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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

  • Cellulosic Market

    Despite declining gasoline demand and idle production capacity industrywide, Suncor, Lignol, Mascoma, Verenium, and DuPont Danisco Cellulosic Ethanol (DDCE) are confident in the future market and are looking to have first supplies of commercially available cellulosic ethanol available by 2011.

    “We are aggressively pursing our green agenda, to have a demonstration plant online by December 2009, a cob-based commercial biorefinery in 2011/2012, and a switchgrass plant within a year to 18 months after that,” says Jack Huttner, vp of commercial and public affairs at DDCE and one of the early advocates for large-scale industrial biotechnology. Planned capacity is 25–50 million gallons, depending on the number of facilities the company ultimately decides upon.

    According to Huttner, to be truly competitive in the cellulosic ethanol space requires several components: financial strength, engineering depth, broad technical competence, and long-term, economical supply of biomass. DDCE’s parent DuPont is providing pretreatment and ethanologen (ethanol-producing organisms) technology to the DDCE venture; Genencor (a Danisco division) is contributing its expertise in biocatalysis.

    But as to biomass: “Right now, you can’t get a ten-year contract for 150,000 or 500,000 tons of biomass. The logistics are starting to come into shape. DDCE and others are organizing the corn cob supply chain and looking to dedicated energy crops, to firm up those upstream feedstock supplies,” says Huttner.

    In the short term, RFS has called for 100 million gallons of cellulosic fuel by 2010, going to one billion in 2013. Though the industry may lag a bit, Huttner credits legislative initiatives, including loan guarantees from the USDA/DOE, reverse auctions for production incentives, and the RFS itself, with a necessary forward pull.

    “By 2010/2011, the appropriations rules will be established and will run for a five- to six-year period. So between 2012 and 2018, the cellulosic ethanol industry will either make it or break.”

    Given the average $200 million investment needed to build a commercial-scale ethanol facility, such incentives are critical, at least until companies have a few large-scale production facilities in place and a ready market. In the meantime, companies like DDCE are scaling up from pilot demonstration and optimizing their production processes to be able to meet forecast demand. The RFS mandate for 15 billion gallons of corn ethanol (an additional 2–5 billion capacity beyond what is currently online) strengthens the corn ethanol infrastructure as a foundation for the next-generation fuels.

    “People lose track of the fact that we’re essentially creating a completely new industry,” adds Huttner. “You cannot go out and buy a bone-dry ton of biomass to your specification; nobody is growing it, nobody is collecting it. That poses a fundamental challenge. It’s like imagining what the website for Netflix will look like before there’s even a fiber optic system. It’s because we’ve been talking seriously about biofuels for 10 years already that people think it’s supposedly now just a matter of turning a switch on. Now we’re ready to actually start the work.”

    Ironically, several companies, including Amyris Biotechnologies and LS9, are gearing up to produce green analogs of traditional biofuels that are drop-in compatible with current petroleum fuels.

    Gevo is among these, but is unique, it says, in focusing on a specific platform molecule—isobutanol—that is convertible into several product streams: not only straight-up gasoline, but also traditional refinery end-products like rubber and solvents.

    “Isobutanol in its own right has ready markets,” says Pat Gruber, Ph.D., CEO. “It’s a solvent and can be developed as a fuel blend stock. Derivatives like isobutylene yield intermediates for processing into gasoline, diesel, jet fuels, plastics, and fibers. Our products are either hydrocarbons or are hydrocarbon-like, so they can be sourced directly to refiners.” The opportunity, he says, is for better biofuels that by-pass entirely certain inherent infrastructure and technical problems with ethanol.

    Gevo’s philosophical approach differs, Dr. Gruber states, in that it is focused on a molecule in use industrially today and with a ready market, uses known unit operations (“boring, vanilla technologies”), can be produced in existing ethanol plants, and can feed into traditional refineries with little to no change to existing infrastructure.

    With an alcohol-production platform originally based on a modified E. coli licensed from UCLA, and other technological tweaks, Gevo says it can produce isobutanol (and other alcohols) using biobased processes and renewable resources, at up to 50% cost reductions over petroleum-based alcohol production.

    In essence, Gevo is positioning itself to become a long-term supplier of industrially useful intermediates for chemicals production that also have utility as fuels and as fuel additives. In fact, Dr. Gruber made ASTM-spec gasoline that a recent Colorado news clip showed him pouring into the gas tank of his own Jeep.

    This past Fall, Gevo entered into an agreement with ICM, which designs and constructs ethanol plants, for production of isobutanol and hydrocarbons from retrofitted ethanol plants. And in January, Gevo partnered with Bye Energy, an energy and aviation-fuel company, to supply renewable fuels for small and medium-sized airports.

    “This technology isn’t decades away,” Dr. Gruber insists. Gevo is due to be producing isobutanol at commercial scale by 2010. 

  • Points to Consider

    • Within the next few years, ethanol will penetrate 100% of the gasoline market, offsetting total U.S. gasoline volumes sold by approximately 25%.

    • Corn ethanol dominates the U.S. ethanol market.

    • U.S. legislation mandates 36 billion gallons of biofuels in production by 2022, 21 billion of which must be non-cornstarch-based.

    • With economic pressures, some ethanol producers (corn and second-generation) have ceased operations. Development of lignocellulosic ethanol facilities is proceeding nonetheless.

    • Companies like Poet, DuPont Danisco Cellulosic Ethanol, and Gevo plan to be producing lignocellulosic ethanol at commercial scale by 2011/2012.

    • Isobutanol and other next-generation biofuels are in the works and can be chemically identical to current petroleum-based gasoline and refined products, but produced with renewable feedstocks and methods with better environmental footprints.

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