Ensyn begins generation sale of cellulosic biofuel RINs under RFS2

9 November 2014

Ensyn has initiated the generation and sale of its first RINs (Renewable Identification Numbers) under the US Renewable Fuel Standard (RFS2) (earlier post); Ensyn’s D7 cellulosic RINs have received QAP certification. Ensyn is the first company to generate cellulosic RINs under the US Environmental Protection Agency’s expanded definition of Heating Oil under RFS2, which became effective in December 2013. Ensyn believes it is now the leading producer of cellulosic D7 RINs in 2014.

D7 RINs are generated by Ensyn by displacing petroleum heating fuels (including #6, #4 or #2 diesel fuel oil) in customers’ boilers with Ensyn’s RFO (Renewable Fuel Oil) produced via Ensyn’s RTP (Rapid Thermal Processing) fast pyrolysis technology. (Earlier post.) RFO is a cellulosic biofuel produced from non-food solid biomass including forest residues. RFO is used to displace petroleum fuels in heating operations and is also a renewable feedstock for conventional petroleum refineries for the production of gasoline and diesel.

<!——>

Expanded definition. RFS regulations first required that to qualify as RIN-generating “heating oil”, a fuel must be #1 diesel fuel, #2 diesel fuel, or any non-petroleum diesel blend that is sold for use in furnaces, boilers, and similar applications and which is commonly or commercially known or sold as heating oil, fuel oil, and similar trade names, and that is not jet fuel, kerosene, or motor vehicle, non-road, locomotive or marine diesel fuel (MVNRLM).

The original definition of a “non-petroleum diesel blend” was a diesel fuel that contained at least 80% mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats. I.e., the original regulations did not allow a party to generate RINs for a non-petroleum fuel used as a heating oil unless the fuel was a biodiesel-type fuel.

Based on requests from producers and public comment, EPA revised the definition of heating oil for purposes of the RFS program to include an additional category of fuel oil used to heat interior spaces of homes or buildings to control ambient climate for human comfort. This additional category does not include fuel oils used to generate process heat, power, or other functions.

The fuel oil must be liquid at 60 degrees Fahrenheit and 1 atmosphere of pressure, and contain no more than 2.5% mass solids.

This allowed Ensyn RFO to qualify for RINs if used for heating buildings where people live, work, recreate, or conduct other activities and if it met the other required components of the proposed definition.

In the final rule, EPA noted that the main difference between the original definition of heating oil (#1, #2, or a non-petroleum diesel blend) and the new category is that the new category will include heavier types of fuel oil with larger molecules. Based on the type of conversion process, producing these heavier fuel oil products versus the #1, #2, or a non- petroleum diesel blend will affect the amount of energy used and therefore the GHG emissions from the process.

There are two main paths for producing a fuel oil product from biomass, EPA observed. In one, the biomass is converted into a biocrude which is further refined into lighter products—i.e., the Ensyn approach. In this case, producing a heavier fuel oil product will require less processing energy and have lower GHG emissions than converting the same feedstock into a #1, #2, or non- petroleum diesel blend.

In the other type of process, the compounds in the biomass are changed into a set of intermediary products, such as hydrogen (H) and carbon monoxide (CO). These compounds are then either catalytically or biochemically converted into the fuel product. In this case, the vast majority of the energy is associated with breaking down the feedstock into the set of intermediary compounds. The process used and the energy needed for it does not vary based on the type of fuel that is then produced from these intermediary compounds.

Ensyn RINs. Ensyn RINs have been assigned QAP status by Genscape, Inc. Genscape’s QAP Service is a comprehensive EPA-approved Quality Assurance Plan (QAP) provided to RIN generators and producers to assure the validity of RINs entering the market.

Ensyn’s RIN generation is being led by the supply of 300,000 gallons/year of RFO to Memorial Hospital, located in North Conway, New Hampshire, under a five-year, renewable contract. This contract allows Memorial to fully displace their petroleum heating fuels with Ensyn’s advanced cellulosic biofuel, reducing Memorial’s greenhouse gas emissions from heating fuels by approximately 85%, and lowering their operating costs.

In addition, in early October, Ensyn announced a seven-year renewable contract with Valley Regional Hospital in Claremont, New Hampshire for the supply of 250,000 gallons/year of RFO. Under this contract, the hospital intends to replace its entire heating fuel requirements with Ensyn’s RFO. Deliveries are targeted to commence by April, 2015.

RFO is being distributed in the US market by Ensyn Fuels Inc., Ensyn’s wholly-owned subsidiary responsible for RFO and RIN sales and distribution.

We are pleased to have generated and sold our initial D7 cellulosic RINs,» stated Dr. Robert Graham, Chairman and CEO. «Now that we have the mechanisms, pathways and qualifications firmly established, we can proceed with expanding our sales and RIN generation from existing capacity as well as from new projects and applications.

Ensyn expects to increase D7 RIN production as it secures additional contracts from existing capacity for RFO heating fuels and as additional production capacity of RFO is brought on line. In addition, as Ensyn completes commercial demonstration of its Refinery Coprocessing application and secures offtake contracts from refiners, the company anticipates that its refiner partners will be generating D7 (diesel) RINs as well as D3 (gasoline) RINs.

Ensyn is executing its renewable fuels business in alliance with UOP, a Honeywell company. This alliance takes place through Envergent Technologies, LLC (Envergent), a joint venture between Ensyn and UOP. (Earlier post.) Envergent’s role is to supply Ensyn’s RTP conversion equipment to RFO production projects world-wide, with performance guarantees. In addition, UOP is supporting Ensyn in the commercial development of its Refinery Coprocessing business, including supplying refiners with delivery systems to integrate RFO into their refining operations.