Contract spans two and half years with the goal being a twofold improvement.

Novozymes obtained a $12.3 million contract from the U.S. Department of Energy  (DoE) to enhance the enzymes necessary to produce cellulosic ethanol. The company will leverage the money over the next two and a half years to increase the efficiency by twofold.

Novozymes will match the DoE’s funding dollar for dollar to supplement its R&D project called DECREASE (development of a commercial-ready enzyme application system for ethanol). The goal is to supply new and more cost-efficient commercial cellulases in pilot, demonstration, and commercial plants by 2012.

Novozymes says that it will in fact launch enzymes for commercially viable production of ethanol from cellulose by 2010. The cost of enzymes per gallon of ethanol will be between 50 cents and $1, while the price per gallon of ethanol is expected to range between $2 and $2.50, says Emmanuel Petiot, global business development manager.

Petiot anticipates being able to reach an even lower price by 2012 by making enzymes more efficient. He points out that besides enzyme innovation, Novozymes is working closely with its customers to improve production processes itself. He stresses that integrating enzyme development efforts with process development is key to reducing overall costs.

Novozymes reports that this is its second DoE financing; the first was awarded in 2001 for $18 million, targeting both improved enzymes and production processes for biofuel production.

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