Opportunities abound in the market for biofuels co-products
Diversifying into the co-products market has proven to be a lucrative way for biofuels producers to expand their product offering. As the share of the industry’s profits provided by non-fuel sources increases, many producers are starting to view co-product supply not only as a means of adding value, but as a fundamental part of their business models.
The livestock feed market, in particular, has demonstrated its complementarity to the ethanol and biodiesel industries. Worldwide, 44 million tonnes of animal feed are produced by the ethanol industry every year, with the biodiesel industry contributing a further 8 - 9 million tonnes.
More enterprising players in the biofuels industry are taking the practice of co-product diversification one step further. In some cases, this has meant closer integration of ethanol production and co-product end use, such as the co-location of ethanol plants and livestock farms pioneered by the likes of U.S. ethanol producers Katzen.
Others are exploring how waste materials from biofuels production can be used to satisfy demand in new markets – from aquaculture, to road repair, to the carbonated beverages industry.
Here’s a rundown of some of the less talked about approaches to co-product diversification.
Aquaculture
One area that shows promise for the biofuels industry is the use of Dried Distillers Grains with Solubles (DDGS), a co-product of ethanol production, as a feed source for fish farming.
With an ever-expanding global population, and higher demand for protein among consumers in emerging economies, the aquaculture industry is expected to continue growing strongly over coming years. Depletion of wild fish stocks and greater regulatory oversight of the fishing industry will compound this trend.
The United Nations’ Food and Agriculture Organisation projects a growth in the global aquaculture market of 5% year-on-year over the coming decade, while total annual production is expected to exceed 100m tonnes per annum by the year 2025.
Naturally, increased production brings with it greater demand for feed. Catfish, a group of ray-finned species found predominantly in freshwater, are extensively farmed in warm climates from the U.S. to Asia. Typical feed sources for catfish are composed of fishmeal, or more recently of soybean meal, but some catfish cultivators have looked to DDGS as a potential alternative due to its high protein content and favourable pricing.
Trials conducted by the U.S. Grains Council (USGC) into DDGS as a feed ingredient in Vietnam and Egypt have rendered positive results, with improvements to both growth rates and mortality rates as a result of DDGS supplementation.
A source of concern among aquaculturists about using corn-derived ingredients as feed is that they can cause a yellow discolouration of the normally white flesh of the catfish. Although there is no evidence that such discolouration is harmful, it can nevertheless be off-putting to consumers. Fortunately, the USGC trials found that there was no discolouration when DDGS was limited to 15% of feed by weight.
Successive studies by researchers at South Dakota State University have also examined the use of DDGS in aquaculture diets for tilapia, rainbow trout and yellow perch. In the latter case, there were indications that DDGS could be substituted for up to 40% of the feed without adversely impacting yields.
Asphalt Rejuvenation & Soil Stabilisation
Another prospect for biofuels producers is in the asphalt rejuvenation market. POET, the U.S. based company which overtook ADM to become the nation’s top biofuel producer earlier this year, have been the first to move into this sector.
As asphalt road surfaces age, their maltene component – which helps to inhibit viscosity and prevent road surfaces from cracking – is diminished by oxidisation and other natural processes.
POET’s product, Jive, described as a “clean, corn based asphalt rejuvenation solution”, is intended to replace the lost maltene and strengthen the road surface. It is marketed as a sustainable alternative to other asphalt rejuvenators, which are commonly produced from crude oil by-products or coal tar.
A similar co-product application is the use of lignins obtained from biofuel production for soil stabilisation. The idea is to mix the lignin into soil before laying pavements, roads or foundations to increase load bearing capacity and improve moisture resistance.
Lignin containing co-products from paper production have already proven their effectiveness in this regard, although some work needs to be done to establish how the properties of lignins derived from biofuels production (which do not contain sulphur) may differ.
Commercialised Carbon Dioxide
POET have also been big players in the commercialisation of captured carbon from ethanol production. Commercial CO2 can be used for a diverse range of applications including food processing, carbonated beverages, healthcare, municipal water treatment and fire suppression systems.
CO2 is a natural by-product of the fermentation process used to produce ethanol. Given its GHG status, capturing CO2 has long been an industry priority. POET have gained an edge over their competitors, however, by focusing on developing the compressors and transportation capacity needed to enter the CO2 market at scale. As a result of this investment, they have grown to become the 5th largest producer of merchant carbon dioxide in the United States.
PHA Bioplastics
For biodiesel producers, a different set of co-product diversification opportunities present themselves. One of these is in the synthesis of PHA bioplastics from biodiesel’s primary co-product, glycerol.
Although there are a number of commercial uses for glycerol in the food, chemical and cosmetic industries, the marked rise in biodiesel production over recent years has suppressed market prices. This makes glycerol a cost-effective alternative to hydrocarbons for plastic production. Crude glycerol from biodiesel refineries also does not need to pass through the stringent purification process required for many other applications if used for bioplastic production.
The Italian company Bi-on are leading the way in the production of PHA Bioplastic from biodiesel co-products. Last year, they entered into a partnership with the British fuel and biodiesel company Greenergy to assess the feasibility of building a PHA bioplastic production facility in the UK, with a planned initial output capacity of 5000 tonnes per year.
Another option for PHA Bioplastic synthesis is to use cellulosic biomass as a “transgenic host” for PHA harvesting alongside the production of advanced biofuels. If switchgrass were used as the feedstock, an estimated 100,000 tonnes of PHA and 62 million gallons of ethanol could be produced from every million tonnes of biomass, according to a study by researchers at the University of Saskatchewan.
You can read more about switchgrass’s potential as a cellulosic biofuel feedstock in our discussion of the topic, here.
Bio-Hydrogen
A final consideration for biodiesel producers is that glycerol can also be used as a substrate for the production of bio-hydrogen. In temperature and PH controlled conditions, researchers have demonstrated that crude glycerol can be anaerobically fermented by various strains of bacteria, including E. Coli, to produce combustible hydrogen gas.
At present such efforts are still confined to the lab. Whether bio-hydrogen production becomes a realistic commercial pathway for the biodiesel industry likely depends on the wider development of hydrogen as a fuel source.
Efforts such as the HyDeploy project, undertaken by National Grid and the University of Keele, are currently assessing the safety and physical properties of natural gas and hydrogen blends in existing pipeline infrastructure.
Meanwhile, the H21 Leeds City Gate Project in the North of England aims to convert a major urban centre to an entirely hydrogen based gas network. You can read more about these projects in our industry review paper, here.
Want to explore the opportunities available for biofuels co-product diversification in greater depth? Join us at the Distillers Grains & Co-Product Diversification Summit – part of the World Ethanol & Biofuels Conference.
