AMSTERDAM – The price of light sweet crude has broken through $85 per barrel, Goldman Sachs predicts price spikes above $90 and Lehman Brothers even mentions the probability of three-figure territory before the end of 2007. When looking at increasing demand figures from developing economies such as China and slow discovery rates of new oil reserves, few would predict oil prices going below $70 or even $80 per barrel in the next few years. Although climate change is an important point on the political agenda, recent price rallies in fossil energy sources and agricultural commodities seem to have created a real sense of urgency among policy makers to develop cellulosic ethanol technology. Investments and subsidies are numerous, notably in the United States and Asia, and at the centre of all this is Novozymes; global market leader in the production of industrial enzymes, the key to make cellulosic ethanol economically viable.
Novozymes has a market share of over 50% in the market for enzymes that are used in ethanol production. Novozymes has been responsible for great advances in the cost competitiveness of cellulosic ethanol between 2000 and 2004, when their work was financed by the United States Department of Energy (DOE). Ethanol Statistics sat down with Emmanuel Petiot, Global Business Development Manager at Novozymes, to discuss the challenges that lay ahead in the next few years and the process that will unfold after the technological breakthrough. According to him, a lot of work needs to be done, “but we are not far away from a competitive solution that is able to produce ethanol from cellulosic materials such as corn stover and other agricultural residues.”
The main challenges for cellulosic ethanol
When discussing the commercial feasibility of cellulosic ethanol, the lack of efficient and cost competitive enzymes seems to always dominate the list of pros and cons. However, “enzymes are no longer the show stopper to the commercial viability of the industry.” Mr. Petiot says. “Between 2000 and 2004 we have reduced the cost of enzymes in lab scale by 30 fold, including a 6 fold reduction directly derived from the specific activity of our enzymes. What we need now are two types of research that will lower the cost of production from pre-treatment to fermentation. We need a combination of fundamental research combined with application driven work, because the most important thing to understand at this point is that significant improvements can no longer be realised in isolation. You cannot develop enzymes and sell them in the market two years from now and hope it will click. It’s not a standard enzymes application. Instead, you need to involve other parties and fields of expertise early in the process. All the steps, pre-treatment, hydrolysis and fermentation need to interact early on. You need to understand that if you choose a cheap method for pre-treatment, your capital costs will be low, but at the same time, it is very likely that you will not properly open up the fibres for hydrolysis and basically lose sugar potential within the first step. After the pre-treatment, you need an enzyme that can do the work, in a more cost-efficient manner than today. New proteins with enhanced catalytic activity targeting biomass and hydrolyzing it in an efficient manner. The second thing is to find a micro organism that can convert C5 sugars. A lot of research has been done in the past few years and today you can probably find quite a few micro organisms that can potentially do the job, but none of them has done so on a commercially scaled basis. Building pilot and demonstration plants to test and improve the entire system, is probably the most important step we need to take in the industry today.”
Cost level
Considering recent announcements of POET, COFCO, Abengoa, Royal Nedalco and others to build industrial and semi-industrial scale plants, we are moving closer towards that goal. So what cost levels can we expect in the near future? “The DOE has set a very ambitious goal of USD 1.07 per gallon of cellulosic ethanol, which, in some cases, is lower than the production costs of first generation ethanol at the moment. We have received quite a few pre-treated feedstock from various players in the industry and concluded that the cost for the enzyme process are currently around 1 to 1.50 dollar per gallon. These are the cost for a process that runs in a semi-efficient manner ,and more work is required both on the enzymes and integration of the processes side in order to further lower that cost. So it’s clear we need to repeat a similar cost reductions to the one we realized between 2000 and 2004. Currently, total production costs are between 3 and 4 dollar per gallon, so we still have a long way to go but the potential of biotechnology is major and we trust that quantum leaps can be achieved. The fact that more pilot plants are coming on line will help the industry greatly in reducing these costs and developing a range of diverse technologies applicable on various feedstock. In order to help this industry demonstrate feasibility, Novozymes keeps supplying commercial and pre-commercial enzymes and enzymes blends to a great number of players working on developing the industry.
The United States
Novozymes is active on almost all continents, with facilities and partnership in the United States, Europe, Asia and Brazil. Is there any difference in how the technology develops in these markets? “There are very clear differences. The U.S. is probably the one country that is helping the industry the most, because the DOE is making substantial funding available to the industry. As an example, a recent 200 MUSD DoE solicitation will allow six to ten projects with different technologies to further improve their processes. (from the collection of the feedstock, to the pre-treatment, the hydrolysis step and the fermentation). But the most interesting thing about the U.S. market is that the DOE is trying to involve major industrial players early in the scale-up process, which ensures that the developed technologies can be tested in real large scale conditions. ” Right now, almost every feedstock is being considered in the US with a predominance of corn stover and corn fibers. Novozymes is currently working with POET on a project pertaining to the expansion of a conventional corn dry mill facility to include cellulose to ethanol commercial production (dealing with corn cobs and fibers).
Europe
“Europe has a very different approach. Although the EU and local governments are providing funds to the industry as well, these are much smaller and attract a more academic audience that primarily focuses on fundamental research. The industry is much less involved, therefore the technology is fine-tuned on a non-commercial scale. Once discoveries are made, the expectation is that they will click into the rest of the processes and work efficiently. This is definitely a very different approach and it seems that Europe is anyway focusing heavily on biodiesel right now. The second generation ethanol will however provide Europe with the opportunity to develop a broader inclusion of this biofuel. A few projects are shaping up in the UK, the Netherlands, Denmark France and Spain all focusing on different feed-stock ranging from wheat straw, wood and even various other industrial wastes.
China
“China is yet again different. The Chinese government has a huge sense of urgency in order to try to reduce its energy dependence and at the same time be in a position to supply energy to a growing affluent population. They have recently stopped all projects that use food crops as China is already food deficient. All ethanol projects planned at the moment involve either cellulosic technology (mainly corn stover, wheat straw and wood) or non-food crops (which includes sweet sorghum, cassava and sweet potato). The Chinese are trying to make biofuels happen on a big scale, involving the largest oil, and technology companies as well as grain giants” Novozymes has established an important partnership with COFCO in China and is working diligently with our partner on a pilot plant with an aim to convert corn stover.
Brazil
“Brazil represents an interesting opportunity. First, Brazil is planting lower cost sugarcane every year, so the incentive to go to other types of feedstock seems very limited and the cost to produce ethanol from sugar can is unmatched. However, they have developed an important domestic market and can work with a captive stream present at the ethanol plants which is already collected and sometimes even grossly pre-treated: sugar cane bagasse. Using bagasse has great potential because one of the major cost components, transportation to the plant, is eliminated. Additionally, the legislation in Brazil is changing and sugar cane fields will not be pre-burnt as much as they are now and therefore have to be mechanically harvested creating an additional volume of biomass, essentially in the leaves. The latter will cause an increase in the availability of bagasse in the next few years.” Through a partnership with CTC (Centro de Tecnologia Canavieira), Novozymes expects to develop technologies that will cost efficiently convert bagasse into ethanol.
Time table: the introduction of cellulosic ethanol and beyond
With strong support in the United States and China, extensive academic research in Europe and great potential in Brazil, how far away are we from a winning technology? “I don’t think there will be a clear winner in cellulosic technology in four years time. However, I do think that, within this time line, several plants will produce ethanol from ligno-cellulosic feedstock, from agricultural residues, wood residues and probably a few from industrial waste. They will produce this on an industrial basis which translates into,25 to 50 million gallons per year plants. But each of these companies will have different technologies combined in their process. They will have different pre-treatment methods, different enzymes blends, different fermentation technologies and also different organisms. All these companies will have proprietary processes or would have acquired pieces of the process through licensing, and, step by step, the less efficient processes will be filtered out.
Novozymes has put in place an unprecedented R&D effort with more than 100 people developing enzymes and acquiring a better understanding of associated processes which heavily impact the hydrolysis step. Thanks to this commitment, Novozymes expects to be in a position to offer enzymes than can help to make cellulosic ethanol economically viable within 4 years from now.
© Ethanol Statistics 2008