Biocatalysis

T. Boone Pickens on ethanol as a fuel: “It’s an ugly baby, but it’s our ugly baby.”

To read our previous take on ethanol as a fuel, click here.

Bluefire Ethanol has announced that it is partnering with Solazyme to pair its acid hydrolysis technology for producing fermentable sugars from biomass with Solazyme’s algae-based fuel production process. This is an interesting partnership. Solazyme wins only if fermentable sugars are cheaper this way. Bluefire wins if Solazyme can produce fuel at lower cost than Bluefire. Or is Bluefire acknowledging that it lacks a competitive ethanol production method, and is simply trying to create value from its biomass pre-treatment method?

Biofuel company LS9 and Procter & Gamble announced a partnership to develop chemicals  to be used in consumer products. As has been typical with LS9 since its inception, details are sparse, but they have boldly stated that the deal is “multi-year” and includes “sustainable chemicals” in the products under consideration. LS9 has reported that it is developing methods to produce hydrocarbon products for fuels by combining the fatty acid synthesis pathway and adding its own proprietary enzymatic steps.

According to Jack Huttner, VP, Public Affairs, DuPont Danisco, “From our point of view the [cellulosic ethanol] technology is ready for commercialization. It is no longer five years from the market.” 

Now if they could just apply this technology to produce butanol or another better biofuel …

Frequent and often heated debate has erupted over the movement toward—and heavy subsidization of—biofuels in general, and ethanol in particular. Proponents tout the creation of a domestically produced fuel produced from renewable materials and improving economics. Naysayers emphasize the diverting of food crops to produce ethanol, causing upward pressure on food prices.  There are also problems relating to the lower fuel value of ethanol and its inability to be blended with gasoline at levels greater than about 10%-15%. Let’s look at some of these pros and cons in more detail.

First there is The Good. Ethanol is a fuel that can be produced now with existing technology, and there are some valid reasons to produce it. Produced domestically, bio-ethanol serves to both replace oil and decrease our dependence on imported oil. Every gallon of fuel ethanol replaces a bit less than a gallon of gasoline that otherwise would come from petroleum. Irrespective of net energy arguments, using and importing less oil is a good thing. A second touted benefit is economic. While ethanol is not competitive with oil at under around $70-90 per barrel, it does help to place a cap on the price of oil as long as we have a sufficient supply of ethanol to use. This would support an argument for some subsidies so that ethanol is available as a credible substitute for oil.

But then there is The Bad. The main problem currently is that most ethanol used in the USA is derived from corn (In Brazil it comes from sugar cane and a lot of land is being de-forested and converted to sugar production). Thus, there is upward pressure on food prices caused by diverting corn to produce fuel ethanol rather than food and exacerbated by diverting land away from food production to fuel ethanol production. This should only be a temporary condition, however. Virtually everyone realizes that producing ethanol from corn is not a tenable long-term strategy, but rather, is a stop-gap measure for providing ethanol now. Once the cellulose-based technology has been sufficiently developed and is competitive, most corn-based ethanol should be converted to cellulose-based production. Within 2-5 years, the displacement of corn by cellulose-based technology should be underway, and upward pressure on food prices due to fuel ethanol production will abate.

Economics are different matter, however. Ethanol has only about 60% the fuel value of gasoline; thus, a crude calculation using simple energy content measurements says mathematically that we need about 1.6 gallons of ethanol to equal the fuel equivalent of one gallon of gasoline. Based on current production methods, the cost of just the sugar (derived from corn) to produce 1 gallon of ethanol is about $0.80-1.00. Adding costs to isolate and refine the ethanol raises the overall cost rises to about $1.50/gallon or more, which after adjusting for the lower fuel value translates to about $3.00 per gallon equivalent of gasoline once it reaches the gas pumps. Cost reductions will be made over time, but ethanol is not yet on an economic par with petroleum-derived gasoline as a transportation fuel.

Then finally, there is The Ugly. Ethanol is also not as easily transported as gasoline from the production plant to the pump due to its tendency to absorb water from the atmosphere. Existing pipeline infrastructure cannot be used, and requiring special pipelines to be constructed (and this will add to the cost). Ethanol is also corrosive. It is, in fact, illegal as well as unworkable to use ethanol as an aviation fuel for this reason. And then there is the problem of the “blend wall.” Car engines require modification to use ethanol in blends higher than about 15%. Automakers will likely void the warranties for engines that have used gasoline blended with higher percentages of ethanol. All these problems illustrate the impracticality of ethanol as a transportation fuel, and argue for other fuel compounds that do not have these problems—for example, higher alcohols such as butanol or hydrocarbons, which can also be produced by the fermentation of sugars. These significant drawbacks lead to the inescapable conclusion that ethanol is a poor choice as a fuel, and should be replaced as soon as efficient processes to produce alternative fuels, such as butanol or hydrocarbons, have been developed.

The LA Times reports today that Sacramento, CA-based Pacific Ethanol filed for Chapter 11 bankruptcy protection yesterday. Pacific Ethanol has 4 plants with a combined capacity of 200 million gallons per year. The company says it will try to continue operations while reorganizing, but capacity shut-downs are near certain since its production is uneconomical.

Scientists in the UK unveiled on Tuesday what they claim is one of the world’s fastest biofuel vehicle; it is a race car powered by vegetable oils and waste from chocolate factories and made partly from plant fibers.

Mascoma announced a bioprocessing breakthrough of sorts. The breakthrough relates to what the company is calling consolidated bioprocessing (CBP) – a transformational technology which the DOE/USDA 2006 Roadmap called “the ultimate low-cost configuration for cellulose hydrolysis and fermentation.” CBP  eliminates the need for adding enzymes to process pretreated lignocellulose into ethanol by integrating their production into the processing step. Estimates provided by Mascoma suggest a 60-% reduction in cost using CBP. You can bet that enzyme developers and producers such as Codexis, Danisco, and Novozymes are not cheering this breakthrough.

The biofuel dominoes are starting to fall, at least as far as ethanol as a biofuel is concerned. VeraSun, which had been the second largest US-based ethanol producer, is already in liquidation. Its ethanol plants are being auctioned off or bought up by larger players with deeper pockets and staying power.  The major oil refiner Valero picked up seven of VeraSun’s plants in March. In California, industry sources are saying that previously highly touted biofuels companies Cilion and Codon Devices are heading for wind-down. Cilion is an ethanol venture that counts the well-heeled Khosla Ventures and Richard Branson’s investment group as backers. Cilion had previously announced that it was developing a 55 million gallon per year first generation ethanol plant in Kern County, and had confidently projected that it would have eight plants operating by 2008.  Codon Devices based its biofuels fortunes on its BioLOGIC protein engineering platform.

More failures are virtually certain, with oil prices hovering around the level at which ethanol is uneconomical and with investors far less wiling to part with additional cash. Consolidation will take over in the ethanol industry. Ethanol will still be produced, but only the larger or better-financed players will be able to stay in. Expect the major companies that are committed for the long-term to start buying up assets from the failing companies at attractive prices. These who got in for a quick profit will more likely wind up with pennies on the dollar.

Meanwhile, the trend toward the use of corn to produce ethanol should also start to slow. Producing fuel ethanol using crops and land that could otherwise be used to produce food has created a lot of negative political pressure.  As technology that uses cellulosic waste rather than corn as a feedstock is demonstrated, production will be shifting away from corn and toward the cellulosics. The main problem, as usual, will be economics.

I will be interested to see if this claim actually proves to have substance behind it. OriginOil, a California-based algae biofuels company, reports that it has patented techbnolyg that solves the previously difficult problem of extracting oil from algae economically. he company said that its patent-pending process does not require chemicals or significant capital expenditure for heavy machinery, and no initial dewatering is required. According to the company, its technology combines electromagnetism and pH modification to break down cell walls, releasing algal oil within the cells. The oil rises to the top for skimming and refining, while the remaining biomass settles to the bottom for further processing as fuel and other valuable products. The technology will be showcased next week at the National Algae Association meeting in Houston.