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A Zeus IntelligenceM Publication

Global Coverage of Gasification Projects and Associated echnologies

Vol. IX, No. 22 November 22, 2013

S Y N G A S R E F I N I N G

report

zeus

Defense Contractors Developing Deployable

Gasication Units ...........................................................2

Analysis: EPA Reduces Renewable Fuel StandardMandate for First Time ...........................................3

Interview: R3 Sciences working to commercialize

modular gas-to-methanol units .............................5

Lanzatech prepares low-carbon fuel for

take-off.....................................................................8

Africa .......................................................................9Qatar sees increasing promise in GTL fuels.

Americas ...............................................................10OCI plans largest methanol plant in the US. Marcellus GTL construction start de-layed until 2014. Northern Plains Nitrogen reaches agreement with Chinese engi-neering rm. CF Industries on track with US$1.7 billion fertilizer expansion project.Northern Iron working to arbitrage NA DRI/HBI market . Louisiana on verge ofconstruction boom on industrial plans. EIU investigating alternative, sustainablebiomass sources. Middlebury biomass plant passes important milestone. CirqueEnergy, Northrop Grumman to develop deployable gasication unit. PyroGenesissecures contract with multinational oil and gas company. EPA considers GHGemission limits on new coal power plants. Sandia Lab researching biocatalysttechnologies for transport fuel production.

Asia ........................................................................16Lanzatech jet fuel certied ahead of partnership with Virgin Atlantic. Biomass gas-ication unit proposed for Kathmandu. Indian government to revoke coal licenseson development delays. MagneGas announces gasication equipment sale toAstana TechCom.

Europe....................................................................17Danish rms investigating alternatives to costly fertilizer. Poland experimentingwith coal gasication processes. IEA: Global GHG emissions to rise 20 percent by2035. Europes enthusiasm for CCS wanes.

Client Letter

News Briefs

Interview

Industry Analysis

Feature Story

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2 Zeus Syngas Refning Report November 22, 2013Reproduction by any means is illegal and punishable by fines of up to $50,000 per violation. Copyright 2013 by Zeus Development Corporation.

echnical and Market Analysis of SyngasProduction & Applications via Multiple-

Feedstock Gasification echnologies

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reportSY N G A S REF I N I N G

Client Letter

Defense Contractors Developing

Deployable Gasication Units

Dear Client,

Lockheed Martin and Northrup Grumman, the largest and fifth-largest U.S.defense contractors, respectively, have individually entered into agreements withseparate gasification technology suppliers to address waste disposal needs, energysecurity and climate control issues. Te goals of both are to develop advanced wasteconversion systems that can be deployed worldwide for landfill diversion, in bothprivate communities and military installations.

With the global population surpassing 7 billion people, there is an in-creased need to reduce dependence on landfills. Tere was an estimated 2 billiontonnes of municipal solid waste generated in 2012 alone. Tis is expected to risealong with population growth, urbanization and improved living standards. Land-

fills, though currently the primary method of disposing of municipal waste glob-ally, are increasingly seen as an option to be avoided, particularly as landfills emitmethane, a greenhouse gas which has twice the environmental impact as CO2.

Gasification systems can produce syngas, electricity, liquid fuels and hydro-gen, along with by-products such as biochar, water, ash, and heat, while addressingthe issue of where to send a communitys waste, and simultaneously reduce the needfor fossil fuels in power generation. Although waste gasification has been commer-cially proven in several countries, the technology is not widespread, and conven-tional incineration is the primary waste-to-energy method in use worldwide.

Lockheed Martin and Concord Blue reached an agreement in October todevelop an advanced waste conversion system to address these issues. Te solution

would address the current burden on landfills, conventional incineration and fossilfuels, as well as provide green baseload energy. Lockheed Martin will provide itsengineering, program management, procurement, manufacturing and integrationexperience to apply Concord Blues patented technology globally in the expandingwaste-to-energy arena. Concord Blue opened its first Concord Blue Reformer in2002 in Izumo, Japan.

Meanwhile, Northrop Gruman Corporation and Cirque Energy have en-tered an agreement for the development of deployable gasification units. Te unitswill be designed to convert wastes generated at military installations, natural disas-ter locations, or commercial or industrial sites into electricity and recoverable heat.Tese units utilize low temperature, starved air gasification technology coupled withconventional reciprocating engine technology. Te companies plan to produce a

working prototype in 2014.Tus, some very large firms have entered into the waste gasification space

in recent weeks, representing some US$70 billion in market capital. For providersof waste gasification technologies, partnerships like these may provide the necessaryimpetus for waste gasification technologies to take off worldwide. We look forwardto keeping you informed and alert as this market segment grows.

Yours sincerely,Zeus Syngas Refining Report

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November 22, 2013 Zeus Syngas Refning Report 3Reproduction by any means is illegal and punishable by fines of up to $50,000 per violation. Copyright 2013 by Zeus Development Corporation.

Industry Analysis

EPA Reduces Renewable Fuel Standard

Mandate for First Time

The U.S. Environmental Protection Agency (EPA) has lowered the ethanolblending mandate known as the Renewable Fuels Standard (RFS) inresponse to the slower-than-anticipated growth of cellulosic ethanol.

Although the move is supported by the oil and auto industries, corn-

growers and developers of cellulosic ethanol technologies, which are at the

cusp of commercialization in the U.S., stand to lose by the development.The EPA has thus acknowledged that the current mandate is not feasible.

Te EPA wants to cut the amount of corn-based ethanol and other biofuels required in 2014

to be blended with gasoline to 15.21 billion gallons. Tis is nearly 3 billion gallons less than

the previous target for 2014 of 18.5 billion gallons.

Te law also proposes a range of 2 billion to 2.51 billion gallons for advanced biofuels witha recommended target of 2.2 billion gallons, far below the proposed target of 3.75 billion

gallons under the Energy Security and Independence Act of 2007, which first established the

mandate.

Te law, In response to concerns about the use of corn-based ethanol, set a cap on

corn-based ethanol capacity, expecting blenders to increasingly rely on sourcing ethanol from

cellulosic projects, or non-food-biomass projects. And although enzymatic cellulosic ethanol

processes are now ready to commercialize, thermochemical approaches to cellulosic ethanol

development have lagged far behind, and several ventures have failed or been cancelled de-

spite limits on corn-based ethanol capacity.

When proposed in 2007, government forecasts expected U.S. gasoline consumption

would continue to rise, corresponding to increasing demand for ethanol. Instead, gasoline

demand has flattened due to fuel-efficiency gains in cars, a weaker economy and higher

gasoline prices. Te mandates were set to require an exact amount of gallons rather than a

percentage of total fuel produced, and therefore a reduction in gasoline consumption affects

the supply to which the mandated volumes can be applied.

Te American Petroleum Institute (API), which represents the oil industry, has

called on EPA to end the program completely. Te industry is joined by groups affected by

higher corn prices. Te Advanced Biofuels Association (ABA) believes that reducing the EPA

standards will pull the rug out from underneath the growing advanced biofuel industry. Ad-

vanced biofuel companies have invested a collective US$14 billion in the development of ad-

vanced and cellulosic biofuels, the ABA states, and further reduction of mandates will reduce

incentives for investment for advanced biofuels necessary to produce large-scale quantities of

renewable fuels.

Most gas station fuel contains a 10 percent blend of ethanol and 90 percent gasoline. With

the higher mandates, which are irrespective of total gasoline consumption, refiners hit a

blend wall, potentially requiring the production of 15 percent ethanol blends. Te blend

wall is the upper limit of how much corn-based ethanol can be blended into gasoline. For

most cases the wall is set at 10 percent. Auto makers have argued that E15 blends could dam-

The Blend Wall

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age engines, and although they took a case regarding the issue to the Supreme Court in June,

the court declined to hear the case. Nevertheless, some automakers have started to certify

vehicles to use E15, including GM and Ford. Chrysler, on the other hand, does not approve

of the fuel and says that it can void existing warranties, as more than 90 percent of vehicles

on the road are not approved to use E15. E15 is roughly 10 to 15 cents per gallon cheaper

than E10 but is less energy-intensive, resulting in less mileage per gallon performance.

RFS compliance is tracked by assigning Renewable Identification Numbers (RINs) for eachethanol-equivalent gallon of biofuel. Te RFA estimates that its industry will generate at

least 3.5 billion RINs in 2013 that qualify as advanced biofuels, exceeding the target of 2.75

billion gallons for 2013. Anything less would be a step backward for the industry, the RFA

argues.

Each gallon of renewable fuel is given a number to monitor trading and track its

use. Refiners that fail to supply enough renewable fuels to the blenders who mix ethanol and

gasoline must buy extra RIN certificates. If there is insufficient renewable fuels overall, RIN

prices rise, providing an incentive to produce more ethanol, but these costs are passed along

to customers at the pump. Ultimately, the API feels, the RIN system punishes refiners for

biofuel producers failing to commercialize cellulosic ethanol.

Te oil industry has suggested that the EPA keep the 10 percent limit on ethanol,

further reducing corn ethanols share and increasing the cellulosic quota, thereby continu-

ing to incentivize cellulosic ethanol development. Because cellulosic ethanol production has

lower GHG emissions than corn ethanol production, the effects on the climate would be

reduced, the industry adds.

Te ongoing battle between EPA and industry associations comes amid the start of cellulosic

ethanols commercialization. In the next year, three major cellulosic ethanol plants are slated

to come online: POEs 20 million gallons per year (gpy) project, Duponts 30 million gpy

project and Abengoas 25 million gpy project. Even still, the three plants would altogether

produce just 5,000 barrels per day of cellulosic ethanol, less than 0.06 percent of U.S. con-

sumption. Te companies building the plants hope to replicate them to ultimately capture 10

percent of the U.S. motor fuel market. Cellulosic ethanol projects using the thermochemical

route have been even slower to materialize, yet companies such as Ineos Bio and Enerkem are

developing projects to produce ethanol using waste feedstocks processed in gasifiers.

Te incentives for thermochemical approaches to cellulosic ethanol development appear to

be waning. Te oil industry sees the mandates as unfair, as they rely on production capacity

that is only now starting to commercialize. Limits on corn-based ethanol production simulta-

neous with rising expectations of ethanol supply was supposed to stimulate cellulosic ethanol

developers to commercialize, but this has largely not occurred, particularly for thermochemi-

cal approaches. While the ethanol industry contends that the oil industry is merely unwilling

to give up further market share to ethanol, particularly as gasoline consumption peaked in

2005 and has been falling as a result of higher-efficiency vehicles, advances in technology will

have to occur before cellulosic ethanol can approach the scale of contributions to the energy

mix that corn-based ethanol has made.

RFS Compliance

Cellulosic Ethanol

Development

Conclusion

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Interview: R3 Sciences working to

commercialize modular gas-to-methanol

unitsR3 Sciences have successfully produced commercial grade methanol in acontinuous ow pilot system using a liquid, homogenous catalytic processAdvances in homogenous catalysis developed by R3 Sciences will allow

the production of methanol from air-derived syngas with only trace levels

of catalyst residual. The company is looking to license its technology for

deployment in transportable, modular units to process natural gas at the

source, providing opportunities for oil eld operators to commercializestranded and ared gas into methanol. R3 Sciences is a unit ofEnersciences Holdings, which through other units provides drilling uids

and services, frac and coil chemicals and power generation technologiesfor upstream operators.

Te Bakken shale formation of North Dakota in particular has seen a huge surge in natural

gas flaring. Tis is primarily driven by economics, as companies find it more cost-effective to

flare the gas than build the infrastructure to collect and use it, particularly in remote loca-

tions. Despite the economics, the practice of flaring may be subject to increased regulatory

pressure. Resource owners as well may demand value from the gas flared from their proper-

ties, as oil companies are largely focused on producing oil. High oil prices and low gas prices

are further inducing producers to flare gas.

Te latest version of the EPAs New Source Performance Standards (NSPS) would

require that by January 2015, green completions will apply to all new Bakken wells to

capture, rather than flare, the gas. Flaring would be permitted only as a temporary measure.

North Dakota regulators will ultimately make the call. According to the World Bank, U.S.

gas flaring has grown significantly over the last five years, from 78 billion cubic feet (bcf) in

2007 to 251 bcf in 2011, a 223 percent increase, a rate of growth faster than all other major

gas-flaring nations. Still, this represents only a small percentage of total oil production.

Zeus Syngas Refining Reporteditor Chris Cothran recently spoke with members of R3 Sci-

ences team to learn more about the companys catalyst breakthrough and plans for com-

mercialization of its technology. David rahan, R3 Sciences President and Chief Innovation

Officer and Dr. Richard Sapienza, R3 Sciences Senior Research Advisor provided an overview

of their technology and perspectives on the growing opportunity for gas conversion systems

for oil field applications.

ZSRR: Could you discuss the latest development on pilot production of methanol from

natural gas, and what will this enable you to do now in term of next steps?

Flared Gas is a

Growing Problem/

Opportunity

Interview with R3

Sciences Team

Members

Industry Interview

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R3 Sciences: In a homogeneous system, running a pilot plant is equivalent to running a

commercial plant as a homogeneous system is easy to scale up or scale down production.

ypical methanol production methods involve passing syngas over a heterogeneous catalyst,

usually a solid with a small number of active sites, where the reaction process occurs.

Our catalyst is completely active, with every portion in liquid state, making it easier to flow

in, out, regenerate, recirculate, much easier than a heterogeneous catalyst. Homogeneous

catalysts tend to be more active, which is why we are also able to pass large inerts throughthe system. Because the catalyst can accept nitrogen without a problem, syngas production

can be conducted at a lower capital cost, as the system can use air instead of an oxygen plant.

High activity enables high single pass syngas production, allowing for smaller plant sizes and

a lower need for catalyst.

Heterogeneous catalysts require higher temperature and pressure than homoge-

neous catalysts. For a traditional Fischer-ropsch (F) process, 250-750 pounds per square

inch (psi) of pressure is required. With most methanol production processes, including

methanol-to-gasoline processes, require up to 750 psi, while F uses 250-300 psi at much

higher temperatures (250-300 degrees Celsius). Our catalyst can run at temperatures as low

as 100 degrees Celsius. Also, the conversion efficiency per pass is over 93 percent, compared

to an efficiency of 30 percent per pass with heterogeneous catalysts. Te lower efficiency of

heterogeneous catalysts requires the gas to be reconditioned, recompressed and recycled into

the system for another pass. Te high conversion efficiency of the homogeneous catalyst is

possible as the catalyst is 100 percent active.

With the homogeneous liquid catalyst, gas is bubbled through the catalyst material,

granting immediate contact of the gas with the catalyst, reacting the CO and H2 immedi-

ately to produce methanol. In heterogeneous catalyst systems, gas needs to sit on the surface

of the metal that is there to be reacted.

In the R3 Sciences process, synthesis gas undergoes gas conditioning steps to

remove certain unwanted gas elements, preventing those elements from interfering with the

catalytic reaction. Te conditioned synthesis gas enters the R3 G2M reactor where it imme-

diately undergoes a chemical conversion into methanol. Te synthesis gas is consumed in the

reactor with the remaining nitrogen leaving the reactor as a major component of the tail gas.

Te nitrogen is the residual inert gas from the air component used in producing the synthesis

gas via the auto thermal reformer.

ZSRR: What is the catalyst composed of? Will you manufacture the catalyst for custom-

ers yourself?

R3 Sciences:Yes, we will produce the catalyst ourselves. All the materials are commercially

available, with no noble metals. Te materials are put together in a unique way. Te catalystresiduals are non-toxic. Te tailgas from our process will be trace hydrogen and the balance

nitrogen. Te catalyst structure is liquid and is blended in a plant and stabilized and deliv-

ered to the field, already prepared. Because it is liquid, the catalyst can be regenerated on-site,

maintaining a high level of activity for the units.

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ZSRR: What are the target applications for the technology?

R3 Sciences:Flared gas in the U.S. is often flared because it has no market, no pipeline, or

the gas may need special conditioning or there is no consumption for it locally. Our plan is

to go to local sites, install our modular units to convert the flared gas to dispatchable liquid.

arget size range of 1 million cubic feet per day (MMcf/d), with the option of incorporat-

ing two or three modules. Above 5 MMcf/d, an operator is more than likely going to have apipeline running to the well. At 1 MMcf/d, an operator can produce 10,000 gallons per day

of methanol per location. If syngas cleanup technologies can be improved on further, there

might be a way to scale the facility even smaller. With a homogeneous catalyst it is easier to

scale down. In the U.S., we see as many as 75,000 sites with this range of gas production.

Tere is enough room for everybody.

ZSRR: When will you be able to move into commercial development?

R3 Sciences:We want to ensure durability of the catalyst. We have spent some US$5 mil-

lion on catalyst research in the last three years. We plan to put these out as standard modular

units, working with distributed production rather than centralized production. Te systems

will be skid-mounted and assembled on small concrete pads. First stage dimensions will be

approximately 30 feet by 50 feet, consisting of half a dozen modules interconnected. wo

large advantages beyond the catalyst is that syngas can be made with air and not oxygen and

no distillation of product is needed. Also, once collected, the methanol product has no water

in it. Most other methanol processes produce a residual of water requiring a secondary pro-

cess. Te methanol could also be used by the oil and gas operator to fuel its fleet of trucks,

compressors and rigs, allowing the operators to consume what they were wasting at the same

site, replacing diesel. By the first half of 2014, we expect to have a commercial unit in the

field to make methanol from natural gas.

ZSRR: Could you discuss why methanol is such an attractive product for stranded gas

monetization, and provide some economics on that consideration?

R3 Sciences:Methanol is such a versatile chemical in terms of what can be done with

it. Methanol is possibly the best vehicle to produce jet fuel and diesel via MG dehydra-

tion reaction. Methanol is a good starting material for valuable materials, such as dimethyl

ether (DME), which is popular in China as a diesel substitute or additive, acetic acid, metal

formate. Tere are so many advantages to taking on methanol. Methanol is easily reformed

into hydrogen for use in hydrogen applications, such as fuel cells. In fact, the best hydrogen

carrying material is methanol itself. Everybody struggles with how to move to the hydrogeneconomy, but hydrogen is difficult to handle. Methanol becomes the ideal transmission form

for hydrogen. Flared gas has no value, in fact, it has a cost: you must buy a flare, manage and

monitor that. If gas was at a price of US$4/thousand cubic feet (Mcf), and methanol is cur-

rently sold for US$1.80 a gallon, we are making US$18 worth of product per US$4/Mcf of

gas. With a total feed cost of US$7 to make US$18 worth of product, the economics makes

sense.

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Feature Article

Lanzatech prepares low-carbon fuel for

take-off

LanzaTech is a New Zealand-based rm, with ofces in the U.S., China andIndia, that is commercializing a process that converts carbon rich gases

and residues from industry into fuels and chemicals. By capturing thecarbon from the gas, LanzaTech is able to reuse it as a fuel or sequesterit into chemical intermediates that can be used in the manufacture of new

products such as plastics, nylon and rubber. The companys technology

uses microorganisms to ferment gas, such as steel mill off-gas, syngas

and steam-reformed methane into fuels. The company recently announcedcertication of its jet fuel by an independent organization, moving forwardits partnership with Virgin Atlantic for the supply of jet fuel to VirginAtlantics operations from 2014.

Lanzaech has operated a pilot scale plant since 2008. Built at the BlueScope Steel mill in

New Zealand with a capacity of 15,000 gallons/year, the pilot plant is linked directly to the

mills off-gas exhaust. Te pilot plant is fully automated. In November 2012, Lanzaech

announced completion of the first phase of a multi-phase partnership with Baosteel, Chinas

largest steel producer: A 100,000 gal/year demonstration facility that converts waste carbon

monoxide gas from Baosteels production facility into ethanol via Lanzaechs gas fermenta-

tion technology. Te successful completion serves as a pre-cursor to a commercial facility

targeted for 2014. Also in 2012 Lanzaechs second demonstration facility using steel mill

waste gases was constructed near Beijing with Capital Steel: the fourth largest steel producer

in China. Later that year, Lanzatech acquired Freedom Pines Biorefinery, located in Soper-

ton, Georgia through its acquisition of the former Range Fuels biorefinery. Lanzaech plansto utilize the existing gasification technology at the facility alongside its gas fermentation

technology to produce fuels and chemicals biomass.

Lanzaechs process uses microorganisms to convert gases into alcohols. Te process can convert

carbon monoxide containing gases produced by industries such as steel manufacturing, oil refin-

ing and chemical production, as well as gases generated by the gasification of forestry and agricul-

tural residues, municipal waste, and coal into valuable fuel and chemical products. Te process is

flexible to the hydrogen content in the input gas and tolerant of typical gas contaminants.

Te carbon monoxide containing gas enters the process at the bottom of the bioreac-

tor, and is dispersed into the liquid medium where it is consumed by Lanzaechs proprietary

microbes as the reactor contents move upward in the reactor vessel. Te net product is with-drawn and sent to the product recovery section. Te product recovery section makes use of

an advanced hybrid separation system to recover the valuable products and co-products from

the fermentation broth. Te water is recovered and returned to the reactor system, minimiz-

ing water discharge from the process. Te products and co-products are collected for down-

stream use.

In some cases, these products can be used directly as fuel or chemical products. In

many cases it is also possible to convert products from the Lanzaech process into common

Approaching

Commercial

Development

LanzaTech Gas

Fermentation

Technology

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chemicals or drop-in fuels that are normally derived from petroleum. Te Lanzaech pro-

cess thus provides a route from waste gases and solids to valuable fuel and chemical products,

reusing carbon along the way to minimize environmental impact.

Lanzaechs process can use hydrogen-free gases for the production of ethanol, as

the companys microbes can produce hydrogen for carbon and water, reducing the need for

thermochemical water gas shift, improving overall C balance, allowing the use of any CO:H2

ratio, and enabling an efficient, low-energy route to carbon capture and sequestration or

utilization operations. Additionally, the company sees production opportunities beyond etha-nol, including the production of specialty chemicals, such as isoprene, MEK, isopropanol,

diesel, jet fuel, olefins and plastics.

At the heart of the Lanzaech process is its patented microbe that uses gas feeds as

its sole source of carbon and energy for fuel and chemical production. Because the companys

microbe is feedstock agnostic and completely tolerant to the extreme levels of contami-

nants found in steel mill and other industrial off gases, the company feels its technology has

multiple opportunities for deployment worldwide. Te microbe is naturally occurring and is

categorized as a WHO-risk 1 organism (same as bakers yeast).

Lanzaech was founded in early 2005 to develop and commercialize proprietary technologies for

the production of low-carbon fuels that do not compromise food or land resources. Troughout

2005 and 2006, the company raised funding through New Zealand-based Angel investors and

secured grants. Soon thereafter, the company attracted Series A investment from an investor con-

sortium led by Khosla Ventures; the Series B financing was led by Qiming Ventures.

Lanzaech closed its Series C investment in 2012 led by the Malaysian Life Sciences

Capital Fund. New investors included PERONAS echnology Ventures Sdn Bhd, the venture

arm of PERONAS, the national oil company of Malaysia, and Dialog Group, a Malaysian

integrated specialist technical services provider to the oil, gas and petrochemical industry.

Company Background

News Briefs

Africa/Middle East

QatarInternational Petroleum Marketing Company (asweeq) is actively promoting GL

jet fuel, a 50/50 blend of kerosene and conventional crude oil-derived jet fuel, manufac-

tured at the Pearl GLfacility, BQ Magazine reported. Te move towards GL and othervalue-added production comes as Qatars energy sector has reached a plateau, with limited

expansion expected in the gas segment for some years to come, at least until the moratorium

on the development of the North Field is lifted, said a asweeq official. Qatar is expectedto experience an average decline in oil production of 6 percent from 2013-16, according to

Standard & Poors. Although oil exploration campaigns are underway, additional production

is unlikely. Te development of GL also limits Qatars exposure to gas prices, which are

trending downward as they become increasingly decoupled from oil prices and new produc-

tion techniques have lowered costs. Tis in turn has boosted the commercial viability of

processed gas products, including GL, the official said.

Sasol Qatar president Marjo Louw says the future of GL will be dependent on the

1. Qatar sees

increasing promise in

GTL fuels
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Americas

OCI N.V.announced that Natgasoline LLC, a wholly owned subsidiary, plans to build a

new greenfield world scale methanol plantin Beaumont, exas. Te plant is expected to have

a capacity of up to 5,000 metric tons per day (tpd), equivalent to approximately 1.75 million

metric tons per annum (mtpa), and is expected to start production in late 2016. It will bethe first methanol facility of this scale in the United States and will be the countrys largest

methanol production facility based on nameplate capacity.

Natgasoline LLC submitted applications for environmental approvals at both state and

federal levels in February 2013. Te plant will take up a portion of a 514 acre plot of land

recently acquired by OCI.

Te project has been awarded a grant of US$2.1 million from the exas Enterprise

Fund, as well as incentive commitments from local entities, including the city of Beaumont,

Jefferson County, the Beaumont Independent School District, the Port of Beaumont and the

Sabine-Neches Navigation District. OCI estimates that the project will create approximately

3,000 construction jobs over the next three years and has committed to create 240 perma-

nent jobs. Tis is OCI N.Vs third natural gas monetization project in the US following the

refurbishment of OCI Beaumonts integrated methanol and ammonia facility in Beaumont,

exas and the construction of a US$1.8 billion nitrogen fertilizer complex in Weaver, Iowa

by the Iowa Fertilizer Company, a wholly-owned subsidiary of OCI N.V. OCI NV owns the

general partner of, and a 78.3 percent limited partner interest in, OCI Partners LP, which

operates an integrated methanol and ammonia production facility in Beaumont, exas.

Construction of Marcellus GLsmethanol-to-gasoline facilityhas been delayed until 2014,

Marcellus Drilling News reported. Plans for the facility were first announced in March, whenthe company expected construction to begin by the end of the year. Tat was typical project

optimism. We had hoped to get all of the supporting contracts in place. It has taken longerthan we envisioned. We are finalizing the contracts and getting the financing in place, said

Paul Hamilton, Marcellus GL executive vice president. Te company expects to

begin construction in April to June in 2014. Starting then will coincide with drier weather,

and it will be easier to do the ground work, Hamilton said. We expect the project to take

about two years of construction. We hope to be up and running in the first quarter of 2016.

Te facility is planned to be located on land that straddles the Allegheny and Blair townships

in Pennsylvania. Te facility will utilize natural gas to produce about 84,000 gallons per day

1. OCI plans largest

methanol plant in theUS

2. Marcellus GTL

construction start

delayed until 2014

market for gas. While there is significant demand for gas, the prospect of major gas discov-

eries in Asia and Africa could have a further impact on prices. For markets that can supply

large amounts of natural gas at low cost, GL represents a viable alternative, Louw said. Te

US is a key opportunity for GL for that reason. Sasol has plans for a GL plant in Louisi-

ana. Shell has plans for its own facility in the state as well, along with other smaller operators

that intend to build plants to produce diesel, gasoline and jet fuel. Large-scale GL projects

are under construction in Nigeria and Uzbekistan. Such developments could significantly

alter the market, said Louw. Current worldwide GL production, in countries such as Qatar,South Africa and Malaysia, produce 200,000 b/d of fuels and lubricants, accounting for just

1 percent of global diesel production.
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of gasoline and propane to be marketed locally for transportation fuel and for heating use. Te

facility will require about 30 workers during commercial operations. Te company continues to

talk with natural gas companies about connecting the facility to an existing gas pipelines, as well

as trucking companies about transportation of the facilitys products via tanker trucks.

Northern Plains Nitrogen(NPN), which is planning a US$1.7 billion nitrogen fertilizer

plant in Grand Forks, North Dakota, has reached an agreement with Chinas Chengda En-

gineeringCorp, Prairie Business reported. Te companies will form a relationship as investorand provider of technology for the fertilizer plant. Chengda, an engineering company which

is owned by the Chinese government, has experience in fertilizer production and is looking

to expand into foreign project opportunities. Te agreement is tentative and is not a guar-

antee of commitment to partnership, but NPN CEO Don Pottinger says that Chengda is

taking such a possibility seriously.

Te NPN fertilizer plans started when the North Dakota Corn Growers Associa-

tion sought to provide a large source of nitrogen fertilizer in the region. In May, the group

announced plans for the facility, which is planned to begin construction in 2015 or 2016

and begin operations as soon as 2017. NPN plans to finance the project with US$1 billion

in debt and US$700 million in equity investment. NPN is seeking investment from farmers

and farm associations in particular, but looks to Chengda as a potential source of a large por-

tion of the debt financing.

CF Industries, which is developing a US$1.7 billion fertilizer expansion projectnear Ser-

geant Bluff, Iowa, is entering the preliminary stages of construction after breaking ground

in October, KIV.COM reported. Te project will take three years to complete. Te projectwill produce ammonia and urea from a new production unit and will have a new warehouse

capable of storing up to 154,000 tonnes of product. Te warehouse will be one of the largest

in North America. Te urea and ammonia production unit will be tied into the companys

Donaldsonville facility, which already produces ammonia fertilizer. Te expansion will create

the capacity to produce nearly 4,000 tonnes per day of urea granular fertilizer a day. Te

project will need between 1,500 and 2,000 workers during construction and an additional

100 long-term workers during operations of the expansion. Te company expects the expan-

sion facility to come online in 2016.

Northern Iron Corp. is developing its mine properties to arbitrage the opportunities for

its HBI and DRI products amid projected increases in industrial development in North

America, which will increase the demand for steel. Te advent of the shale gas revolution in

North America is sparking the resurgence of industrial development in a variety of industries

and in particular the demand for metallics (HBI/DRI). Te past producing Griffith mine is

well placed to take advantage of these developments. said Basil Botha, President and CEO

of Northern Iron.

Te company plans to attract a large industry partner into the project to provide

expertise and capital to advance the project. Voestalpine recently announced the construction

of a US$661 million 2 million tonne per year Hot Briquetting Plant (HBI) in exas to sup-

ply their Austrian steel mills, along with Nucors announcement that they are soon to open

a US$750 million plant in a Louisiana bayou that will produce 2.5 million tonnes of direct

reduced iron per year.

DRI and HBI plants have steadily been shuttered over the last 20 years as they be-

came less competitive against imported product. With the advent of shale gas development in

3. Northern Plains

Nitrogen reaches

agreement withChinese engineeringrm

4. CF Industries on

track with US$1.7billion fertilizer

expansion project

5. Northern Iron

working to arbitrage

NA DRI/HBI market
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North America, this has changed the dynamics, whereby industrial manufactures are now en-

ergy competitive. Te projects are jumbo-sized examples of a steady expansion of cheap natural

gas use by a wide range of manufacturers, from chemicals and steel to glass and fertilizers.

Te comparatively cheap price of North American natural gas compared to Euro-

pean and Asian prices is currently a huge advantage for U.S. firms that depend on it and one

of the reasons foreign investment is coming back to North America. Natural gas in North

America, sells for approximately 30 percent of what it fetches in China. Te real ramp-up in

industrys demands for gas has already started in 2013 and goes through 2018, said BentekEnergy senior analyst Darrell Proctor. Tere are hundreds of new industrial projects that are

proposed for that period. As a result of the abundance of shale gas, there is a clear indication

that by 2020 the United States will require, for internal use, in the order of 9 to 10 million

tonnes of DRI/HBI.

DRI and HBI save energy in the production of steel and also provide steel plants

with a more consistent raw material than scrap steel, the company said. Tese facts enable

Electric Arc Furnace operators, the predominant steel production process in North America

to produce ever-improving quality steels. Te company estimates that, following nearly

twenty years of mining operations at the past producing Griffith mine, that there are approxi-

mately one hundred million tonnes of waste rock on site.

Louisiana is on the brink of a construction boom due to a number of multi-billion-dollar

industrial projects in the Lake Charles area and elsewhere in the state readying for construc-

tion, Te Daily Advertiser reported. According to forecasts, the state will need some 86,000workers in coming years as these projects start construction. Sasol will need 5,000 construc-

tion workers to build its ethane cracker and GL plant in Westlake, near Lake Charles, and

another 550 to work in its ethylene unit. Te company will invest a total of US$25 billion

in developing the projects. Shell recently announced plans for a GL facility of its own in

Louisiana as well.

Cheniere Energy is already constructing its LNG export facility in Cameron Parish.

Other LNG export plants are planned for the state also. Tese massive LNG facilities are expected

to create 100,000 jobs in the exploration and production sector as well as construction jobs. Che-

nieres investment is expected to exceed US$6 billion. New projects and expansions announced in

the Lakes Charles area total US$46.6 billion, according to economist Loren Scott, with another

US$25.1 billion planned in Baton Rouge and US$8.3 billion in St. James Parish.

Louisiana will also see a number of petrochemical plants developed in the area,

which, like Sasols GL plant and the LNG facilities, will need natural gas as feedstock. Te

demand from these projects will help offset the rise in natural gas supply from increased pro-

duction of Louisiana shales. If the price of natural gas gets too low to drill or frack, it hurts

us and it hurts them, said Gregg Gothreaux, president and CEO of the Lafayette Economic

Development Authority. By them being a ready, local user of natural gastheres a very

symbiotic relationship there.

Eastern Illinois University(EIU) researchers are conducting research to improve biomass-

based fuel applications, Te Daily Eastern News reported. Peter Ping Liu, the director of theuniversitys Center for Clean Energy Research and Education, said that the university has

been awarded three grants to further biomass research, including the investigation of plant

materials and animal waste for use in fuels production. Te students will evaluate different

biomass options to figure out what will be the best for the universitys Renewable Energy

Center to use, based on resources readily available in the Midwest region.

6. Louisiana on verge

of construction boom

on industrial plans

7. EIU investigatingalternative, sustainable

biomass sources
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Currently, the Renewable Energy Center runs on wood chips. Corn stover, switch

grass and miscanthus are also being examined as alternatives. Tese products are all native

to the Illinois area. Te research is looking to improve on woodchips as a biomass feedstock.

Further research will examine biomass options better suited to other regions, such as distilled

grain for Alaska. Te research will also study potential further uses for the ash by-product of

biomass gasification, including the possibility of replacing some or all of the cement in con-

crete as well as replacing some or all of the shale in brick. Te concrete and bricks produced

would need to be comparable or stronger than currently available concrete and bricks. An-other study will focus on pellet manufacturing using switch grass, miscanthus, big bluestem

prairie grass or cord grass as base material.

Te biomass gasification plant at the Middlebury College in Vermont has entered its

16thweek of uninterrupted operation, Te Middlebury Campus reported. Te plant is a corecomponent of the Colleges goal of achieving carbon neutrality by 2016. Te school relies

on the plant to reduce 40 percent of its greenhouse gas emissions. It is painful for us to use

oil. No one wants to be the guy that breaks the streak, said Manager of the Central Heat-

ing Plant Kelly Boe. Te plant has experienced just four weeks of shutdown since it began

operations in 2009. Since 2009, the college has decreased the use of fuel oil from 2.1 million

gallons annually to 634,000 gallons last year. In September, the school only utilized 3,000

gallons of fuel oil. Tis corresponds to a 66 percent drop in carbon emissions from heating

and cooling since 2007. Plans are to limit shutdowns to a short period during the spring and

the fall for maintenance. Te College saves roughly US$840,000 a year in fuel costs due to

biomass gasification. Such costs are offset by the annual cost of obtaining wood chips, a cost

which totals approximately US$800,000 annually.

Cirque Energyhas entered into a Joint Development Agreement with Northrop GrummanCor-

poration for the development of a Deployable Gasification Unit. Northrop Grumman and Cirque

Energy, previously working as a subcontractor, created a conceptual Deployable Gasification Unit

(DGU) on behalf of Northrop Grumman. Te DGU is capable of converting byproducts or

wastes generated at military installations, natural disaster locations, or commercial or industrial

sites into electricity and recoverable heat. Tese units utilize low temperature, starved air gasifica-

tion technology coupled with conventional reciprocating engine technology.

Te companies plan to continue technology development for the DGU towards

commercialization. Tey plan to produce the first DGU prototype for testing and demon-

stration for military, government, and commercial customers. Tey anticipate the DGU unit

prototype to be completed during 2014.

Under the agreement, Cirque Energy will lead development, manufacturing, and

testing of the initial demonstration DGU, with input from Northrop Grumman. Upon

successful demonstration, Northrop Grumman will manufacture DGUs for exclusive sale

by Northrop Grumman and Cirque Energy.

Te units are intended for the disposal of wastes, particularly at military bases and

foreign deployment sites, simultaneously achieving reduced fossil fuel dependence and lower

energy costs. Output from the units can be used in combined heat and power applications.

Te companies also see opportunities to deploy the DGU in commercial and industrial

settings to provide customers with ready access to waste feedstocks with energy indepen-

dence. Cirque Energy CEO Joseph Durant sees the potential market for the technology

exceeding several billion dollars in the U.S. alone.

8. Middlebury biomass

plant passes important

milestone

9. Cirque Energy,Northrop Grumman to

develop deployable

gasication unit
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Pyrogenesishas been awarded a follow-on contract from a Multinational Oil and Gas Com-

pany, which has requested that its name, as well as the details of the process be withheld for

competitive reasons. Te positive findings from a recently completed techno-economic study

has resulted in PyroGenesis being contracted by the Client to carry out engineering, testing and

fabrication of a novel plasma based process that could revolutionize the oil and gas industry.

Under this contract PyroGenesis will design, deliver and test a high temperature

plasma based process which eventually would be integrated into the Clients existing oil and

gas process. Te total value of this contract is over US$0.5 million and will be completed in

approximately 6 months.

Plasma gasification processes allow the attainment of extremely high temperatures

without the use of fossil fuels, PyroGenesis said. Once the company proves the process at pi-

lot scale it will work to develop an on-site commercial demonstration at the clients industrial

operation. PyroGenesis expects the contract to generate revenues in excess of US$100 million

through the development of the commercial application.

Te U.S. Environmental Protection Agencys (EPA) proposed rule to impose limits on greenhouse

gas emissions on newly constructed power plants may have a significant impact on the coal in-

dustry, Energybiz reported. Te proposed rule would allow such plants to emit only 1,300-1,400pounds of CO2 per megawatt hour. Coal-based power plants would need to implement carbon

capture and sequestration (CCS) technology to meet these standards. Implementing CCS would

increase electricity prices, putting coal-based power generation at a disadvantage.

In June 2013, President Barack Obama stated that reducing emissions from coal is an

important component of his climate action plan. In response, the coal industry called the presi-

dents plans a war on coal. Despite the administrations plans, however, coal will continue to be

a key component of the U.S. energy mix for some time to come. In aReutersinterview, Energy

Secretary Ernest Moniz stated that Obama expects fossil fuels, and coal specifically, to remain a

significant contributor for some time. Tis statement is supported by recent Energy Information

Administration estimates, which clearly point to coal as a dominant energy resource in the U.S.

and across the world even until the middle part of the current century.

If the administrations plans are implemented, the coal industry would have to adapt.

CCS technology would need to advance in order for many generators, particularly those that

produce a majority of their power from coal, to survive. According to EIA estimates, the cur-

rent state of CCS technology would mean that building a new coal plant with CCS would

take 30 percent more capital expenditure. Operating expenditure would be affected too due

to the energy cost of capturing carbon. Te increased cost may make the construction of new

coal power plants economically infeasible, according to the coal industry. A recent analysis by

the Journal of Environmental Studies and Sciences states that fossil fuels, including coal, are

becoming increasingly economically unviable for power generation, due to regulation.

If coal-based power generation has a future, it is clean coal. Investing in improvingCCS technology may make clean coal a broader reality. Tus far, no commercial application of

coal-based power generation integrating CCS has come online. Tis may change in 2014, when

Mississippi Powers IGCC facility in Kemper County, Mississippi comes online. Tat facility is de-

signed to capture 65 percent of carbon emissions, utilizing them in enhanced oil recovery opera-

tions in the region. Without CCS, coal-based power generation may become obsolete in the U.S.,

particularly as cleaner sources of power, such as natural gas and renewables, progressively filter into

the power generation markets at increasingly competitive prices versus coal.

10. PyroGenesis

secures contract with

multinational oil and

gas company

11. EPA considers

GHG emission limits

on new coal powerplants
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Researchers at Sandia National Laboratorieswill use their expertise in protein expression,

enzyme engineering and high-throughput assays as part of a multi-project, US$34 million

effort by the Advanced Research Projects Agency-Energy (ARPA-E) aimed at developing ad-

vanced biocatalyst technologies that can convert natural gas to liquid fuel for transportation.

Te ARPA-E program is Reducing Emissions using Methanotrophic Organisms for

ransportation Energy, REMOE, and involves 15 different projects. Sandia is a part of a

two-year award led byMOgene Green Chemicals, a wholly owned subsidiary of St. Louis-basedMOgene, LC, and will work toward sunlight-assisted conversion of methane to butanol.

Using enzyme engineering and other capabilities, Sandia National Laboratories will

work to engineer pathways from methanotroph organisms into another microbial host that

can generate butanol. Butanol has long been considered one of the best biofuel options for

transportation energy. Te broad goal is to have another source of energy in the U.S. that

doesnt have to be imported and could lead to lower carbon monoxide emissions than con-

ventional fossil fuels.

Methanotrophs are microbes that can metabolize methane. Sandias Blake Sim-

mons, manager of the labs biofuels and biomaterial science and technology group, calls this

microbe the poster child of organisms that are capable of metabolizing and converting

methane. Te goal of the project is to engineer pathways from these organisms into another

microbial host that can generate butanol. Butanol can be used as a fuel in an internal com-

bustion engine and, along with ethanol, has long been considered one of the best biofuel

options for transportation energy.

Te need for hydrocarbons that are nonpetroleum in origin is still growing, includ-

ing applications such as aviation and diesel engines, said Simmons. But in its natural state,

youre not going to readily burn natural gas in those types of engines, and the same goes for

some combustion engines. Natural gas, he explains, requires a special modification to be

used effectively as a liquid fuel in vehicles, much like biomass needs to be converted before it

can be used as a drop-in fuel.

With biomass, we are essentially taking something that exists in nature and convert

ing it into a low-cost, low-carbon, domestically-sourced fuel. With this project, were using

natural gas as the input rather than biomass, said Simmons. Natural gas extracted from the

ground is not renewable, he pointed out, but it is playing an increasingly important role for

the Department of Energy and the nations energy supply.

Using organisms to convert natural gas into liquid transportation fuels isnt a new

objective for the research community, Simmons said. Tere have been plenty of investi-

gations into this in the past, since there are plenty of organisms in nature that thrive and

survive and multiply off of natural gas metabolism. Te problem, though, is that they exist in

unique, tailored environments and are typically very slow at what they do, he said. ARPA-

Es projects, he said, are hoping to improve upon what nature has given us and developnew, more efficient pathways to speed up the process and convert gaseous feedstocks at a pace

and scale that is commercially viable. Currently, there are no proven biological methods for

converting gaseous inputs such as natural gas into butanol.

What we and others are doing is looking at the core metabolism of these microbes,

Simmons said. Ten, we can either engineer it to make it faster in native organisms or we can

take the metabolism out of those organisms and put it in something more industrially relevant.

12. Sandia Lab

researching

biocatalyst

technologies for

transport fuel

production
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Asia

Lanzaechhas had its jet fuel certified by the Roundtable on Sustainable Biomass (RSB),

moving its partnership with airline Virgin Atlanticforward, Environmental Leader reported.Lanzatech earned the RSBs sustainability certification for the joint venture facility that con-

verts waste steel mill gases to biofuel using the companys gas fermentation technology. Tis

is the first facility to use steel mill off gases for biofuel production in China. Te technologyuses carbon as a key component of its process, effectively acting as a carbon capture and utili-

zation solution. Te process can also utilize methane and syngas as feedstock.

Lanzatech and Virgin Atlantic teamed up in 2011 to produce low-carbon aviation fuel

with at least half the carbon footprint of conventional aviation fuels, such as kerosene. One of

Virgin Atlantics priorities is to achieve a 30 percent carbon reduction per revenue metric tonne

kilometer by 2020. Te Lanzatech technology uses microbes to convert waste carbon monoxide

gases from steel mills into ethanol. Te alcohol produced is then converted to jet fuel through

a second stage process. Trough this process, gases that would otherwise be flared off into the

atmosphere are recycled as part of the production process of jet fuel instead. Lanzatech states

that such a process could be applied to as much as 65 percent of steel mills worldwide. Virgin

Atlantic hopes the process can be tied-in to European facilities especially. If all current steelmills were so fitted, they could provide 19 percent of current worldwide jet fuel demand. Virgin

Atlantic hopes to have planes powered by the fuel beginning in 2014.

Nepals Department of Electricity Development (DoED) has issued a survey license to a bio-

mass plant developer for a feasibility study on a biomass gasification power project, Republicareported. Te project will have a designed capacity of 5.1 MW. Gold Rush Company Lim-

ited, the developer, wants to use municipal solid waste from Pokhara to process 90 tonnes per

day of garbage for the production of electricity. Te government is actively supporting such

environmentally friendly projects. Electricity produced from the facility will be just a fraction

of the cost of electricity produced from the countrys hydropower facilities.

Te facility will utilize pyrolysis gasification and produce bio-char as a by-product.Te facility will produce about 750 tonnes of bio-char annually, which can be used as a soil

amendment. Te plant will also be capable of producing 200,000 liters of biodiesel annually,

which can be used in industrial settings. As the city of Pokhara has only one active landfill,

the municipal authority is concerned that the landfill will be incapable of accepting addi-

tional garbage within seven or eight years.

Te project will cost approximately US$20 million, or $4 million per MW. Tough

the project is costlier than an average hydropower project, it is important from the environ-

mental perspective, said Puja Chand Takuri, Gold Rush Companys managing director. We

have sent a proposal to the World Bank and Alternative Energy Promotion Center for financial

assistance, said Takuri. Te company will also approach foreign investors for the project after

the completion of the feasibility study, which is expected to be completed within two years.

Te Indian government is planning to revoke as many as a dozen coal licenses, held by such

companies as ata, Jindal, Birla and Monnet Ispat & Energy, for delaying development of

the blocks, Business imes reported. Te licenses contain a combined 4.5 billion tonnes of re-serves and are located in Orissa, Chhattisgarh, Jharkhand, Madhya Pradesh and Maharashtra.

Te panel has recommended de-allocating three coal blocks of Jindal Steel & Power and two

coal blocks of Monnet Ispat for unsatisfactory progress. wo big blocks allocated to Jindal

1. Lanzatech jet fuelcertied ahead ofpartnership with Virgin

Atlantic

2. Biomass gasicationunit proposed for

Kathmandu

3. Indian government

to revoke coal licenses

on development delays
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Steel & Power and ata Sons for the countrys pilot coal-to-liquid projects are also proposed to

be de-allocated since the companies have not done any work on the blocks, a senior coal min-

istry official said. Te coal-to-liquids projects entail an investment of about US$10 billion each.

Te government made its recommendations via an inter-ministerial panel after reviewing the

status of 30 blocks and hearing the companies respective explanations for delayed development.

MagneGashas received US$276,000 towards the aggregate purchase price of US$499,000 for

a gasification equipment sale to Astana echCom, a company located in the capital of Kazakh-stan. Astana has purchased a small Plasma Arc Flow gasification system on wheels, custom built

to facilitate demonstrations of the MagneGas echnology to local energy industries, medical

facilities and universities. Final payment and delivery is expected in February 2014.

Te equipment will be used in the industrial gas market and in liquid waste treat-

ment in Kazakhstan. Since transportation of certain liquid wastes can be expensive and prob-

lematic, the units provide the capability to verify liquid sterilization or gasification on-site.

Tis would be the first deployment of MagneGas technology in Central Asia.

4. MagneGas

announcesgasication equipmentsale to Astana

TechCom

Europe

Danish firms Biomass DU, Dong Energy and Bregentved Estate plan to demonstrate the use

of agricultural waste biomass as a renewable energy source and as a substitute for conventional-

derived fertilizers, Biofuels Digest reported. Te companies will utilize biomass gasification toproduce electricity and heating, exploiting 90-95 percent of the biomass energy in the process.

Te companies began a research collaboration in 2012 on thermal gasification and bio-ash pro-

duction. Bregentved Estate is one of Denmarks largest farms. It uses straw for soil improvement

and is therefore suited for alternative straw treatment. Dong Energy has acquired a gasification

unit developed by Biomass DU and has installed a demonstration facility in Kalundbord. Te

plant currently produces large volumes of bio-ash and electricity from straw.

Poland is investigating methods of improving coal gasification, Euronews reported. Poland,one of Europes biggest coal pollution emitters, is looking to gasification for the extraction of

syngas from coal, particularly through the use of underground coal gasification (UCG) pro-

cesses. We are in the experimental corridor, which was built especially for coal gasification.

Preparations for the gasification process are underway, so you can see that special supports are

being built to hold a pipeline which will extract the productions from gasification. Behind

us, they are working to drill outlets for the geo-reactor, where the coal will be burnt, said

engineer Ryszard Gowarzewski from the site. Such gas can be used to power electric turbines

as well as produce special chemicals in the chemicals industry. Poland looks to reduce its

dependency on basic coal mining and imported natural gas, particularly as prices in Europerise amid dwindling stocks of fuels.

Renewables are expected to grow significantly by 2035, but carbon capture and storage

(CCS) is not expected to grow much at all during the same period, according to reports by

the International Energy Agency (IEA), Power Magazine reported. According to the report,world energy demand is projected to rise by one-third over the period, driven particularly

by Asian countries such as India and China, and especially Southeast Asian countries, which

1. Danish rmsinvestigating

alternatives to costly

fertilizer

2. Poland

experimenting withcoal gasicationprocesses

3. IEA: Global GHG

emissions to rise 20

percent by 2035
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4. Europesenthusiasm for CCS

wanes

are expected to experience the most rapid growth over the period. Several efforts to mitigategreenhouse gas emissions are underway, including the U.S. Climate Action Plan, Chinasplans to limit coal-fired power generation, Europes debate on its 2030 energy and climatetargets, and Japans new energy plan, which may or may not include nuclear power. Never-theless, carbon emissions are expected to rise over the period by 20 percent. Renewables will play a role, eventually representing a 30 percent share of the globalpower mix, but coal is expected to remain dominant over the period, for coal is expected to

remain the cheaper power generation for most regions, except those without ready access tolow-cost natural gas, such as North America. Coal demand is expected to increase 17 percentto 2035, with two-thirds of that increase happening by the end of the current decade. Whilecoal use declines in North America and Europe, India is expected to become the worlds larg-est importer of coal in the early part of the next decade. Te U.S. is expected to become energy independent by 2035, according to the report.Te report is pessimistic in its assumptions about the use of CCS in coal-fired power genera-tion, expecting only 1 percent of global fossil-fueled power generation capacity to be integratedwith CCS by 2035. Te projected massive increase in the use of renewables will likely createsignificant challenges, the IEA foresees, raising questions about current market design and itsability to ensure adequate investment and long-term reliability of supply, the agency said.

CCS policy expert Chris Davies believes the European Unions strategy for the developmentof carbon capture and sequestration (CCS) technology has fallen far short of its goals, TeParliament reported. CCS is seen as essential to meet Europes 2050 CO2 reduction goals,particularly as coal is expected to continue to play a dominant role in power generation inmany European countries. Instead of playing the major role it anticipated, the lead is beingtaken by the U.S., Canada, and China, Davies argues. Although European heads of government planned to have as many as 12 CCS dem-onstration projects online by 2015, with as much as 1 billion euros proposed for a range ofpilot projects sourced by the European Commission, now there appears to be little enthusi-asm for such projects. Political support for such projects has apparently waned. At present,just one project, the UKs White Rose Project, appears to be in the running for financialsupport. Most of the pilot projects never reached the stage of being approved for funding.

Te lack of support for CCS appears to stem from a lack of commitment to thetechnology, which is still considered uneconomical to develop, Davies said. In addition, thereappears to be a lack of a business model that supports private investment. Renewable energydevelopers, in contrast, receive cash subsidies for developing their technologies. It was pre-sumed that a model would become apparent if carbon allowances were priced high enoughto force investors to invest in CCS technology to meet CO2 emission limits. As the carbonprice scheme collapsed so did the financial justification of CCS, Davies said. If CCS is to become viable, European countries must assess how to achieve their 2050CO2 reduction goals, perhaps passing measures to require member states to publish a long-term CO2 reduction strategy to meet the goals. In order to support the drive to implementCCS, member countries must play an active role, providing financial support mechanisms,facilitating the development of CO2 pipeline networks and storage sites, Davies recommends.Concerns on the long-term storage of CO2 must also be addressed for the technology to beseen as viable long-term. Important to the development of CCS is the development of flagshipCCS demonstration projects, which will provide knowledge of CCS for policymakers, poten-tially opening up a willingness to help fund additional projects, Davies said. Davies supports the creation of an EU innovation fund for the sale of carbon allowanc-es. Davies sees financial support coming from producers and importers, whose CO2 emissionsCCS is intended to avoid. Legislation requiring them to purchase certificates, or make equiva-lent CCS investments, could help fund the further development of CCS technology.

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