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Will Cellulosic Ethanol Take Off?

Fuel from grass and wood chips could be big in the next 10 years–if the government helps.
February 26, 2007

Cellulosic ethanol, a fuel produced from the stalks and stems of plants (rather than only from sugars and starches, as with corn ethanol), is starting to take root in the United States. This month, Celunol, based in Cambridge, MA, broke ground on an ethanol plant in Louisiana that will be able to produce 1.4 million gallons of the fuel each year starting in 2008. Other companies are moving forward as well with plans to build plants.

Alcohol fuel: Celunol, based in Cambridge, MA, tests its cellulosic-ethanol process in this pilot-scale plant, which converts biomass such as switchgrass into ethanol. Biomass is stored and handled in the building to the right. From there it’s fed into the four black tanks in the center, which contain enzymes for breaking down cellulose and other complex carbohydrates to form simple sugars that can be fermented in the “beer” tank below. There, the liquid produced has the same alcohol concentration as beer. Next, the beer is distilled in the tall column left of center before being stored in ethanol tanks at left. Celunol started construction on a much larger cellulosic-ethanol plant this month.

But experts from industry and environmental groups say that without loan guarantees and other incentives, the nascent industry will fail to emerge from the current demonstration phase to produce commercial-scale quantities of ethanol. And without that, it may be impossible to meet President Bush’s ambitious goal of producing 35 billion gallons of renewable fuels a year by 2017.


  • View a slide show of Celunol's process.

Cellulosic ethanol is attractive because the feedstock, which includes wheat straw, corn stover, grass, and wood chips, is cheap and abundant. Converting it into ethanol requires less fossil fuel, so it can have a bigger effect than corn ethanol on reducing greenhouse-gas emissions. Also, an acre of grasses or other crops grown specifically to make ethanol could produce more than two times the number of gallons of ethanol as an acre of corn, in part because the whole plant can be used instead of just the grain. That’s good news because many experts estimate that corn-ethanol producers will run out of land, in part because of competing demand for corn-based food, limiting the total production to about 15 billion gallons of fuel. (Already, corn-ethanol plants–existing and planned, combined–have a capacity of about 11 billion gallons.) The greater productivity of cellulosic sources should eventually allow them to produce as much as 150 billion gallons of ethanol by 2050, according to a report by the National Resources Defense Council (NRDC). That’s the equivalent of more than two-thirds of the current gasoline consumption in the United States.

But it will take some time to reach these levels of production. Even producing enough cellulosic ethanol to meet the president’s 35-billion-gallon goal will be difficult. That will require that roughly 15 billion gallons would come from non-corn-grain sources such as cellulosic ethanol (about 5 billion gallons might come from biodiesel culled from oils in crops such as soybeans). And reaching 15 billion gallons by 2017 will be a challenge. Currently, according to the ethanol industry’s list of producers in the United States, none of the ethanol comes from cellulosic biomass.

Cellulosic-ethanol companies are hopeful that they can meet this goal. Colin South, the president of Mascoma Corporation, also based in Cambridge, says that if all goes well, cellulosic ethanol could supply half of the 35-billion-gallon goal by 2017. But so far Mascoma has only announced plans to build a demonstration facility with a capacity of about half a million gallons of fuel per year. That facility should be ready in 18 months, South says. But as is the case with the new Celunol plant, the facility’s primary purpose would be to demonstrate that the company’s technology can work at a large scale; it will not always operate at full capacity, as the system is used to test new cost-saving technologies.

Other companies are planning to build plants, but these are also relatively small. Range Fuels (formerly Kergy), based in Broomfield, CO, plans to start construction this year on a 10-million-gallon-per-year plant in Georgia, CEO Mitch Mandich says. A large corn-grain ethanol company, Abengoa Bioenergy, of St. Louis, is building a 1.3-million-gallon biomass ethanol plant in Spain. But even taken together, these plants will supply only a tiny fraction of the 15-billion-gallon target.

“That’s a huge goal,” says John Howe, vice president of public affairs at Celunol. “That’s well beyond what any one company or a large number of companies [can do]. It will take a massive national effort to get close to that goal.”

By “national effort,” he partly means money for loan guarantees that will encourage financiers to fund the building of large commercial-scale plants. Company executives and cellulosic-ethanol advocates agree on the need for such government help. Iogen Corporation, in Ottawa, Canada, is a case in point. The company has been producing cellulosic ethanol since 2004 and already has an almost 700,000-gallon-per-year demonstration plant. But Iogen’s plans for a 20-million-gallon commercial-scale plant are now on hold as the company awaits legislation to be passed in Canada, the United States, or Germany that will provide the financial incentives Iogen needs to build such a big operation.

Yet financing may not be the only hurdle: even if commercial plants can be built, the process may still prove too expensive to compete with corn ethanol, so further work in the lab may be necessary. (See “Redesigning Life to Make Ethanol.”)

Indeed, researchers at cellulosic-ethanol companies, national labs, and academic labs are engaged in continuing R&D both in converting biomass into ethanol and in growing more-productive strains of biomass. Right now the conversion is an expensive and water-intensive multistage process. Some groups hope to genetically engineer a single organism to both break down cellulose into simpler sugars and ferment alcohols, thereby simplifying the process. Others are working to improve methods for converting biomass into ethanol using heat and catalysts–the method being used by Range Fuels. And companies such as Celunol are investigating better crops, such as the ancestors of today’s sugarcane, that can produce more ethanol per acre.

Some researchers have even given up on the idea of cellulosic ethanol, turning instead to sources such as algae for biofuels. (See “Algae-Based Fuels Set to Bloom.”) But Nathanael Greene, an energy-policy specialist at the NRDC, remains optimistic. Although he thinks it’s unlikely that cellulosic-ethanol plants will produce more than a few billion gallons of fuel by 2017, “that would put us in the position where the cellulosic industry is really ready to start growing exponentially,” he says. “Once we get over that first hump, I think the cellulosic industry will grow quite rapidly, and [it] has much greater longer-term growth potential [than corn ethanol].”

Greene cites the example of the now fast-growing corn-ethanol industry. “It took 10 years to get the first billion gallons and 10 years to get the second billion,” he says. “And now we’re set to go from 6 to roughly 12 billion in 18 months.”

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