Cometstock: Comstock Fuels yields are headed for the stars. Why?

They say that if Comet Tsuchinshan-Atlas lives up to expectations as it nears Earth these days, it will be comet of the century.

Beg to differ on the grounds that if Comstock Fuels technology lives up to expectations, that might well be a bigger event of planetary significance . Accordingly, let’s think of it just for now as COMetSTOCK, and let’s get into the reasons why this one may shine so brightly in the bioeconomy sky. It has something to do with the nature of comets, I might add.

First, comets. When we crown one periodic visitor as the ‘comet of the century’, it is not solely on the ground of size, or proximity to Earth. It is the way that the Sun’s rays act upon the comet, to convert more of the comet mass into light energy — yes, it is a story of dazzle, but it is more a story of energy and yield. As Tennyson might have better phrased it in his poem Ulyssses, the trick is: To strive, to seek, to find…yield.

The yield story

Now, over to Comstock. We have previously reported in “Cellulosic Fuels Go Big Hoss in the Ponderosa” that the technology is based on a yield projection in the 120 gallon per ton range — that’s for high-density, drop-in fuels, not lower-density ethanol  or methanol. And, it’s from waste biomass.  

So, you have the “holy grail” feedstock, available for three pennies a pound, yielding nearly half of what you get from using soybean oil, which is currently costing 41 cents a pound.  That thruppence might give plant oils their comeuppance. 

Let me put it this way. Right now, using spot prices, you’d pay about $3.20 for the feedstock, and that, since you might be wondering, is the hold-up on the SAF Grand Challenge target of 3 billion gallons by 2030. For the bigger volume expected in the 2030s and 2040s, there are limits of the availability of used cooking oil that will further constrain growth — for now, the problem is feedstock cost.

Which, in a nutshell, is why every cellulosic venture is given a great deal of scrutiny. There’s enough available, affordable cellulosic feedstock to displace every gallon of petroleum — with leftover for lots of marine fuel. But there’s not enough of anything else that comes in anywhere near the current price of jet fuel. Yes, there are electrofuels coming along quickly, some light-duty electric planes, but the costs are not competitive now and are not expected to be so for some time. The public’s appetite for economy-wide, large carbon taxes has rarely been tested and never has beeb shown to be sufficient to bring high-cost, high-value technologies along quickly — the path for electrofuels is paved with bumpy cobblestones and progress will impress but not in terms of pace, so far as we know.

The technology story

Which brings us back to Comstock Fuels, shining brightly in the sky above us. Feedstock costs look more like 50 cents a gallon at the yields, based on $60 per ton for waste biomass, that have been in our reporting this year, and that’s transformative.

So, it’s a comet. Why? As Comstock explains, “the Comstock Fuels process generally involves: (1) solvolytic digestion and fractionation of lignocellulosic biomass, (2) bioconversion of cellulose into Cellulosic Ethanol, (3) esterification of lignin and other derivatives into Bioleum Oil, (4) hydrodeoxygenation of Bioleum Oil into Hydrodeoxygenated Bioleum Oil (“HBO”), (5) refining of the resulting intermediates into ASTM compliant renewable fuels, and (6) gas-to-liquids emissions capture and fuel conversion. The first five of these processes are proven to produce up to 125 gallons of renewable fuel per dry metric ton of feedstock (on a gasoline gallon equivalent basis, or GGE), depending on feedstock, lignin content, site conditions, and other process parameters, with extremely low carbon intensity scores of 15. The sixth step has the potential to increase bulk biomass conversion yields even further, to more than 140 GGE and more than 70% of the theoretical maximum yield from most forms of woody biomass.”

Why, then, possibly the ‘comet of the century’? Well, these’s this partnership just unveiled with NREL and MIT. The topline is that, by utilizing side-streams and making fuels from them, Comstock’s technology could push yields, at scale, to 140 gallons per ton. More about that partnership here. As the partners aver, “The technologies covered by the NREL license have the proven potential to depolymerize and stabilize intermediates, reform feedstock derived water to decrease reliance on fossil hydrogen, and by remove oxygen in a way that favors high concentrations of aromatic hydrocarbons for use in SAF.”

The cost story

That lowers the feedstock cost to $0.43 per gallon, according to my math, again using that $60 per ton feedstock cost that the Billion Ton Study has concluded is feasible.

That takes us into some rare territory, if you’ll pardon a little bit more calculator reporting here. That’s a feedstock cost equivalent to $18 oil and, if accounting for the higher yields from petroleum refining vs cellulosic refining (say 250 gallons per ton for petroleum vs 140 gallons here), you end up with a yield equivalent to $32 oil. 

Oil prices have fallen below $30 only a handful of times in the past 20 years. There’s the start of the pandemic in Q1 2020 and there’s the height of the fracking book in Q1 2016. Rest of the time, you have costs north of $30.

Which goes back to a thesis we’ve advanced for a long time. No petroleum refiner will continue to use petroleum for the long term if the cost of biobased feedstocks is lower and the technology produces a drop-in equivalent fuel. 

So, that’s why Comstock might be COMetSTOCK, the comet of the century. This story comes equipped with the same argument against oil that oil used to kill coal, and coal used to kill wood.

Response from the Usual Suspects

Now, let’s step back for a moment and consider that, to the extent that renewable fuels scale, petroleum will not be sold for $74 per barrel as it is today. The current price of oil is not constrained by production costs but by the health of the global economy and the lack of viable alternatives. 

Should alternatives appear, at meaningful scale, count on the price of petroleum to drop. $30 is hard for OPEC in the long-term, it produces social unrest and investor unhappiness. But OPEC prices can be maintained at $15 or lower for short-terms, and lowering the price to bankrupt the alternatives is the oldest financial trick in the Monopolist’s Handbook.

The Bottom Lin

So, a couple of notes here of caution. OPEC doesn’t disappear overnight because a technology has appeared with yields and costs in these ranges. Further, aspirations are just aspirations, until proven and delivered at scale. 

Right now we have Hopium, and we’ve seen some other ventures come around that have, in the end, produced Nopeium. So, let’s approach this news from Comstock Fuels with the appropriate cautionary notes, pack away the bands and bunting for just a little longer, and let the company get on with gaining the hard yards of commercialization, as the technology advances toward its goal line.

But, then again. Look, up in the sky, it’s a bird, it’s a plane, it’s renewable fuels at scales and costs that anyone can get excited about. That’s why this one might well be the comet of the century, and we’ll continue to track it as it makes its approach to Earth.