Ethanol giant POET says it can make ethanol from cellulosic sources--rather than the corn grain it's usually made from in the United States--for costs that are approaching that of corn grain ethanol. Last year, when it started a pilot plant for making ethanol from corn cobs (one of many potential cellulosic sources), it cost $4.13 to make a gallon of ethanol. Now it costs just $2.35 per gallon. In comparison, corn grain ethanol costs about $1.60 to $1.90 a gallon, a cost heavily dependent on the price of corn and natural gas. The company hopes to get costs below $2 a gallon.

That's considerably more than the $1 per gallon figure that some startups are claiming, but who knows if those estimates will pan out. The $2.35 figure from POET seems solid--it comes from a company that knows how to make large amounts of ethanol, and the figure includes all of the relevant costs: "interest, depreciation, wages, benefits, repairs, maintenance, insurance, etc.," according to a company spokesperson. It seems like a good indication that cellulosic ethanol could soon be competitive with conventional ethanol, and fossil fuels.

A number of factors have helped bring costs down, the company says.

· Chemical raw materials required in the process have been reduced, resulting in an operating cost savings of $0.20 per gallon.

· The energy used in the pretreatment process has been reduced by more than half.

· Alternative energy technology has been demonstrated to provide all of the energy for the cellulosic ethanol plant and at least 80 percent of the adjacent corn-based plant.

· Enzyme cost has been cut in half and is expected to continue to decline.

· Through continuous optimization of the process, entire unit operations have been eliminated, reducing overall capital cost by over 40 percent.

This week Qteros, a startup in Marlborough, MA, announced a major milestone. The company, which was a microbiologist founded after discovering an organism that devours woody biomass and other cellulosic materials and excretes ethanol, has shown that the bacteria it uses can produce high concentrations of ethanol. The company says this makes its process for converting cellulosic plant materials into ethanol "more economical than any other process to date."

Increasing the concentration of ethanol lowers the cost of ethanol production in many ways. As the bacteria break down plant matter, they produce a beer-like broth containing ethanol and water. The lower the concentration of ethanol in the water, the more expensive it becomes to distill pure ethanol (more water is needed for the process, and the processing plant needs to be bigger and more expensive).

Qteros's chief technology officer, Kevin Gray, says that for making ethanol from cellulosic sources, the target is to produce a broth with 5 percent ethanol by weight. This is well above the less than 1 percent by weight that the company's organism produced when the company first started working with it, he says. Now Qteros researchers, by optimizing the conditions in which they grow the organism and the nutrients they provide, have increased the broth concentration to 7 percent ethanol by weight (9 percent by volume).

Gray says the new numbers are remarkable because the bacteria are a species of Clostridium, a type of bacteria notorious for low tolerance for ethanol, typically surviving in concentrations of only 2.5 to 3 percent. The concentrations are still far lower than those in corn ethanol production, which can be 18 percent ethanol by weight. But with cellulosic ethanol, the feedstock produces less-concentrated sugar, so such high concentrations aren't possible, according to Gray.

The high concentrations could save roughly 30 percent or more on the cost of the process, compared to the minimum desired level of 5 percent, Gray says. This will add to the other main advantage of Qteros's organism: it produces both the enzymes needed to convert cellulose into sugar and the mechanisms for fermenting sugar to produce ethanol. Most other processes must use costly enzymes produced by one organism paired with another organism for fermentation.

Work remains to be done, however, before the process can be successfully commercialized. Gray says the rate of ethanol production still needs to be increased and the cost of the nutrients decreased.

Don't be fooled by all the electric-vehicle announcements in recent months: these vehicles won't be taking over the roads by 2050, according to three-quarters of a four-person panel at last weekend's MIT Energy Conference (a panel that included a representative from Ford Motor Company, no less). The fourth person, and sole dissenter, was a representative from Better Place, a company that's helping Israel, and a number of other countries, as well as cities, end its dependence on gasoline by building infrastructure for electric vehicles. He thinks EVs will take over completely by 2050.

There's good reason to believe he's wrong.

The moderator, Daniel Snow, a professor at Harvard who studies the "last gasps" of technologies--how incumbent tech keeps hanging on in the face of seemingly superior challengers--drew on the oft-cited example of microprocessors. For years, researchers have been touting experimental alternatives to silicon-based transistors (nanotube, exotic semiconductors, shape-shifting molecules), but silicon is still the backbone of microelectronics because of heavy investment in research in silicon, economies of scale, and inertia: chip makers know how to work with it, so they keep working with it.

The same will probably be true for internal combustion engines, Snow said. Although electric vehicles have many notable advantages over conventional vehicles--instant torque, zero tailpipe emissions, much better efficiency--cars with internal combustion engines could continue to dominate the streets long into the future. It's hard to beat the energy density of liquid fuels such as diesel and gasoline. And there's no clear limit to how little gasoline a car might consume: you might even one day have a superlight car that gets 10,000 miles to the gallon, Snow speculated. "Old technology can persist because of the learning curve," he said.

The economy could make it even harder for new technologies to get established, said John Casesa, an auto-industry analyst. He thinks that in 50 years' time, electric vehicles will still only make up about 10 percent of the vehicles on the road.

John Viera, the director of Sustainable Business Strategies at Ford Motor Company, agreed with Casesa's assessment. Ford recently announced two electric vehicles, the first of which is due out next year. But like Casesa, he doesn't think that EVs will make a big dent in the number of internal combustion engines out there. Citing depleting oil resources, he does, however, think that by 2050, ethanol from grass, wood chips, and other cellulosic materials will take over for petroleum in fueling internal combustion engines. (Note: Later in the conference, a representative from BP said that we have 140 years of oil left.)

The big reason that Viera thinks that EVs will be a long time coming is cost. He said that battery packs for EVs add $12,000 to $15,000 to the cost of a car, so most people won't buy electric vehicles. Eventually, battery prices will come down, but to get to this point, he thinks that someone needs to come up with a better way of selling electric vehicles. One option, he said, with a nod to Better Place, is to sell the car without including the price of the battery.

In the Better Place model, the company owns the battery, and drivers pay a monthly subscription based on the miles they drive--like paying for minutes on a mobile phone. Sven Thesen, who is in charge of sustainability strategy at Better Place, predicted that light-duty cars can "move completely to electric" in 40 years. And he thinks that biofuels will be used for airplanes.

Why the optimism? It's not just his company's subscription business model. Better Place is starting in Israel for a number of reasons, not least that the government there has decided to get Israel completely off of oil by 2020. To do this, it's established a tax of 72 percent on new gas-powered cars, compared to a 10 percent tax on electric vehicles, Thesen said. With carbon dioxide levels rapidly rising, he thinks that everyone's got to take similarly decisive action: "Burning oil is bad."

But with U.S. automakers failing, and people struggling in general to make ends meet, heavy taxes on gas-powered cars aren't going to be approved in the United States anytime soon. "We don't reelect officials who talk about a gas tax," Casesa said. "I think it's time for some national introspection."