and inventories mean that we have no hope of meeting our global 2°C goal unless we can rapidly deploy and scale negative-emission technologies. 

The most-discussed of the negative-emission technologies is called BioEnergy with Carbon Capture and Storage, or BECCS. In concept, this is the growth of bioenergy crops that are then burned to generate energy, with the carbon dioxide emissions from that step captured and stored underground. Such an approach can essentially reverse the flow of carbon that humankind has disinterred from fossil sources into the atmosphere, hence being a source of ‘negative emissions’. In 101 of 116 scenarios modelled by the IPCC in which 2°C of warming is not surpassed, negative emission technologies are in play.

The conceptual flow of carbon for a range of energy generating technologies.   By Elrapto (Own work) [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

The conceptual flow of carbon for a range of energy generating technologies. 

By Elrapto (Own work) [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons

There’s just one big problem, as has been recently highlighted; BECCS isn’t proven, in fact it's largely just a concept, not an actual technical reality. The primary concern with BECCS, or any other form of direct injection of CO2 into subterranean storage, is whether there’ll be leakage of that CO2 back out into the atmosphere. 

An additional challenge with BECCS is one shared with many biomass-based energy solutions – that of incompatibility of operational scales. The minimum scale of industrialization needed to make the techno-economics of CCS affordable is relatively large, meaning that huge amounts of biomass are needed to feed a single centralized BECCS system. Given the diffuse distribution of biomass, this need for scale necessitates long collection distances, which in turn drive up the cost of biomass feedstock. There is an inherent scale-incompatibility challenge.

These concerns are not sufficiently addressed by the small track record of BECCS. Only one integrated BECCS system has been built, and it’s at a very early stage of development, certainly not at a maturity point that will assuage doubters.

Even if BECSS can work from a technical perspective, large scale deployment might have unintended consequences. One significant concern of the modelled IPCC ‘solutions’ is that in those 2 degree C or less models, 700 Million hectares of land would need to be turned over to dedicated bioenergy crop growth, putting enormous pressure on land that is currently used for feed and food production. 

Given the importance of negative emissions technologies, we need BECCS to work.  But there is a lot of uncertainty that it will, under current conceptualizations. I am a techno-optimist; I believe that every problem has a solution. In fact, my career has been focused on driving to market technological solutions for global challenges. That said, even I recognize that an overly optimistic take on the feasibility of a technology that promises us to absolve us of all our carbon sins could create a perverse incentive. If we can push all that emitted carbon back into the ground, why change anything about how we produce and consume energy? Such permissive thinking is in fact baked into the IPCC models that include a large share of negative emissions; fossil fuel consumption continues to grow significantly in these scenarios. It is true that BECCS promises the production of renewable electricity. However, that energy commodity is already on a trajectory to decarbonize through the rapid deployment of solar and wind.

But more fundamental than all these technical challenges and potential unintended consequences, is a real shortcoming of this kind of engineering solution to a critical global challenge; the fact that it is a solution to only one challenge, albeit a very big one.  Our world faces so many very important wide-scale challenges, that a solution to atmospheric CO2 levels that needs to be deployed on a global scale, consuming one of our most precious resources (arable land), but only addresses one of the major global challenges, well, that is a wasted opportunity for much broader impact. Throw in the fact that in enacting that solution, other challenges might be exacerbated, and it’s clear this particular solution has a problem.

In part two of this blog, I will consider alternatives to BECCS that may deliver negative emissions to help tackle the climate challenge, but that also serve as a central solution for multiple global challenges, and therefore have greater stability and deliver greater value to humankind.

The Four Dimensions of the Bioeconomy

The bioeconomy is a complex system, and how to choose the right technology to produce a desired product can be bewildering at times.  Do the economics of the process make sense?  Are there better options?  Even if I choose the most cost effective process to produce my product of interest, will I be able to effectively source inputs, or will competing markets undercut me?  A technology might make sense in current market conditions, but will it make sense in the future?

In thinking about how to produce any given bio-based product, I find it useful to consider what I call the four dimensions of the bioeconomy.  This blog explains this framework, and provides some insights into the what tools and craft can be useful in assessing each of the dimensions, with an aim to making wise investment decisions in sourcing biobased technologies.

 

Dimension 1:  The pathway

The first dimension is the straight line of the overall process from input, through intermediates, to final product.  To an engineer, this would be represented as a process-flow diagram, as follows:

Figure 1: The Pathway. Essentially, a simple process flow diagram showing feedstocks, transformations to intermediates, and final product.

Figure 1: The Pathway. Essentially, a simple process flow diagram showing feedstocks, transformations to intermediates, and final product.

In this example, cellulose is transformed in three steps to adipic acid, a bioplastics precursor.  If you want to make a biobased adipic acid, this is one of the options.  The existence of this option indicates that it is technically feasible to make these conversions and generate this product. But is it affordable? A technoeconomic analysis (TEA) is the tool to answer that question, yielding a cost of production that can be used to assess the competitiveness of this pathway against the incumbent, or other technologies.  Oh, and speaking of other technologies...

 

Dimension 2: the spaghetti diagram

The second dimension if the bioeconomy recognizes that for any given pathway or desired product, there are going to be multiple technology options for producing the target.  These are the polarizing diagrams that people often show at conferences; half the audience's eyes glaze over, instantly bored by technology-TMI, while the other half perks up, thrilled to finally get into the nitty gritty.

Figure 2: The Spaghetti Diagram.  This dimension of the bioeconomy recognizes the alternative pathways to producing a bioproduct of interest.

Figure 2: The Spaghetti Diagram.  This dimension of the bioeconomy recognizes the alternative pathways to producing a bioproduct of interest.

In this example, two additional ways to produce adipic acid from cellulose are shown. For clarity's sake, this is a very simple spaghetti diagram - often they are bewilderingly complex, and certainly there are a number of other pathways to produce adipic acid from cellulose or other feedstocks that aren't shown here. Nevertheless, as this diagram shows, there are always going to be alternative technologies to consider.

It is nice to have options, but how can you work out which one to choose?  Again, TEA is going to be the tool that allows you to compare the relative performance of the options.  But beware, don’t just compare the final output cost of production: the big challenge in this situation is that for TEAs to be comparable between different competing pathways, they need to be carried out using the same methodology and assumptions.  Unfortunately, there are as many different ways to do a TEA as there are to produce a bioplastic, and so it's uncommon to be able to just go to the literature and find perfectly comparable TEAs for parallel pathways.  Looking closely at the methodologies and assumptions used is critical to being able to effectively compare the results of different TEAs and use them for making decisions about the relative merits of technology options.

 

Dimension 3: Different Planes

So far, we've considered the various ways in which a single product, or class of products like bioplastics, can be created.  However, one of the best things about the bio-economy is its versatility – an enormous range of commodities and consumer products can be made from renewable resources.  But this versatility poses a challenge for those who seek to generate a single product: any given input or intermediate could be used by other processes for producing other products. For example in the diagram below bioplastic intermediate 5-HMF can be converted to a fuel precursor 2,5-DMF.  Likewise other intermediates in the original example can also be converted into intermediates or fuel products as shown by the coloring of blue or green in the diagram.

Figure 3: The parallel planes that form the emerge in a third dimension of the bioeconomy.  The original bioplastics spaghettit diagram is shown in blue, with a parallel biofuel plane in green, and a nutriceutical plane in red.

Figure 3: The parallel planes that form the emerge in a third dimension of the bioeconomy.  The original bioplastics spaghettit diagram is shown in blue, with a parallel biofuel plane in green, and a nutriceutical plane in red.

And it's not just fuel products that may be competing for intermediates or inputs.  There is a range of different sectors of the economy that bio-based products can serve.  One simple example shown in this diagram is the production of omega 3 fatty acids from glucose. Here the bioeconomy is contributing to human nutrition and health by the generation of sustainably-sourced essential oils.   Thus, there are many layers to the bioeconomy and these different classes of market (bioplastic pathways shown in blue, biofuel pathways in green, nutraceuticals show in red) fit into the dimensional framework as parallel planes.   This three-dimensional structure expands the spaghetti diagram across markets as a set of overlapping and reticulated pathways.

The complex network here demonstrates the risk of competition.  Even if a given pathway chosen carefully from a spaghetti diagram of options pencils out with a promising TEA, if one cannot affordably source input feedstock because other users can pay less for it, the pathway will not be commercially viable.  Likewise, if an intermediate in the chosen pathway has greater value being converted to a different product serving a higher value market, then the originally targeted pathway is similarly unviable.  This latter situation is not necessarily a problem from the perspective of a project developer who is seeking to maximize returns, but it can certainly disrupt the plans of strategic investors who are interested in specific products or markets.

Given this complexity, how does one understand the competitiveness of a target pathway amongst all of the various permutations and combinations by which carbon may flow through the bioeconomy?  The tools required to analyze this question are far more complex and less well understood than simple techno economic analysis. What is needed here is an understanding of the characteristics of the markets for the various inputs, intermediates and products in this three-dimensional framework.

For example, if you are considering glucose as an intermediate in your pathway to produce adipic acid you need to understand not just the input costs of glucose but also the opportunity cost of not turning that glucose into, e.g., omega-3 fatty acids or ethanol.   You will need to understand the size, pricing and price elasticity of both omega-3 fatty acid and ethanol markets as well as your target market of adipic acid. Much of this information is available as general market research, although advanced analysis and modeling may be required to understand the interrelation between these markets, such as could be performed through a general equilibrium modeling.  

By recognizing that there are is a three-dimensional context to any given pathway of interest you are acknowledging that competition for renewable carbon will be fierce and needs to be understood before making investment decisions in bioeconomy technologies.

 

Dimension four:  Dynamics over Time

By fully considering the previous three dimensions one will understand the relative competitiveness of a pathway across all aspects of the bioeconomy, but only at a given point in time.  So far we have essentially a static view.  But things change.  If the enormous pace of change over the past few years are any indication, the bioeconomy is certainly going to be highly dynamic moving forward.  Therefore the fourth and final dimension of the bioeconomy is time, just as it is in the physical world. By acknowledging the time dimension, one is prepared to understand how the competitiveness of a pathway will change over time as the bioeconomy evolves. Factors that might drive change over time include:

  • Emerging technologies leading to disruption, both internally and externally.
  • Internal dynamics of the bioeconomy, such as market saturation, cost curve reduction opening the door to competing in new markets, etc
  • Policy changes over time including increasing carbon regulation or the establishment and or the disestablishment of incentivizing policies.

As an example from the diagram above, the potential adipic acid producer may be concerned about the pathway that routes through glucose as an intermediate because more profitable production of ethanol may divert that glucose to production of fuel ethanol, not adipic acid.  But in the near term, there is uncertainty about policy support for ethanol production.  Also a growing share of the gasoline market, into which ethanol is a blendstock, is being lost to electrification of light vehicles. These dynamics may suggest that the value of ethanol may drop in the near-to-mid term, and the concerns about the relative competitiveness of adipic acid production from glucose should be lessened.

Unlike the 'lower' dimensions, which can best be understood through an analytical, quantitative methodologies such as TEA, the considerations of this final dimension are less tractable to standard methodologies.  Understanding the temporal dynamics of the bioeconomy is really more of a craft than a science.  Having a wide range situational awareness across the range of markets, policy drivers, and emerging technologies is the best way to be ready to successfully predict where the bioeconomy is headed.  Having a strong network helps too - market intelligence that doesn't reply on public information can provide a competitive headstart for better positioning to take advantage of near-term opportunities.

 

Summary

This framework helps in developing a better understanding of how a technology fits into the broader context of the bioeconomy.  Taking a narrow view of what constitutes 'viability' for a novel technology can lead to wasted time, energy and resources.  For those who invest in technology in the bioeconomy, considering all four dimensions will allow you to move from answering the question of "can we do this?" to the more important "should we do this?"

 

P.S.  This is my first blog post on the bioeconomy, and I'd love to hear your feedback.  Am I making sense, or am I missing anything important?  Are there any topics you'd like me to blog about?  Let me know in the comments, or drop me a line (see the contact page).  Thanks for reading!