Experimental methods for converting wood chips and grass into ethanol will soon be tested at production scale. Mascoma Corporation, based in Cambridge, MA, is building demonstration facilities that will have the capacity to produce about one-half to two million gallons of ethanol a year from waste biomass. The startup recently received $30 million in venture-capital money, which is fueling its scale-up plans.

While Mascoma has not achieved its ultimate goal of using a single genetically engineered organism to convert wood chips and other cellulosic raw materials into ethanol, the company has developed genetically modified bacteria that can speed up part of the process of producing ethanol. The optimized process shows enough promise to invest in scaling up the technology, says Colin South, Mascoma’s president.

Corn grain, the current source of ethanol in the United States, requires large amounts of land and energy to produce. This, along with the demand for corn as food, limits the total amount of ethanol that can be produced from corn to about 15 billion gallons a year–about three times what is currently produced. If the fuel is to supplant a sizable fraction of the 140 billion gallons of gasoline consumed each year in the United States, ethanol producers will need to turn to biomass such as wood chips and switchgrass. These resources are cheaper and potentially much more abundant, and they can be converted to ethanol much more efficiently than corn can because they require less energy to grow (see “Redesigning Life to Make Ethanol”).

Indeed, ethanol from such sources could replace “a very large fraction” of the gasoline currently used for vehicles, says Gregory Stephanopoulos, professor of chemical engineering at MIT. He says some experts estimate that with gains in efficiency and high yields of ethanol, all the gasoline for transportation could be replaced; the most conservative estimates say that about 20 percent could be replaced. Hoping to capitalize on this potential, a handful of companies–including Celunol, in Dedham, MA; Iogen, in Ottawa, Canada, which has an existing demonstration scale plant and plans to scale up to commercial production; and the National Renewable Energy Laboratory (NREL), in Golden, CO–are working to develop better technology for making cellulosic ethanol.

Despite its potential, cellulosic ethanol is expensive to make today. It requires more costly equipment and more processing steps than does making ethanol from corn grain. While both corn and cellulosic ethanol are created by fermenting sugar, converting the starch in corn grain into sugar is much easier than converting the complex cellulose in cornstalks or biomass such as wood chips. To simplify the process and reduce costs, many researchers ultimately hope to engineer a single organism that can both break down the cellulose and convert the resulting sugars into ethanol. But research is already improving parts of the process. For example, researchers have created a cocktail of enzymes for converting cellulose into sugar that is a hundred times cheaper than previous methods, says George Douglas, spokesman for the NREL.

Mascoma is focusing on improving the first steps of the process–pretreating raw materials and converting cellulose into sugars–which South says are key to reducing costs. In the conventional pretreatment step, materials such as wood chips are soaked in a dilute solution of sulfuric acid and then heated. This breaks down complex lignin structures that form a “shield” around the cellulose, says Charles Wyman, Mascoma co-founder and professor of chemical and environmental engineering at the University of California, in Riverside. Wyman’s research has analyzed the mechanisms involved in this process, helping the company optimize this step. Mascoma has also developed technology for improving the next step: breaking down the now accessible cellulose into sugars by using enzymes produced by organisms. In the latter part of the process, these sugars are fermented to make ethanol.

Wyman estimates that the company’s technology could produce ethanol for about the same cost as producing ethanol from corn, and eventually for less money. This would be a significant improvement over other technology. A cost analysis at an NREL pilot plant, for example, suggests that it would cost more than two dollars a gallon to make cellulosic ethanol–about double the cost of making corn ethanol. But even NREL researchers are confident that this cost will be cut in half and meet corn-ethanol costs within six years, Douglas says.

Producing enough ethanol to replace a significant fraction of gasoline consumption is still many years away, however. It will require further improving both the technology and the industrial processes, including the challenges that go with handling large amounts of bulky biomass. “We are definitely not there yet,” says MIT’s Stephanopoulos. “Processes today are clearly uneconomical.”

But Douglas says researchers are optimistic that continued funding and the application of new tools will make widespread cellulosic ethanol possible: “The pathways are pretty clear.”