U.S. biofuel industry is starting to sprout

From switch grass to sugar cane, labs are creating alternatives to oil

March 17, 2007|By Elizabeth Douglass | Elizabeth Douglass,Los Angeles Times

Near a cluster of purple petunias in a greenhouse in Thousand Oaks, Calif., sprouts a key weapon in the nation's ambitious push into biofuels.

The plants don't look like much. They're just tall, spiky shoots of prairie grass. But these stalks are souped-up samples of switch grass, part of an urgent drive toward a new kind of ethanol using plant fibers instead of corn kernels or sugar cane.

Ceres Inc., the biotechnology company nurturing this batch of switch grass, is betting that the plant has a big future as an energy crop. It's a strong candidate because it can be grown year-round in poor soil, then harvested and converted to fuel ethanol without displacing traditional food crops.

Researchers at Ceres and labs around the world are experimenting with various crops and forms of plant waste and conjuring up enzyme cocktails that would lower the cost of teasing energy out of the cell walls of plants.

Such work, once conducted in relative quiet, is now in the spotlight as the federal government increases financing for ethanol research.

The Energy Department announced $385 million in grants last month to stimulate construction of six small operations that would refine ethanol from a wider variety of plants. It marks the nation's first major foray into the production of so-called cellulosic ethanol.

Wall Street and private investors have joined in the search for new kinds of ethanol, putting unprecedented amounts of money behind companies with promising technologies. Oil giants have rushed in as well, striking deals with universities and other firms involved in biofuels.

"People are working feverishly on innovations ... everyone's racing," said Nathanael Greene, clean energy senior policy analyst at the Natural Resources Defense Council. "There are many more companies now working on many different variations."

Among the motivators: President Bush's goal of displacing 20 percent of the nation's gasoline with alternative fuels and efficiency measures by 2017. While biodiesel, hybrid cars, natural gas buses and other technologies will be part of the mix, most experts believe Bush's benchmark can't be met without next-generation ethanol.

"It's a big technology bet that cellulosic will be a primary contributor," said Alexander Karsner, the Energy Department's assistant secretary for fuel efficiency and renewable energy.

Apart from outright cuts in energy use, he added, such next-generation ethanol "is perhaps the best hope we have in the transportation sector for minimizing the human impacts on global climate change."

Today, ethanol made from corn is the most pervasive renewable fuel in the United States, blended into about 46 percent of the nation's gasoline. Using a process similar to brewing beer, ethanol refineries isolate starch from corn and convert it to sugars that are fermented and distilled to get the finished product.

Corn's drawbacks

Corn ethanol remains this country's cheapest, easiest and quickest way to displace gasoline in the short term, but it has substantial drawbacks. It's laden with corn-state politics and subsidies, clashes with food-supply needs and lowers fuel efficiency in vehicles. In some formulations, it can increase certain pollutants as it reduces others by replacing gasoline.

"It's good for going forward, but there are a lot of issues that come up" with corn ethanol, said Ron Pernick, co-founder of Clean Edge, a West Coast firm that researches and tracks venture capital funding. "We need to move to next-generation biofuels, including cellulosic ethanol, and to next-generation biorefineries."

Cellulosic ethanol is already a proven concept, with production processes that work, said Mark Emalfarb, chief executive of Dyadic International Inc., of Jupiter, Fla., one of several biotechnology companies isolating and patenting microbes used in making the fuel.

"It's now a matter of making it work on a large enough scale and at a low enough cost," he said.

The National Renewable Energy Laboratory puts the production cost of non-corn ethanol at about $2.25 per gallon, or about double what it costs to make corn kernel ethanol. BlueFire Ethanol Inc., an Irvine, Calif., company that plans to make ethanol from landfill plant waste, said it expects its process to cost $1 per gallon.

Costs to decline

"I describe a cellulosic biorefinery as the ultimate flat-screen TV," said Richard Hamilton, chief executive of Ceres, which is using genetics to improve switch grass and other energy crops. "The first few are going to be very expensive, but the key part is getting those first few built so we can ride the cost curves down."

Iogen Corp. was the first to take cellulosic ethanol out of the lab, opening a pilot plant in 2004 that has been making the fuel from wheat straw at a rate of 260,000 gallons a year.

Using one of the Energy Department's new grants, the Canadian company will begin producing in the U.S. with a plant in Idaho Falls, Idaho.

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