January 2020
Vol 7 | Issue 270

Q&A with Stephen Johnson of Illinois Clean Fuels

President

Principle Series:

Illinois Clean Fuels is seeking investment to build a synthetic fuels plant that will revolutionize fuel production and waste management in North America

  • The plant will produce ~414,000,000 gallons per year of ultra-clean drop-in-replacement diesel and jet fuel from garbage-derived biomass
  • ICF’s climate emissions will be far enough below zero that not only does ICF’s fuel not create a climate impact, but a gallon of ICF’s fuel also offsets the impact of an additional gallon of conventional fuel
  • Capable of delivering zero climate impact solutions to otherwise difficult-to-decarbonize applications that require energy-dense liquid fuels, such as aviation and transoceanic shipping
  • The ICF plant will be located near Mattoon, in Coles county Illinois
  • Located on existing rail lines, and has power transmission and major road access in the immediate vicinity
  • The site has undergone substantial permitting and development work for a similar gasification + carbon storage project
  • The ICF project will demonstrate a new commercial reality renewables can achieve a lower cost of production than traditional fossil fuels and thereby deliver greater returns, from a higher-quality asset, with better lifespan and longevity, without subsidies


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Synthetic fuel technologies have been around since the 1930s. Why is now the time to develop synthetic fuel plants?

The world is facing rapidly escalating problems with climate impact, affordable fuel supply, and municipal waste management. Synthetic fuels plants represent an integrated solution that can cleanly and profitably address all three issues.

Carbon capture is fundamental to the chemistry of synthetic fuel production. This means that our cost of capturing the significant volume of excess CO2 generated in the process, but not needed for fuel production, is essentially zero, and our incremental cost of permanently sequestering that co2 underground is negligible. Synthetic fuel plants represent the lowest-cost option available for integrating carbon capture and sequestration with the treatment of municipal waste and the production of transportation fuels, eliminating the climate impact of both, and in fact integrating to form a negative emissions technology that actively pulls a large amount of CO2 from the air and permanently locks it in the ground on a full lifecycle basis for every gallon of our fuel that is used.

The world has not found more conventional oil than it has consumed in a given year since roughly 1983. In 2003 the world ran out of spare production capacity of cheap conventional oil, and prices began to climb. Virtually all new oil production capacity brought online since then has been much higher-cost unconventionals, such as fracking, tarsands, and deep water offshore, and the cost of additional barrels of oil is slowly rising over time. The world economy must begin to transition to sustainable sources of transportation fuels. Synthetic fuels really represent an old business model pioneered in the coal to liquids and gas to liquids industries, which currently produce over 700,000 BPD worldwide across 10 plants. While those processes are neither clean nor sustainable, the fundamental chemistry used in those facilities also works just as well with biomass feedstocks, which IS clean and sustainable. Synthetic fuel plants running on municipal waste can produce fuel at a production cost lower than new sources of oil from fracking.

Municipal waste represents the lowest cost available source of biomass feedstock. This is in the form of the non-recycleable fraction of waste, which is about 50-65% biomass on average. This volume is currently either landfilled (where it breaks down and emits methane and CO2) or incinerated (where 100% of the carbon in the waste is emitted to the atmosphere). There is currently no economically viable alternate user for this feedstock material, as electricity production does not achieve a sufficient profit margin to cover the operating costs (which is why incinerators rely on tipping fees to turn a profit). ICF represents a new lower-cost, radically cleaner way to eliminate the landfilling and incineration of this waste, and upgrade it to much higher-value products.

What is the potential impact of the ICF project?

Directly, we will produce 414 million gallons per year of fuel, with the climate impact of removing 2.1 million cars from the road. But the larger impact comes from the demonstration of the business model. Many large companies around the world will begin to deploy this integrated process once they see a commercial demonstration. Transportation and municipal waste management represent two of the largest climate emissions centers in the world economy, and are among the most difficult to cost-effectively decarbonize. Our project will demonstrate a new economic model which powerfully and profitably links these two sectors, capturing and re-using the energy and raw materials trapped in municipal waste (and thereby preventing it’s release into the oceans and environment), while delivering a new source of ultra-clean jet and diesel fuel, at a lower cost than new sources of oil.

The US is the Saudi Arabia of garbage. There is enough feedstock just in the US to support 20 plants putting out 600,000 Barrels Per Day of fuels. Ocean plastics are already at crisis levels, and poor waste management practices are creating widespread environmental damage, particularly in the developing world. The World Bank estimates that Africa, the Middle East, and South Asia will double their municipal waste generation rates by 2050, and everywhere else will grow by 50%. This volume must be cost-effectively managed and not released into the environment, and landfills and incinerators are not the answer. Using the World Bank's waste generation estimate, the world could potentially produce as much as 16,000,000 barrels per day of transportation fuel from that volume of municipal waste.

Waste should be viewed as a source of valuable unrecovered energy and raw materials, and as one of the lowest-cost potential paths to economy-wide carbon emissions reduction. The ICF project aims to demonstrate a model that can be replicated globally to profitably mitigate the connected issues of waste management, climate, and affordable transportation fuels.

How is ICF different from other biofuels producers?

The ICF economic model does not rely upon subsidies. Virtually all sources of biofuel, whether ethanol, renewable diesel, sustainable aviation fuels, or other, rely on a massive level of subsidization to offset their high production cost. This is particularly true of the hydrogenation pathways that represent the majority of current renewable diesel and sustainable aviation fuel production.
Our philosophy is that subsidies cannot scale, and we must develop an economic value chain that can be implemented anywhere in the world. Our focus has been on developing an economic model that can compete directly with oil on production cost, while maximizing our environmental and climate performance. There are other waste-to-fuels projects (Enerkem and Fulcrum in particular). Our project is 30X larger than these facilities in production capacity, which gives us a $30-40/bbl lower production cost due to scale economics. We are also the only project that integrates carbon capture and storage, which (apart from just plain being the right thing to do from a license-to-operate perspective) gives us a tremendous additional advantage in the form of 45Q tax credits for carbon sequestration, and much higher levels of Low Carbon Fuel Standard credit generation on account of the dramatically lower lifecycle carbon footprint of the fuels we will produce. We also utilize different process technologies that do not generate potentially harmful byproducts such as fly ash. So, in short, we are much cleaner, much more profitable, and deliver a much more positive climate impact.


Stephen Johnson of Illinois Clean Fuels

Stephen has been active in the synthetic fuels space since 2003, helping to develop technologies, advance projects, and lay the groundwork for commercial implementation in the US.

His expertise is in synthetic fuels process design, and the economics of alternative fuel production. With the vital support of the rest of the ICF team, he pioneered the integration of municipal waste feedstocks, carbon capture and storage, and synthetic fuel production, which combines to form the world’s first Biomass Energy + Carbon Capture and Storage fuels process, a negative climate emissions technology.

Prior to founding ICF, he was the founder and portfolio manager of Stonebridge Asset Management, a hedge fund he founded straight out of college, where he delivered a 327% return net of fees over 5 years.

He holds a bachelors degree in finance from Portland State University and is an Eagle Scout. On the weekends he can usually be found exploring the Pacific Northwest, either by kayak, ski, dirtbike, mountain bike, or with his daughter’s scout troop.

Contact Stephen:

stephen@icfuels.com

www.icfuels.com