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Cellulosic ethanol may be getting close to commercial viability [ClearOnMoney]
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Cellulosic ethanol may be getting close to commercial viability

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Commentary

Cellulosic ethanol may be getting close to commercial viability

25 Apr 2011 by Jim Fickett.

Biofuels – made from plant or animal matter rather than mined from rock – will probably be an important component of the future energy mix. Ethanol made from cellulose (e.g. from wood chips, corn stalks and cobs, and grass) would be attractive in that, unlike ethanol made from corn, energy production would not compete with food production. Cellulosic ethanol has sounded promising for a long time. Cost of production has come down and commercial plants may be in operation in the next year or two.

Several years ago there was considerable hype about biofuels generally and cellulosic ethanol in particular; for example in 2007 Vinod Khosla, a well known venture capitalist, predicted cheap cellulosic ethanol by 2010:

What the best R&D will achieve is a matter of judgment, but my research has convinced me that the benchmark $1.25 per gallon or cheaper cellulosic fuels are less than three years away.

That didn't happen and, up until quite recently, progress reports on cellulosic ethanol always seemed quite futuristic, with some statement somewhere admitting that major hurdles still needed to be overcome. Just a few months ago, in October 2010, the Congressional Research Service put out a report suggesting that cellulosic ethanol was probably not profitable to produce at that time:

the share of cellulosic biofuels is mandated to grow to 16 billion gallons by 2022—a daunting challenge considering that no commercial production existed as of mid-2010. …

Under energy-equivalent pricing, the breakeven oil price … is prohibitive for biochemical cellulosic biofuels ($145.98 with subsidy; $196.64 without).

The statement being made is that cellulosic ethanol, with current government subsidies, could compete commercially only if oil rose to $145.98/barrel. There is always some ambiguity in such projections, but the suggestion was that commercial viability was still some ways off. Nevertheless, several companies are moving ahead.

There have been significant advances in process. For example, in February of 2010 Novozymes, an offshoot of Danish Novo-Nordisk, announced that it had invented enzymes that would considerably reduce the cost of producing sugar from cellulose.

In Denmark, Novozymes announced that productivity increases with its new Cellic CTec2 enzymes have brought enzyme costs down to 50 cents per gallon, and will enable the biofuel industry to produce cellulosic ethanol at a price below USD 2.00 per gallon for the initial commercial-scale plants that are scheduled to be in operation in 2011. This cost is on par with gasoline and conventional ethanol at the current US market prices.

A May 2010 report from the USDA Economic Research Service inventoried commercial plans for biofuels in the US, and showed that companies were projecting a large increase in production by 2012:

Based on company press releases and other reports, ERS estimates that [2010] production capacity for cellulosic biofuel, primarily ethanol, may be … about 10 million gallons, with capacity expanding to over 200 million gallons by 2012

Note that those projections were based on company press releases, and may be on the optimistic side. Optimistic or not, several companies claim they are close to moving beyond the pilot stage and opening commercial plants. The first to come on-line may be in Italy, as early as 2012:

Gruppo Mossi & Ghisolfi began building the world’s first commercial-scale cellulosic ethanol plant in northwestern Italy, the company said today.

The first stone for the 110 million-euro ($159 million) factory was laid today, Tortona, Italy-based Mossi & Ghisolfi said on the Bio Crescentino website. The refinery will produce 40,000 to 45,000 tons of ethanol a year from about 10 times that weight of a bamboo-like grass called Arundo Donax, it said.

The Crescentino project is a step toward commercializing second-generation biofuels, which aren’t made from food crops, unlike conventional bio-ethanol. The plant, scheduled to open in 2012, will be 10 times the size of the largest trial facilities operating now, Novozymes A/S said in a statement.

Note this plant will be based on the Novozymes advance.

Others are probably not far behind. For example, Abengoa, the Spanish energy firm, is planning to open a commercial facility in Kansas by 2013:

Abengoa Bioenergy has secured 60% of the feedstocks it needs for its hybrid ethanol facility being developed in Hugoton, Kansas.

The company, part of Spanish multinational Abengoa, revealed last week that progress made this year suggests the plant should be operational in 2013. …

The Hugoton facility is set to be the first commercial-scale installation of a hybrid refinery – a cellulosic ethanol facility alongside a traditional grain ethanol plant.

The plant is to use enzymatic hydrolysis technology as developed by Abengoa’s New Technologies division, and is set to have a 100 million gallon a year production capacity.

And, at least according to Novozymes, China and Brazil are also not far behind:

Steen Riisgaard, chief executive of Novozymes …

… said he was confident that four US plants would be built within the next two years, with China and Brazil also on course to start full-scale production by 2013.

It seems not altogether clear that cellulosic ethanol is ready to produce a profit. But we will know before too long.

Aside on biofuels more generally

As an aside, the USDA/ERS report has a nice summary graphic classifying the processes used to make biofuels: