The facility is fairly small. And even if all goes smoothly, its production will also be fairly modest -- just 13,500 metric tons of diesel fuel a year as compared with Germany's annual consumption of 30 million tons. Still, this tiny refinery in the eastern German town of Freiberg has managed to attract a number of highly prominent visitors, including the CEOs and leading researchers of both Mercedes and Volkswagen.
And they won't be the only ones at the facility's grand opening on Thursday. Top managers from Shell will be there, as will German Chancellor Angela Merkel. After all, the small cluster of concrete silos, combustion chambers and catalyzers owned by Choren Industries is worth paying tribute to. The only facility of its kind in the world, it is designed to turn wood into fuel for cars -- and thus represents a decisive step toward so-called "second generation" biofuels.
Over the past few weeks, support for conventional biofuels, such as rapeseed (canola) oil and ethanol, has reached new lows, with many doubting whether they provide any benefits at all. Promoting these first generation biofuels through tax incentives and compulsory admixtures has proven to be a misguided approach. But the fiasco was perfectly predictable.
Correcting First-Generation Mistakes
Production levels are simply too low when fuels are derived exclusively from grains and tubers. The environmental benefits have been limited, and may actually do more harm than good. Plus, biofuel doesn't sit quite right with many engines. All of this has been known, and largely ignored, for years.
Now Choren wants to mark the dawn of a new age. The plant in Freiberg uses non-food biomass instead of traditional crops and is the first of its kind to cross the threshold from theoretical research into industrial production. This advanced refinery was designed to furnish proof that the new fuels are feasible -- and can be produced on a much larger scale.
Instead of sugar beets and rapeseed, the new plant processes wood as its raw material. In a pinch, it can also use straw. Using these materials significantly increases the yields from cultivated areas. According to estimates provided by the German Agency for Renewable Resources (FNR), the annual energy yields using the Choren process, based on a Central European climate, are 4,000 liters of fuel per hectare (1,057 US gallons), which is up to three times as much as previous biofuel production methods. Whats more, in contrast to production methods using rapeseed oil and ethanol, this technique does not produce fuel of inferior quality. Choren manufactures extremely pure diesel with virtually no sulfur. Moreover, these second generation biofuels do not harm particle filters or engines and meet top emissions standards.
This groundbreaking technology is actually a wonder discovered through research in the former East Germany. After World War II, the socialist state founded the German Fuel Institute in the mining town of Freiberg. Motivated by concerns that the fledgling country could one day find itself cut off from oil supplies, chemists and engineers worked to advance the coal conversion technology used in Nazi Germany. After all, there was no lack of lignite -- also known as brown coal -- in the GDR.
Coal is nothing more than fossilized biomass -- a plant-based fuel. It didn't take long for the idea to make the leap from the laboratories of the walled-in workers paradise to a new business venture in the free-market unified Germany.
Finding Friends in the Right Places
Bodo Wolf worked his way through the ranks -- from coal miner to engineer -- and eventually became one of the fuel institute's leading researchers. In 1990, just one year after the Wall came down, he and a group of colleagues founded the company that would eventually become Choren. Wolf developed a technique based on the key elements of the coal liquefaction process to transform wood into a synthesis gas that could be transformed in turn into a liquid fuel (see graphic).
There followed a decade of difficult pioneering work accompanied by a growing realization that the limited resources of a handful of scientists would never suffice to pull off such an ambitious project. By 2000, Wolf's company was on the verge of bankruptcy when he convinced Hanns Arnt Vogels, the former CEO of the German aerospace corporation MBB, that he had a winning idea.
Then the doors started opening. Big doors. Vogels had connections in the world of power and money. Soon Wolf was pitching the concept to VW and Mercedes, who rapidly got on board as development partners. On the investor front, Vogels rounded up a deep-pocketed posse of well-respected, retired captains of industry, including former bank presidents and the distinguished green energy tycoon Michael Saalfeld.
Since then, €180 million ($285 million) has been injected into the Choren venture, says Tom Blades, who has led the company for the past four years. The savvy Brit, who formerly worked for the oilfield drilling giant Schlumberger, turned out to be just the man for one of the companys major diplomatic missions: An oil company had to come on board, ideally one that was a leader in green technology.
It took Blades a little over a year. In the summer of 2005, Shell acquired a stake in the company. The oil corporation contributed a key component in the refining process, the Fischer-Tropsch technology, which converts the synthesis gas into a BTL (biomass-to-liquid) fuel.
Researchers at the oil conglomerate appear to be completely convinced: BTL is a dream fuel, says Wolfgang Warnecke, CEO of Shell Global Solutions in Hamburg, "the best of all the biofuels."
New Technologies, New Needs
Toward the end of the year, the plant at Freiberg will go into operation, fed primarily with old, untreated bits of lumber and other scrap wood. It will take approximately five tons of dry material to produce one ton of fuel. The small refinery will consume nearly 70,000 tons of waste wood a year. It should be pretty easy for us to get our hands on this amount, says Michael Deutmeyer, who is responsible for supplying biomass to Choren.
It will be considerably more challenging to keep up with the needs for raw materials at the full-scale refineries Choren is planning to build. The first of these larger plants should go into service in 2012 in the eastern German city of Schwedt, right near the border with Poland. The planned facility will produce 200,000 tons of BTL diesel a year -- and devour a million tons of wood and other dry material. Waste products alone wont be enough to satisfy this hearty appetite.
To meet this increased demand, Deutmeyer is planning to plant trees. Wood is the most suitable raw material for biofuel processing. Three years ago, just east of Schwerin, the capital of the federal state of Mecklenburg-Western Pomerania, Choren converted 20 hectares (50 acres) into experimental rapid sapling-to-sawmill plantations, where willows and other fast-growing trees are flourishing.
Such cultivation, says Deutmeyer, requires significantly smaller amounts of pesticides and fertilizers than crops like rapeseed. This type of forestry also reaps considerable public subsidies. The Ministry of Agriculture in the state of Brandenburg has already indicated that it will provide government funds for the plantations destined to supply the wood for a plant to be built in Schwedt. Up to 45 percent of the investments for saplings, preparations and soil-improvement measures will derive their financing from state coffers.
The experimental fields in Mecklenburg have already been harvested once, the trees reduced to wood chips by a special chopper from Sweden. The results look very promising. Annual yields of up to 20 tons of dry material per hectare can be harvested from good soils. This would work out to a top production rate of four metric tons -- or 5,000 liters -- of BTL diesel. Until now, rapeseed fields that are comparable in area have only yielded 1,500 liters.
With numbers like these, BTL is the first plant-based liquid fuel that could constitute a viable replacement for fossil fuels while not directly competing with food production. According to the FNR, up to six million hectares of land in Germany could be used to grow energy-producing plants. This corresponds to over a third of the area currently used for agriculture. The agency says this acreage could form the basis for BTL products to satisfy a quarter of Germanys domestic fuel needs. On a Europe-wide scale, the replacement potential could even reach as high as 40 percent, owing primarily to the vast areas available in the new EU states in Eastern Europe.
Chances in the American Heartland
Other parts of the world offer even larger expanses that could be put into play. In comparison with Germany, which is relatively densely populated, the United States has seven times as much farm- and pasture land per inhabitant. The Bush administration has recently been trying to use agro-energy policies in an effort to reduce the countrys deplorable dependence on imports of foreign oil. Under the battle cry of freedom fuel, the US government has so far put its money on ethanol derived from agricultural crops. Ethanol is one of the products most simply derived from biomass, but it also numbers among the least efficient.
Vast tracts of land have already been wasted in this endeavor. Bread-basket states like Iowa have primarily fed refineries that quench American gas guzzlers. There are currently 139 ethanol plants operating or under construction in the US. As a result, grain prices have skyrocketed, which has -- among other problems -- already triggered a tortilla crisis in Mexico as corn becomes unaffordable. But ethanol has proven to be a poor replacement for gas and has captured only a small percentage of the fuel market.
Now, shortly before the end of his second term in office, Bushs energy strategists have apparently recognized their error. According to a strategy paper recently published by the US Congress, there are plans to boost admixtures of biofuels in the US sevenfold to 136 billion liters (36 billion US gallons). However, this will not be based on the old technologies. The strategy, which is now also officially supported by Bush, foresees only minimal growth for conventional biofuels. By contrast, nearly two-thirds of the planned production will be met by advanced biofuels using second generation technologies.
Ushering in New Technologies
US researchers are focusing primarily on cellulose ethanol, an enzyme technology that converts straw and wood first to sugar and then to alcohol. Anything with high cellulose content could be used, including farming and forestry waste products, which would produce far greater yields per acre. The prospect of manufacturing alcohol with this method has attracted the attention of Shell, which has purchased a stake in a Canadian enzyme producer Logen. So far, however, this partnership has produced research projects and feasibility studies, but no refineries.
This is where Choren has a clear advantage. The German technology is ready for production. And this has prompted traditionally gasoline-fixated Americans to take an interest in BTL diesel. In a competition held last year between 146 entrants, Choren emerged as the only foreign company in a group of winners to offer new energy technologies. Washington wants to promote these new technologies quickly and effectively -- and without red tape.
Choren CEO Blades says a US government agency reviewed his company for just nine months. Soon thereafter came the offer for a loan guarantee amounting to 90 percent of the investment costs of a BTL facility on American soil.
It was quite another story with the bureaucratic agencies in Germany. In 2004, the company applied for a loan covering 30 percent of the investment. The application process dragged on for two years and, in the end, turned out to be totally superfluous: Choren didnt need the state guarantee anymore.