Cellulosic Ethanol's Time May Finally Have Come

Like hydrogen, cellulosic ethanol has been tomorrow's technology breakthrough for decades. But until recently this form of biofuel--which far surpasses corn ethanol in both efficiency and eco-friendliness--has been stuck in a purgatory of research labs and demonstration plants. That could be changing, as not one but two Danish-owned firms announce significant steps toward commercialization--and $2 a gallon eco-fuel.

Cellulosic ethanol is, finally, not only commercially viable, but mandated, too. The Energy Independence and Security Act of 2007 requires 36 billion gallons of ethanol and other fuels by 2022, and 16 billion gallons are earmarked for cellulosic ethanol.

Cellulosic ethanol has long been touted by environmentalists because it is five times better in terms of its net energy balance than corn-based ethanol, and because it can be produced with fast-growing grasses such as switchgrass that absorb carbon dioxide as they grow. Another advantage is that cellulosic ethanol plants will be able to run their energy-intensive boilers on the plant waste from their own processes (corn ethanol plants use natural gas).

The sticking point with cellulosic ethanol has been finding a dependable enzyme that can break down raw materials (everything from fast-growing grasses to sawdust) into the sugars that make ethanol (and possibly gasoline and diesel fuel, too). This is, after all, a manufacturing process that, like making beer, is dependent on natural processes.

One of the Danish firms is Novozymes, a big player with $1.5 billion in sales (18 percent from biofuels). According to Adam Monroe, Novozymes' North American president, the company can produce enough enzyme (called Cellic Ctec2) to produce a gallon of biofuel for 50 cents (when production tax credits are factored in). "A year ago that cost was $1, and three years ago it was as high as $3," he said. Enzymes are 20 to 25 percent of cellulosic ethanol production costs.

Monroe said that affordable enzymes could enable production of cellulosic ethanol at $2 a gallon. "It won't necessarily be cheaper than gasoline, but it will be cheap enough to make it economically viable, and certainly could be on the spot market in the same price range as corn-based ethanol."

Novozymes CEO Steen Riisgaard said, "Biofuel producers now have a critical component to turn agricultural waste into a competitive alternative to gasoline."

Novozymes plans to go past the demonstration phase with a major biofuel partner, Poet, which has 26 facilities nationwide producing an annual yield of 1.54 billion gallons of ethanol. In 2011, Poet will open (in Iowa) one of the first commercial-scale cellulosic plants, with a capacity of 25 million gallons per year from corn waste. Poet has had a test-scale plant, producing 20,000 gallons, in operation since 2008.

To see a documentary on Poet's upcoming plant, click here.

Monroe said that Novozymes has received $29.3 million in Department of Energy grants to help develop its enzyme, and that this has "dramatically reduced" the cost of the production process. "In the last year, we've reduced costs 50 percent," he said.

Novozyme has 65 percent of the global enzyme market, and its products are used to make first- and second-generation ethanol in the U.S., Denmark, Brazil, China and elsewhere. Cellulosic ethanol is the next generation fuel.

The second company with an enzyme breakthrough is Genencor (a division of Danisco A/S). Like Novozymes, Genencor has been working on its technology for a decade, and says it can also produce its new enzyme (Accellerase Duet) for 50 cents per produced gallon of fuel.

Aaron Kelley, a senior engineer in Genencor's Biomass Applications Group, said, that the company (originally U.S.-based, before its acquisition by Danisco in 2004) also has commercialization plans. It has formed a joint venture with DuPont (DuPont Danisco Cellulosic Ethanol LLC) that will soon open a pilot plant in Tennessee, followed by a commercial operation using corn waste and cobs as it feedstock in 2012. The capacity will be on the 20 to 25 million gallon range annually, he said.

"It's a coincidence that both of these companies are now Danish," Kelley said, "but we've both been working on it for a long time." Kelley defines Accellerase Duet as a proprietary cocktail that is "a mix of many different enzyme activities."

The federal renewable energy standard requires cellulosic ethanol to reduce lifecycle emissions of greenhouse gas by 60 percent from that of gasoline or diesel, and Kelley said that most cellulosic processes reduce those emissions by 100 percent.

The U.S. is currently the world leader in ethanol production, followed by Brazil (which makes it mostly from sugarcane). Cellulosic ethanol is a tiny part of the total, but it is growing fast.

"There is a lot of critical mass behind it, with government support and investment from private companies," Kelley said. "There are 20 demonstration plants, and five to 10 on the commercial scale by 2012 and 2013. I'd be surprised if it didn't make big progress in the next five to 10 years."