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Mar 15, 2009 (Vol. 29, No. 6)

U.S. Biofuels Market Off and Running

Experts Say that Ethanol Will Penetrate 100% of Gasoline Market in Next Few Years

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    DuPont scientists are developing biocatalysts for DuPont Danisco Cellulosic Ethanol, a joint venture with Genencor that expects to be producing commercial quantities of cellulosic ethanol by 2011.

    Biofuels are already entrenched in the U.S. transportation fuels market, but not everyone may realize this. Yet, according to the Energy Information Association, by the end of 2008, U.S. ethanol facilities were producing up to 668,000 barrels per day (still short of the same-period ethanol demand of 683,000 barrels/day, according to the Renewable Fuels Association).

    Even cellulosic ethanol has established itself. As of January, several companies—including Iogen, Abengoa Bioenergy, and Poet— have pilot-scale cellulosic plants in operation. And widescale commercial cellulosic ethanol should be available by 2011.

    Today’s commercial supply consists primarily of corn ethanol. The U.S. Renewable Fuel Standard (RFS) dictated by the 2007 Energy Security and Independence Act calls for 36 billion gallons of biofuels to be blended into the gasoline supply by 2022. Of these, 21 billion must be noncornstarch-derived, i.e., second-generation fuels such as lignocellulosic-derived ethanol.

    It is expected that in the next few years, ethanol will have penetrated 100% of the gasoline market, offsetting total volumes of gasoline sold by approximately 25%. E10 (10% ethanol-in-gasoline blend) will soon be ubiquitous throughout the U.S.

  • Challenging Landscape

    Still, the securing of ongoing capital for construction of large-scale production poses significant hurdles. Major dry-mill corn ethanol producer VeraSun Energy, whose 16 facilities had a combined annual online production capacity of 1.64 billion gallons, filed for Chapter 11 bankruptcy protection in November. The company recently announced a $280 million deal, subject to approval of its Bid Procedures and Sale Motion, to sell five existing production facilities, plus one in development, to oil refiner Valero Energy.

    In early February, forestry feedstock company Lignol Energy suspended a cellulosic ethanol collaboration with Suncor Energy. An $80 million demonstration plant in Colorado had been planned, supported by a $30 million grant from the U.S. Department of Energy (DOE). Lignol cited current economic conditions as the cause behind ending negotiations.

    Meanwhile Alico (a land-management company) and Iogen, two of six recipients of a collective $385 million DOE award to develop cellulosic ethanol refineries in the U.S., abandoned their projects. (Iogen is continuing development of cellulosic ethanol plants in Canada.)

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