A type of bacteria that helps termites digest wood could be key to making ethanol cheaply from wood and grass. ZeaChem, a startup based in Menlo Park, CA, has developed a process based on this bacteria that can produce 50 percent more ethanol from a given amount of biomass than conventional processes can.

The company has demonstrated the method in a laboratory setting and is now drawing up plans for an ethanol plant that will produce about two million gallons of ethanol a year. Construction could begin as early as this year, says Dan Verser, a founder and vice president of research and development at ZeaChem. It is one of a growing number of biofuel companies seeking to make ethanol from noncorn sources, since corn requires large amounts of land, water, and energy to grow.

The process improves yield by making more efficient use of biomass than conventional techniques do. It begins, as do other techniques for making ethanol, with breaking down biomass into sugars. At this point, conventional processes use yeast to ferment the sugars into ethanol. But this process is wasteful: about a third of the carbon in the sugars never makes it into the fuel. Instead, it's released into the atmosphere as carbon dioxide. ZeaChem replaces yeast with a type of bacteria called Moorella thermoacetica, which can be found in a number of places in nature, including termite guts and the ruminant of cows, where it helps break down grass. Instead of making ethanol and carbon dioxide, the bacteria convert sugars into a component of vinegar called acetic acid, a process that releases no carbon dioxide.

To convert acetic acid into ethanol, ZeaChem turns to chemistry. First, the company's researchers convert the acid into a common solvent called ethyl acetate--something that chemists have long known how to do. The final step--making ethanol--requires adding energy to the system in the form of hydrogen. To get the hydrogen, ZeaChem uses material left over from the process that converts biomass into sugars. This material, called lignin, can be converted into a hydrogen-rich mixture of gases by heating it up under the right conditions--a process called gasification. The hydrogen is combined with ethyl acetate to make ethanol. The remaining gases in the mixture are fed back into the process to provide the energy needed for gasification, making use of material that otherwise would have gone to waste and eliminating the need to use fossil fuels. So far, the company has shown more than 40 percent better yield compared with conventional approaches, and it's working toward a theoretically possible improvement of 50 percent.

"It's a very innovative process," says James McMillan, a research scientist and group manager at the National Renewable Energy Laboratory, in Golden, CO. He says that it's important to get as much ethanol from the feedstock as possible, since the final cost of ethanol depends heavily on the cost of feedstock. Although ZeaChem's process is more complicated than methods used now, and building ethanol plants that use it will cost more, McMillan says that the improved yield could make up for these increased costs.