Issue Date: June 1, 2009
LATER THIS MONTH, a new Dutch company called BioMCN plans to open a large-scale facility that will convert glycerin into methanol. The first of its kind, the plant is intended to take advantage of a surplus of glycerin in Europe and the rest of the world.
This global excess is the result of the explosive growth of biodiesel as a renewable alternative to traditional diesel fuel. For every 10 gal of biodiesel manufactured from vegetable oil, 1 gal of glycerin is produced on the side.
Although making chemicals out of glycerin looked like a sure thing a few years ago, today it seems anything but. Even though the surplus is real and growing, glycerin has proven to be a volatile commodity that experiences huge price swings. At least one big glycerin-based chemical project has been shelved and two others are significantly delayed. Perhaps more ominously, questions are emerging about glycerin's long-term supply security.
In the U.S., the biodiesel boom began in 2004, when then-president George W. Bush signed a jobs creation law that included a generous tax incentive to companies that produce biodiesel. According to the National Biodiesel Board, U.S. biodiesel output tripled from 2004 to 2005 to 75 million gal. It continued to skyrocket for the next three years, reaching 700 million gal in 2008.
Government mandates and incentives in Europe and Southeast Asia spawned similar biodiesel run-ups. Depending on the region, the raw material was soybean oil, rapeseed oil, or palm oil. But the result was the same: React more and more vegetable oil with methanol to create biodiesel and you get increasing amounts of coproduct glycerin.
Darol Brown, U.S. head of the oleochemicals consulting firm HBI, has been in the glycerin business since 1985. When he started, glycerin was a fairly staid by-product of making soap and oleochemicals. Today, Brown says, close to two-thirds of world glycerin production comes from biodiesel. Combined U.S. and European output last year was 1.2 million metric tons, almost triple what it was in 2004.
Around 2005, chemical companies began eyeing glycerin's three-carbon backbone and wondering what they could do with it. In 2006, both Dow Chemical and Solvay announced plans to use glycerin as a raw material for epichlorohydrin, an epoxy raw material that is now derived from propylene via a somewhat inefficient multistep process.
Only months later, Dow and other companies, including Archer Daniels Midland and a joint venture between Cargill and Ashland, started revealing plans to make propylene glycol from glycerin instead of the petrochemical propylene oxide.
Other companies began researching glycerin-based chemistry. The Brazilian petrochemical maker Quattor announced that it would make propylene out of glycerin. France's Arkema proposed generating acrylic acid and acrolein from glycerin. Huntsman Corp. developed glycerin carbonate to complement its line of alkylene carbonates. And the industrial gases producer Linde announced a pilot plant to generate hydrogen using glycerin as the source.
Start-up companies also got into the fray. Senergy Chemical was created by a group of propylene glycol consumers to commercialize glycerin-to-propylene glycol technology developed by researchers at the University of Missouri. Glycos Biotechnologies was formed around glycerin conversion technology from Rice University.
AS WOULD BE EXPECTED from the biodiesel explosion, glycerin prices fell, bottoming out in March 2007 at 32 cents per lb for refined glycerin in the U.S. But in mid-2007, a jump in rapeseed oil prices suddenly rendered Europe's biodiesel industry uncompetitive, and plants started shutting down. Glycerin shot up around the world in response. According to HBI's quarterly market report, the U.S. price of refined glycerin hit 90 cents per lb in March 2008 and stayed there for several months.
Cargill and Ashland got cold feet. In a financial report issued in April of last year, Ashland disclosed that the partners had suspended their plan to build a plant in Europe to convert glycerin into 65,000 metric tons per year of propylene glycol. The reason, according to Ashland, was "persistently high glycerin input costs."
Other projects also stumbled. Senergy's website hasn't been updated in years. The company doesn't provide a phone number, and an e-mail requesting information bounced back as undeliverable.
Dow hatched plans to make propylene glycol from glycerin by contracting with its Dow Haltermann Custom Processing subsidiary to carry out the conversion at a facility in Houston. Dow called the product PGR, for propylene glycol renewable, and predicted that it would help customers reduce their use of fossil fuels and other finite resources.
But although Dow still has PGR for sale, the company has stopped producing it because of glycerin volatility and other economic aspects of the technology. Dow says it is evaluating ways to improve the cost picture, even though no decisions have been made.
Likewise, Dow and Solvay have pushed back their plans for glycerin-to-epichlorohydrin facilities. As recently as last October, Dow said it was on target to build a 150,000-metric-ton plant in China's Shanghai Chemical Industry Park by 2011. The project is now on hold. "Dow made this decision in light of the economic downturn and the significant drop in forecasted market demand," a spokesman says. The company says it is "firmly committed to this project" but won't say when it will be revived.
And Solvay says its facility, a 100,000-metric-ton plant originally set for Thailand by the end of this year, is now being targeted for completion in the second half of 2011.
Although Dow and Solvay cite market conditions for their delays, Brown says glycerin's price swings concern many companies. Even Solvay acknowledges that "glycerin price volatility is going to stay and represents a risk for our investment."
With the exception of one small Dow plant in Europe, all glycerin is a by-product of other processes. Its main source, biodiesel production, is subject to the vagaries of government renewable fuel policies and is a slave to vegetable oil prices. "People come to me all the time and ask what I think the price of glycerin will be in one year," Brown says. "It's a hard question."
Yet some glycerin chemistry projects are proceeding. ADM is advancing a plan to make propylene glycol and ethylene glycol out of glycerin and sorbitol, a corn-derived polyol. The company affirms to C&EN that it is building a 100,000-metric-ton plant in Decatur, Ill. Start-up is set for the third quarter.
And Rob Voncken, chief executive officer of BioMCN, reports that his company's facility in Delfzijl, the Netherlands—a retrofitted conventional methanol plant—is on target to open this month. At full capacity the plant will be able to make 200,000 metric tons of methanol per year, requiring about 250,000 metric tons of glycerin.
UNLIKE FIRMS such as Dow and ADM that are preserving glycerin's carbon structure, BioMCN is gasifying glycerin and using the individual carbons to make methanol. The economics look better than they did a year ago. The price of refined glycerin has dropped by 50% since last summer, although it is still above the lows it reached in early 2007.
BioMCN's facility can consume crude glycerin, which sells for about 12 cents per lb in Europe. That's still more than the European methanol price of about 9 cents per lb, but thanks to biofuel-use targets in the European Union's Renewable Energy Directive, Voncken says that he can price his biomethanol on par with more expensive bioethanol.
And just getting off the ground as a developer of glycerin-derived chemicals is Glycos, the Rice spin-off. The Houston-based firm was launched last year to commercialize technology developed in the lab of Ramon Gonzalez, a professor of chemical and biomolecular engineering. According to the company, Gonzalez' microbes can convert glycerin to lactic acid, succinic acid, 1,2-propanediol, 1,4-butanediol, ethanol, and other chemicals.
Richard Cilento, an entrepreneur who joined Glycos two months ago as chairman, acknowledges that glycerin can be a volatile commodity. But he points out that Glycos is able to start with cheap, bottom-of-the-barrel glycerin that is contaminated with sugars, methanol, or solids. "Our bugs and fermentation can deal with that," he says.
According to Cilento, Glycos is in negotiations with several biodiesel facilities looking to upgrade their by-product glycerin into environmentally friendly chemicals. "They'll make biodiesel just to make the glycerin to make the green chemical," he predicts. "We hope to be in production next year."
HBI's Brown acknowledges that biodiesel producers typically have excess glycerin on their hands, but he isn't convinced that this state of affairs will remain. "I would argue that biodiesel in the long haul is probably not the fuel of the future," he says. "It is probably an interim fuel that will be replaced by more efficient fuels."
Already in the U.S., the big meat company Tyson Foods is working with a technology partner to turn fats into a renewable fuel with advantages over biodiesel, including the absence of glycerin. In Europe, the world's largest biodiesel production center, the fuel is coming under scrutiny in the food-versus-fuel debate. And in Southeast Asia, the burning of rain forests to plant biodiesel-yielding crops has created an outcry.
For now, though, even with the bad economy, glycerin-based chemistry is a tantalizing prospect. Unrefined glycerin from biodiesel plants, Brown says, is often sold as animal feed or burned for its fuel value. And even when refined, it's still cheaper than many other chemical raw materials out there. That's a reality that enterprising chemical executives can't seem to pass up.
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