Bioethanol Boost

As President Bush steps up the call for cellulose-based ethanol to help cure the U.S.'s "addiction to oil," fuel ethanol producers, enzymes developers, and the financial community are boosting their commitment to the technology worldwide.

Last week, the banking firm Goldman Sachs announced that it has invested $27 million in Iogen, an enzymes producer that operates the world's only cellulose ethanol facility. The plant, in Ontario, has the capacity to make 3 million to 4 million L of ethanol per year by breaking down and fermenting about 40 tons per day of wheat, oat, and barley straw with steam, enzymes, and yeast.

The announcement followed by days Bush's latest speech promoting the inclusion of $150 million in next year's federal budget for research into new ways of making ethanol.

Goldman Sachs, which joins Royal Dutch/Shell as a major investor in Iogen, says its money will be used to accelerate Iogen's commercialization program. Iogen seeks to build a plant, likely in Idaho or western Canada, that will produce around 170 million L of ethanol per year. Such a facility, however, would cost upward of $300 million, money that no financial backer has yet put up.

Brian Duff, a biochemical process engineer at biofuels consulting firm BBI International, says cellulosic ethanol is economically feasible at today's gasoline prices. Yet the risks associated with building the first plant are huge. "Nobody wants to be the guinea pig," he says. "There's a lot of 'wait and see' going on."

Meanwhile, interest is growing in Europe. Abengoa, a Spanish energy company, is building a plant designed to make more than 5 million L of cellulosic ethanol annually. Iogen, Shell, and Volkswagen are studying a facility in Germany. And the enzymes producer Genencor, which worked with the U.S. government to bring down the price of cellulase enzymes, just joined a French consortium looking to produce ethanol from pulp mill waste.