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Market News

 February 22, 2012
Novozyme: new enzyme brings biofuels into petrol cost bracket

 Novozymes will today launch a new enzyme that it claims will convert five times more waste biomass into ethanol than current products, bringing second-generation biofuels into cost-parity with corn ethanol and gasoline.

The biofuel company said the so-called Cellic CTec3 enzyme is 50 per cent more effective at turning cellulosic feedstocks, such as wheat straw, corn stalks, agricultural residue or household waste, into bio-ethanol when compared to Novozymes' previous product, Cellic CTec2.

The company said that it will start commercial biofuel production using the new enzyme at plants in the US and Italy later this year.

Peder Holk Nielsen, executive vice president of the Danish company, told BusinessGreen that production cost for the new biofuel would range from $2 to $2.50 per gallon, depending on the size of the plant.

Record corn prices have forced corn ethanol costs to around $2.20 per gallon, meaning the new biofuel should be able to compete on price with first-generation biofuels, while addressing concerns that the fuel eats into food supplies.

"With the progression of the technology... and the huge forwards steps we are making with the enzymes, cellulosic ethanol is now becoming competitive to corn ethanol, but also gasoline," Nielsen said.

Supporters have long argued that cellulosic biofuels address many of the sustainability concerns attached to conventional biofuels, as they do not rely on energy crops that eat into agricultural land and, as such, do not contribute to deforestation or rising food prices.

Advocates claim that the technology could provide a sustainable means of delivering large quantities of biofuel to the aviation and shipping industries, creating huge potential markets. A report published by Bloomberg New Energy Finance last month predicted global production of second-generation biofuels would reach 15 million gallons in 2012 and 250 million gallons in 2014 as demand for the technology explodes.

In the US alone, it is estimated that less than 20 per cent of available agricultural residues could produce more than 18 billion gallons of ethanol every year. As a result, 16 per cent of the country's gasoline consumption could be replaced by 2030, creating 1.4 million new jobs and reducing CO2 emissions from gasoline-based transportation by 11 per cent.

President Obama has also set a target of producing 16 billion gallons of cellulosic biofuels by 2022, prompting the US Department of Energy to partly fund Novozyme's research effort.

US company Fiberight will also announce today that it will open a small-scale plant in Lawrenceville, Virginia to use the enzyme to turn solid municipal waste into biofuels from next year. The plant will be followed by a larger facility capable of producing six million gallons of biofuel a year, which is set to open in Blairstown, Iowa in 2013.

In addition, packaging giant M&G Group is scheduled to open a facility in Crescentino, Italy, producing 12 million gallons of ethanol per year from locally sourced wheat straw, energy crops and other feedstocks.

Nielsen said it only takes 50kg of CTec3 to make one ton of ethanol from biomass, which for a biofuels producer operating a 35-million-gallons-a-year facility, could mean the difference between four weekly truckloads of CTec3 or 20 deliveries of another product.

He added that the company is also currently in talks to develop tailored enzymes for biofuel and bioplastic operations run by multinationals, including BP, Abengoa and Cargill.

While ethanol production is set to be the largest market for the new enzyme, companies also want to develop biobutanol, which can be used to replace a wide variety of fossil fuels. Similarly, Nielsen revealed that Cargill is looking to develop an enzyme strain that can ferment sugar into chemical substances.

"Now is the time to start working with partners to develop unique enzymes -- both pre-treatment and fermentation -- in order to get the next wave of improvement," he said.

"We are talking to a number of partners... [but] volume-wise, we are looking at the fossil fuel market -- the majority [of biofuel] is simply burned in an engine or power plant," added Nielsen.