According to the EIA, the United States consumes approximately 134 billion gallons of gasoline (containing approximately 14 billion gallons of ethanol). We believe Coskata’s technology has the potential to replace the use of petroleum-based gasoline and chemicals in the United States and elsewhere.
Coskata’s technology can utilize a variety of carbon-containing feedstocks to produce substantial amounts of alternative fuels and chemicals. These materials are abundant, and generally under-utilized resources. We believe these resources have the ability to materially impact the transportation fuels market in the United States. For example, if 10% of the natural gas produced each year in the United States was converted to ethanol using the Coskata process, we could produce an incremental 15 billion gallons of ethanol, more than doubling current U.S. production.
Our feedstock flexibility will allow us to locate our production facilities in large fuel markets where the availability of corn-based ethanol is limited by transportation costs. We believe that our shorter shipping distance to these markets, compared to corn ethanol shipped from the Midwest, will add to our cost advantage.
*numbers based on using the Coskata technology
Natural gas is an attractive feedstock due to its abundant supply and its low cost relative to transportation fuels such as gasoline and ethanol. According to the EIA, during 2011, gasoline was approximately six to eight times more valuable than natural gas per mmBtu. We believe that processes which convert natural gas to more valuable transportation fuels will offer compelling economics by allowing producers to take advantage of the difference in value between the two commodities. Natural gas can quickly and easily be converted into syngas, making it an ideal feedstock for various fuel and chemical products. Natural gas is available across the globe, and is especially abundant and inexpensive in North America and the Middle East.
Coskata has conducted extensive operations using Natural gas at the Lighthouse facility and at its Warrenville headquarters. Natural gas will also be used at Coskata’s first commercial-scale facility.
Many industrial processes such as steel production and oil refining result in the generation of carbon monoxide, carbon dioxide and hydrogen. Our process can utilize these industrial gases for the production of fuels and chemicals. Industrial gases are abundant, often available at low cost, and eliminate the need to build natural gas reformers or biomass gasifiers. As a result, facilities utilizing these industrial gases offer the potential for advantaged production and capital costs.
Wood represents a large market opportunity for our technology platform. Wood is a readily-available feedstock with established supply chains and feedstock handling and processing equipment. Our process can take in a wide array of wood biomass resources, including hardwoods, softwoods, forest residues, mill residues and urban wood waste.
Coskata conducted thousands of hours of operations at the Lighthouse demonstration facility using wood as a feedstock.
Municipal Solid Waste
We believe that municipal solid waste (garbage) is an attractive feedstock opportunity owing to its large supply and low cost. Municipal solid waste consists of items such as product packaging, grass clippings, furniture, clothing, plastic bottles, food scraps, and newspapers. In certain markets municipal solid waste can be procured for no cost, and sometimes at negative cost due to tipping fees. Because municipal solid waste represents household and business garbage, its availability generally coincides with dense populations and large transportation fuel markets.
According to the EPA, annual municipal solid waste generation in the United States was 243 million tons in 2009. Since the 1980s, regulations have placed further constraints on end-of-life solutions for municipal waste. Rather than sequestering waste in landfills, the Coskata process can convert most of these waste materials into valuable end-products. Based on EPA studies on municipal waste content, Coskata believes there is potential for 12 billion gallons of ethanol from non-recycled municipal waste streams annually.
Agriculture/ Biomass Residues
Crop residues are desirable feedstocks for bioenergy applications because of their immediate availability and relatively concentrated location in major growing regions. The most plentiful residues include corn stover (stalks and leaves), corn cobs, sweet sorghum and other small grain stubble, crop processing residues, and sugarcane residue such as bagasse.
There are more than 200 corn ethanol plants in the United States, and we believe that these plants are well-positioned to access agricultural residues such as corn stover and corn ethanol by-products such as corn fiber. We also believe there are significant capital and operating synergies that can be achieved from co-locating one of our plants with an existing corn ethanol plant, including lower capital and production costs.
Today, perennial, fast-growing grasses such as sorghum and miscanthus are specially grown to create renewable energy. Although in their infancy, these materials can be grown in a wide variety of regions globally and have low costs. These crops can be utilized in Coskata’s process and alleviate many agriculture-growing concerns related to food-related biofuels.