World’s largest cellulosic ethanol plant starts up in Italy

Posted: Wednesday, August 14, 2013

An Italian company has opened the world’s largest cellulosic ethanol plant and aims to export the technology to as many as 25 other locations in the next four years.

Beta Renewables, a $350 million joint venture of chemical company Gruppo Mossi & Ghisolfi and capital investment firm TPG, says its plant in Crescentino, Italy, is the first to produce cellulosic ethanol on a commercial scale at a price competitive with corn ethanol and gasoline.

Denmark’s Novozymes, the world’s largest maker of enzymes used in the production of biofuels, last year bought a 10 percent stake in Beta Renewables for $115 million in cash.

“Our partners at Beta Renewables started to produce and ship commercial volumes of biomass-based ethanol from their plant in Italy,” said Thomas Videbaek, executive vice president for business development at Novozymes. “This is an important milestone. The plant now runs continuously and the process is under control. Beta has begun the work of de-bottlenecking the plant and optimizing the process in order to get the yields up.”

The plant will initially produce 13 million gallons of second-generation ethanol per year from wheat straw, energy crops and other locally available feedstocks. It has a design capacity of 20 million gallons per year. Novozymes expects Beta Renewables to be able to contract 15 to 25 new cellulosic biofuel facilities by 2017. The annual sales potential for Novozymes enzymes from these plants alone could be up to $180 million, according to the company.

“There is one firm order at this point in time from GraalBio,” Videbaek said. “There’s a long list of memorandums of understanding and letters of intent in this area, and we continue to believe that we are on a good track to reach the 15 to 25 plants within the next couple of years.”

The GraalBio deal involves licensing Beta Renewables technology to a manufacturing plant in Brazil that will make fuel from discarded plant stalks and leaves at a price forecast to be 30 percent cheaper than first-generation ethanol.

‘No negative surprises’

Cellulosic ethanol is a fuel derived from agricultural and household waste, wood chips and inedible crops that generally is more expensive than conventional ethanol made from corn. Companies such as Beta Renewables, Novozymes, DuPont, Poet and others are working to bring down the price for such fuels so that it’s competitive with gasoline. The ambition is to make cellulosic biofuel projects bankable and to accelerate their large-scale commercialization, according to Guido Ghisolfi, CEO of Beta Renewables.

The partners will offer customers looking to produce biofuels from agricultural residues, energy crops and other cellulosic feedstocks a combination of Novozymes’ enzymes and Beta Renewables’ engineering and production technology. Beta Renewables will guarantee biofuel production costs upon startup of customers’ cellulosic facilities in an attempt to reduce the risk in customers’ projects while providing competitive commercial terms.

“There have been no negative surprises in the data we’ve seen so far,” Videbaek said, referring to the initial production at the Crescentino plant. “So we continue to be optimistic about getting this rolled out, and we are learning from what we are seeing in Italy now.”

Novozymes holds nearly 50 percent of the global market for industrial enzymes, more than twice the market share of DuPont, its closest competitor. Its dominance in U.S. enzymes used in ethanol production is even more pronounced, with 60 percent market share there.

“Second-generation bioethanol and biochemicals are clearly on track to commercialization,” said Hans Gregersen, an analyst at Swedish bank Nordea. “Second-generation biofuel activities will see customers signing biomass raw material agreements and plant and enzyme contracts with Beta Renewables and Novozymes in the coming quarters.”

Gruppo Mossi & Ghisolfi has also received a $99 million loan guarantee from the U.S. Department of Agriculture to build Project Alpha, a cellulosic biofuel plant in North Carolina.