Seeing beyond ethanol

By Al Costa, Director, Alkol

Special to the Digest

I remember having some time ago an interesting conversation with an executive of a leading pro ethanol  group in the US. I asked him why, since its organization made such big praises for ethanol (which I share), it only considered ethanol from corn.

A first thought would be that was naïve from my part, but it had a purpose. In fact, I concluded the dialogue reminding the gentleman of the history of the railroad in the US. There, huge fortunes were made and lost in a matter of a few years, and the conclusion was that its founders refused to understand they were not in the TRAIN business, but in the TRANSPORTATION business. In fact, soon other modes of transportation become available (such as boats in the Mississippi), but the railroad owners did not want to integrate their systems to those new ones.

The end result is the customer had to choose between the 2, and if by any chance he gave the 2^nd option chance he would often stick with it. Thus, to the railroad, that was another client lost.

Likewise, in the ethanol model, producers tend to behave just like regular farmers. Instead of just being agnostic on how, where, etc they got the ethanol from, they insist in only producing from an specific feedstock. An exception to the rule I can think is an ethanol plant in the state of Mato Grosso in Brazil, which can produce from either sugarcane and corn. In that particular case, it so happens that the corn and sugarcane harvests there alternate, so the ethanol plant can work practically all year round instead of the usual 6 to 8 months such as happens with regular sugarcane ones. Proof that model works.

The result of this monolithic practice is clear: USA finally got fed up with paying for the VEETC, Australia is doing a similar thing, Brazil recently dropped all COFINS import taxes on ethanol, etc. Why? Because they got tired of continuously paying for a model which many times is not working and, worse, not showing any signs of change.

So, the idea I’m spreading here is that we should produce ethanol from many sources? No, that is only PART of the idea. And a small one, in fact. The larger part of the idea is that we need to move to a model which closely resembles the oil industry. There, there is a refinery which produces in a single “distillation column” a myriad of products. Gasoline, diesel, asphalt, jet A, methane…you name it . In our model however, the same column produces just ONE product: ethanol . Doesn’t that sound like a big waste of machinery?

In fact, so far, our machinery is nothing more than a distillation column for a broth fermented by some kind of micro-organism which is in something like 99,999% of cases Saccharomyces cerevisiae, AKA plain old Baker’s yeast. Again, doesn’t that sound like a big waste of machinery? Couldn’t we ALSO grow other microorganisms such as maybe Deinove’s Deinococcus? Or maybe that genetically modified Saccharomyces by Amyris which also produces Farnesene? Or even that bug LS9 used to produce diesel?

Well, you’d say. We also produce DDGS, CO2, oil in some cases, etc. Well, a sugarcane one also produces electricity (11 GW is produced by all plants in the state of São Paulo), vinasse, bagasse, etc. However, in all those those are really products which offer low prices. We need to go for the high end molecules.

For that, it is imperative we understand we are not in the ETHANOL business, but in the FERMENTATION business. We can use the same machinery we already have to produce molecules which are just the plain old boring ethanol. Just like the column from the oil industry, we can make ours produce many MOLECULES (not low-pay stuff like DDGS). That will rid us from the shackles of “blend walls”, EPA’s 15% limit, Europe’s 5% limit, and what not. That because we will be able to tackle markets which have nothing to do with fuel, such as plastics, paints, etc. Exactly like the oil industry does, btw.

We love to say we are here to REPLACE oil. Well, let’s do that, since so far all we do is produce ethanol. We have the machinery for which we paid hard for: let’s make it work producing high-end value molecules and let’s leave all those guys at Washington, Brussels, etc to their bureaucratic lives.

Alkol was founded in 2007 as a consulting company strictly focused on bioenergy, and ultimately launched a portal devoted to bioenergy: www.globalbiobusiness.com, where people can download documents, see real-time stock quotes, read news from leading publications, etc. And the company opened operations in Spain, Brazil, USA, and now is aiming to Asia.