World’s largest producer of sugarcane ethanol commits investment to cellulosic ethanol development with Iogen.
In Brazil, Raízen Group and Iogen Energy announced that Raízen has committed an initial investment to develop a commercial cellulosic ethanol project in Brazil with Iogen.
The investment, the first step toward the commercialization of cellulosic biofuels technology in Brazil, will cover development and engineering costs associated with the front end design of a biomass-to-ethanol facility to be co-located with Raízen’s Costa Pinto facility in Piracicaba, São Paulo.
The deal comes after Raízen conducted a thorough review of cellulosic technologies and concluded that Iogen is the company with the most advanced technology ready for commercialization at Raízen’s sugar cane ethanol facilities.
Raízen Group is a $12 billion joint venture between Royal Dutch Shell and Cosan. Raízen produces 2.2 billion liters of ethanol annually, 4 million tons of sugar, and has installed capacity of 900 MW of electric energy derived from sugar cane bagasse. The company has over 4,500 service stations for retail fuel distribution in Brazil, 700 convenience
stores, 53 fuel distribution depots, and aviation fuel businesses in 54 airports in Brazil.
The writing had first appeared on the wall in 2010. That year, Shell “announced a further investment in Iogen Energy, for the purpose of accelerating the commercial deployment of Iogen Energy’s process for making cellulosic ethanol from agricultural residue. As part of the ongoing joint development agreement between Shell, Iogen Corporation and Iogen Energy, Shell made a significant incremental commitment to fund research and development activities at Iogen Energy until mid-2012.”
At the time Iogen was using its R7 technology – the purpose of the new funding was to develop and demonstrate the R8 and R9 technology releases that were aimed at significantly reducing the capital and operating costs per gallon of cellulosic ethanol.
In spring 2012, we asked “Did R8 and R9 fail?” answering “In persuading the partners to go forward, yes.” But we noted that a Shell spokesman in an emailed statement at the time said of Iogen, tersely, “We think the technology is viable.”
Yesterday, Raizen CEO Vasco Dias, confirmed the same. “We believe Iogen has one of the most robust, well proven, and competitive technologies in the cellulosic ethanol business.”
So, we noted in May that one way to read the project cancellation was that Shell decided that it liked Brazil more than Manitoba, was going forward there, and focusing more and more on bagasse.
That appear to be the case — that what we saw in spring 2012 was not so much a strategic shift away from cellulosic investments in the likes of Iogen and Codexis, as a shift towards Brazil where Raizen, rather than Shell, would be the project and investing partner.
Brazil’s cellulosic ethanol potential capacity – how much?
As a rough guide — and referring to dry tonnes — a cane field produces one third sugar, one third bagasse and one third tops and cane trash. Using that rough math, a 125 million (dry) tonne annual Brazilian cane harvest produces around 62 million tonnes each of bagasse and tops/cane trash. At 80-100 gallons per tonne, there’s enough biomass there (if all of it was used) for 10-12.5 billion gallons of ethanol, or 37-47 billion liters.
We put the practical figure at more like 40 percent of that – leaving the remainder to be used as biomass in the field for nutrient purposes, or burned for power generation.
Raizen is the largest producer in Brazil, with just shy of 10 million tonnes of sugar and ethanol production. There should be around 20 million tonnes of bagasse, tops and leaves in its network – adding a potential 800 million gallons in capacity.
The next shoe to drop: C5 sugars
Last month in the Digest we wrote:
“We expect that Raizen will announce that it will utilize (presumably Codexis-based, and expressed through the Dyadic C1 platform) a C6 enzyme for sugarcane bagasse – and that Raizen and Iogen will ultimately build a plant to support that technology path in Brazil. We further expect that there will be a second path announced with respect to C5 sugars – and that additional partners may well be involved.”
The bottom line: continued urgency in Brazil on cellulosic ethanol production
There’s a new urgency in Brazil on cellulosic biofuels, after many years of focusing on first-generation. Why now?
Well, sugar prices are sky-high. That means Brazilian sugar producers want to maximize sugar production. Leaving he country potentially short on ethanol. Meanwhile, the Brazilian government has lately, through ANP, acquired substantial regulatory influence over biofuels – and is determined to ensure that access to ethanol remains widespread and that the fuel markets do not become slaves to the food markets.
The opposite, if you will, to the US market, where concerns focus on the impact of biofuel on food markets.
At the same time, Brazil is mechanizing the sugar harvest and banning the open-field cane burns. – meaning the tops and leaves are harvested instead of being cut and left on the field for burning. Can’t just leave all that biomass on the field – invites pests.
The solution? In every way, it’s cellulosic biofuels. That means we can certainly expect more activity on bagasse – not the least of which will be keeping a close eye on Petrobras’ next moves. And, clearly, Iogen is back on the map, in a new role as the Comeback Kid.
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