Chewing Cellulosic with Indigestion – Bioenergy PROFITS Principle, Flexibility

By Biofuels Digest columnist Dr. Rosalie Lober

What makes cellulosic so tough to chew?  Yes, the fiber are strong and no edible as a food stock.  But I’m talking financially.  Cellulosic ethanol, up until now has been stuck.  It’s been stuck with relying on high priced enzymes to break it down and manufacture it easily and feasibly.  Not many people doubted that cellulosic ethanol was more efficient and carbon friendly than corn ethanol.  The economics was the stumbling block.  And, along comes flexible approaches.

Flexibility

• Building partnerships
• Thinking out of the box

When processes work, we can get complacent, especially when they work well.

The tried and true is easy and reliable.  Yet, we don’t always see the big picture.  This includes the entire supply chain.  Though production of cellulosic ethanol is a fairly simple process, it results in financial and commercialization implications that are not so simple.  And it is the financial and commercialization realities that determine whether or not the industry survives.  The process and production capability is essential yet not sufficient.

Building partnerships

Sometimes your suppliers, who come from to you with a perspective from a different industry, can change your world view of your product.  This is what happened in the cellulosic industry.

One indirect partner of cellulosic ethanol is, in actuality, the government.  The 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.  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.

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 some say that most cellulosic processes reduce those emissions by 100 percent.

Environmentalists are another partner.  They stand by cellulosic ethanol because they say it is 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).  POET is already doing this.

The biggest issue in the manufacture and commercialization of cellulosic ethanol is finding an enzyme that can breakdown feedstock into the sugars that make ethanol (and possibly gasoline and diesel fuel, too).  In reality, there needs to be the ability to manufacture a natural process.

Thinking out of the box

Though hackneyed phrase and overused, ‘thinking out of the box’ is a wonderful phrase.  It elevates us to stretch our brains beyond the obvious and to create wonderful possibilities.  It is not easy to break an obvious mindset.  Those who come into contact with creative thinkers and people from industries unlike their own are most fortunate.  Many breakthrough technologies evolve by studying or teaming up with companies in unrelated industries.

When we think about cellulosic ethanol, the other logical partners are enzyme companies.  One firm that rises to the challenge 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.

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.

A 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.  Kelley states that capacity will be approximately 20 to 25 million gallons annually.

Flexibility is one of the Bioenergy PROFITS Principles, highlighted in Dr. Rosalie Lober’s, newly released book, Run Your Business like a Fortune 100: 7 Principles for Boosting PROFITS.  Learn here, how you can apply some of the best practices and proven principles of successful biofuels companies for running your business most effectively in this current world of climate change and renewable energy.

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