Will Cellulosic Ethanol Take Off?

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Other companies are planning to build plants, but these are also relatively small. Range Fuels (formerly Kergy), based in Broomfield, CO, plans to start construction this year on a 10-million-gallon-per-year plant in Georgia, CEO Mitch Mandich says. A large corn-grain ethanol company, Abengoa Bioenergy, of St. Louis, is building a 1.3-million-gallon biomass ethanol plant in Spain. But even taken together, these plants will supply only a tiny fraction of the 15-billion-gallon target.

"That's a huge goal," says John Howe, vice president of public affairs at Celunol. "That's well beyond what any one company or a large number of companies [can do]. It will take a massive national effort to get close to that goal."

By "national effort," he partly means money for loan guarantees that will encourage financiers to fund the building of large commercial-scale plants. Company executives and cellulosic-ethanol advocates agree on the need for such government help. Iogen Corporation, in Ottawa, Canada, is a case in point. The company has been producing cellulosic ethanol since 2004 and already has an almost 700,000-gallon-per-year demonstration plant. But Iogen's plans for a 20-million-gallon commercial-scale plant are now on hold as the company awaits legislation to be passed in Canada, the United States, or Germany that will provide the financial incentives Iogen needs to build such a big operation.

Yet financing may not be the only hurdle: even if commercial plants can be built, the process may still prove too expensive to compete with corn ethanol, so further work in the lab may be necessary. (See "Redesigning Life to Make Ethanol.")

Indeed, researchers at cellulosic-ethanol companies, national labs, and academic labs are engaged in continuing R&D both in converting biomass into ethanol and in growing more-productive strains of biomass. Right now the conversion is an expensive and water-intensive multistage process. Some groups hope to genetically engineer a single organism to both break down cellulose into simpler sugars and ferment alcohols, thereby simplifying the process. Others are working to improve methods for converting biomass into ethanol using heat and catalysts--the method being used by Range Fuels. And companies such as Celunol are investigating better crops, such as the ancestors of today's sugarcane, that can produce more ethanol per acre.

Some researchers have even given up on the idea of cellulosic ethanol, turning instead to sources such as algae for biofuels. (See "Algae-Based Fuels Set to Bloom.") But Nathanael Greene, an energy-policy specialist at the NRDC, remains optimistic. Although he thinks it's unlikely that cellulosic-ethanol plants will produce more than a few billion gallons of fuel by 2017, "that would put us in the position where the cellulosic industry is really ready to start growing exponentially," he says. "Once we get over that first hump, I think the cellulosic industry will grow quite rapidly, and [it] has much greater longer-term growth potential [than corn ethanol]."

Greene cites the example of the now fast-growing corn-ethanol industry. "It took 10 years to get the first billion gallons and 10 years to get the second billion," he says. "And now we're set to go from 6 to roughly 12 billion in 18 months."