Cellulosic ethanol won’t reach first-generation price until 2020 — study

E&E  • Posted: Monday, November 21, 2011

Even with subsidies, ethanol made from crop waste or wood chips won’t be competitive with fuel made from corn until 2020 at the earliest, which is at the tail end of the most optimistic industry predictions, a new study said this week.

So-called second-generation ethanol faces significant extra costs due to the need for pre-treatment of the sturdy, cellulose-rich raw materials, as well as the more complex enzymes employed, says the study by the Department of Wood Science at the University of British Columbia.”Production requires significant cost reductions and at least the same level of financial support that was given to the first-generation systems if second-generation ethanol is going to be fully competitive by 2020,” said the study’s lead author, Jamie Stephen.Cellulosic ethanol’s potential appears to be enormous. With over 1.3 billion tons of biomass available for ethanol production, the United States could in theory replace all gasoline made from imported oil with ethanol.

The corncobs, wood chips, grasses, leaves and husks used in the second-generation plants must be pre-treated at high temperatures to make the tough biomass more receptive to fermentation. The material is then processed with enzymes to turn cellulose into sugar that can be fermented and distilled into ethanol, much the same way that grain-based ethanol is today.

“Researchers and companies are going to have to concentrate on reducing the cost of pre-treatment and increasing the output of the digester in order to reduce the costs,” said Stephen.

First-generation ethanol, which is obtained from the starch and sugars in corn and sugar cane with the help of enzymes, has boomed in the past 15 years as the U.S. government mandated more production and increased the amount of fuel allowed to be blended with gasoline. Because it is made from food crops, it has been criticized for contributing to increasing food prices globally. Some studies have argued it may not save as much greenhouse gas emissions as hoped compared with gasoline.

Driving down the cost curve

That’s why second-generation ethanol, while more expensive, is attractive. The U.S. government ramped up support for advanced biofuels with new loan guarantees and grants for the industry earlier this year.

“Not only is cellulose the most abundant polymer on Earth, but it also cannot be digested by humans, so using it for fuel production does not compete directly with food supplies,” Stephen said.

The top ethanol producer in the United States, POET, plans to open the first commercial cellulosic fuel plant in Iowa in 2013. According to the company, its ethanol will reduce carbon dioxide emissions by 111 percent over gasoline, meaning it will actually have negative emissions. By 2022, POET wants to reach 3.5 billion gallons of annual capacity, using various cellulosic feedstocks from across the country.

POET says it now makes cellulosic ethanol for $2.35 per gallon and wants to drive that down to $2 per gallon by the time the commercial plant starts. Novozymes, the world’s largest producer of industrial enzymes, started selling an enzyme last year that it said could bring the cost of cellulosic ethanol to the $2 level.

As enzyme technology continues to improve, POET aims to produce cellulosic ethanol at a price competitive to that of the first-generation fuel between 2018 and 2020. Still, it will be a challenge to compete with regular ethanol produced from sugar cane in Brazil, which costs as little as 73 cents per gallon today.

Second-generation ethanol is also more costly because lignocellulose contained in farm wastes is made of multiple kinds of sugar that are difficult to extract and break down. Meanwhile, cornstarch consists of pure glucose, which is much easier to deal with.

“Despite much effort and progress over the last few years, the cost of using cellulase enzymes is still significantly higher than for amylase-based processes, and will need to be reduced substantially before lignocellulose starts to become competitive with corn and sugar cane as a feedstock,” Stephen said.

While conceding the point, the industry says its main objective is not to compete with first-generation ethanol, but to compete with gasoline, which should happen long before 2020. An Italian company, Gruppo Mossi & Ghisolfi, which began building the world’s first commercial-scale cellulosic ethanol plant this year, says its fuel will already be price competitive with gasoline when the $160 million plant opens next year.

It will make 13 million gallons of ethanol per year from wheat stalks, rice husks or a grass similar to bamboo.