Next-Generation Biofuels Are Inching Towards Reality

When U.S. Congress passed the 2007 energy bill, it expected the country to be producing over 1 billion gallons of next-generation biofuels by 2013.  Biofuels were going to be greener and more efficient than corn-based ethanol but the advanced biofuel industry has developed far more slowly than lawmakers predicted, leading the Environmental Protection Agency (EPA) to cut the 2013 mandae for cellulosic biofuels to just 4 million gallons—and even that target could be difficult to meet, given that only 142,000 gallons are available now. It’s not that companies don’t know how to make cellulosic ethanol or biofuel from algae. It’s that they’ve struggled to do so cheaply and at a scale large enough to compete with oil.

“The technology just hasn’t matured yet,” says Peder Holk Nielsen, the CEO of the Danish biotech company Novozymes, which has been involved in next-generation biofuel research and development for years. “It’s simply been too expensive.” Earlier this week Novozymes in partnership with the Italian biofuels company Beta Renewables, announced the opening of the world’s largest advanced biofuels facility. Built in northern Italy, the plant is the first in the world to be designed and built to produce bioethanol from agricultural residues and energy crops at a commercial scale. The facility will produce over 20 million gallons of cellulosic ethanol a year. Cellulosic ethanol has been difficult to produce for the same reason that it’s impossible for the human stomach to digest cellulose, the material that makes up the tough cell walls of green plants. It takes specialized enzymes to break down cellulose into simple plant sugars, which can then be converted into fuel.  Novozymes’ role is providing the industrial enzymes needed to break down the tough wheat straw, rice straw and arundo donax—a high-yielding energy crop grown on marginal land—that the Italian plant will be using. Those enzymes aren’t cheap—Nielsen notes that while the enzymes used to make corn ethanol cost 3 to 7 cents per gallons, those used for cellulosic ethanol run 30 to 40 cents a gallon. Bringing down the cost of those enzymes will be key to making cellulosic ethanol more than just a lab experiment. “We’re convinced that over time, it will be cheaper than gasoline” says Nielsen.

But Novozymes isn’t the only company opening up a cellulosic ethanol facility. In 2014 plants from the ethanol company POET, Dupont and the Spanish firm Abengoa will begin producing next-generation ethanol, and the startup KiOR is already running a commercial plant in Mississippi that turns woody biomass into drop-in fuel.

However :  Daniel Klein-Marcuschamer, a researcher at the Australian Institute for Bioengineering and Nanotechnology, conducted a comprehensive analysis of renewable aviation fuels. He concluded that producing first-generation bio-jet fuel from sugarcane would require oil prices of at least $168 a barrel to be competitive, and that some second-generation algae technologies would require crude oil to soar above $1,000 a barrel (the current price is around $110) to break even.

What is more, California-based Solazyme uses custom-built algae to develop better biofuels, and it has sold thousands of gallons of its product to the Navy for use in its ships.  Solazyme has also branched into making oils for higher profit products like cosmetics, food and petrochemicals. To that end, late last month Solazyme announced a deal to supply roughly 3 million gallons of algae-produced oil to the consumer products giant Unilever over the next 12 to 18 months, beginning at the start of next year. Unilever has said it will only use sustainable agricultural raw materials by 2020, and Solazyme’s algal oils fit perfectly into that strategy. “ We didn’t know what the technology was capable of, and now we can tailor oils we never would have envisioned ” says Wolfson, Solazyme’s CEO.

Biofuels that are cheap—and don’t compete with food—could still play a major role in helping the world reduce the carbon footprint of transportation. But as smart companies like Solazyme and Novozymes show, biofuels could just be the beginning for this technology.