The last few weeks have been quite a ride for cellulosic ethanol.
In the latest announcement, Coskata, which last month announced a partnership with General Motors Corp. (NYSE: GM), on Wednesday said it also is partnering with ICM, a Colwich, Kan.-based ethanol plant design, engineering and support firm, to design and construct its first commercial plant to make ethanol from nonfood sources (see VentureBeat, Earth2Tech and Green Light posts).
In January, the Warrenville, Ill.-based startup had said it planned to break ground on the plant, expected to make between 50 million and 100 million gallons of ethanol annually, this year and to have the plant up and running in late 2010 or early 2011. The announcement Wednesday indicates Coskata expects the plant to open in late 2010.
CEO Bill Roe had told Greentech Media that the first commercial plants would probably be built through partnerships, and Mary Beth Stanek, director of environment and energy policy and commercialization at GM, said that "very strategic" partnerships, which would "facilitate a very quick ramp-up," would be announced in the next few weeks (see With GM Deal in Hand, Coskata Promises $1 Ethanol).
"This strategic alliance moves us a step closer to the arrival of Coskata’s next-generation ethanol in the marketplace," Roe said in a written statement Wednesday. "Coskata and ICM will speed the commercialization of a process that will convert biomass into advanced biofuels from a number of renewable materials, at a production cost of less than $1 a gallon."
Other announcements in the last week also have underlined growth in cellulosic ethanol.
Dedini, a sugar- and biofuel-equipment manufacturer in Piracicaba, Brazil, announced it has found a way to produce ethanol from plant waste on an industrial scale, with costs of about $1.02 per gallon, according to a Gulf Ethanol Corp. press release Monday.
Mossi & Ghisolfi, a chemical group in Tortona, Italy, said it would invest about €100 million (about $148.1 million) to build Italy's biggest ethanol plant -- with the capacity to produce about 200,000 tons of the fuel -- by 2009 and then would spend another €120 million to convert it into a cellulosic-ethanol plant, Reuters reported Tuesday.
And the U.S. Department of Energy last week announced it would invest up to $114 million over four years in ICM, Lignol Innovations, Pacific Ethanol and NewPage Corp. (see Funding Roundup: Getting Votes, Wrapping up Deals).
Greg Krissek, director of the government affairs department at ICM, said its DOE project in St. Joseph, Mo., which is slated to receive up to $30 million from the agency to convert agricultural waste into ethanol using both biochemical and thermochemical processing, is unrelated to the plant it is planning with Coskata.
"Both projects are two different types of technologies," he said. The location of the Coskata plant has not yet been released.
Coskata previously had said it was applying for a DOE grant. Wel Bolsen, chief marketing officer and vice president of business development for Coskata, said the startup's application is still being considered by the agency, which has said it expects to announce a second round of investments in the spring.
But while all these announcements could lead to cheaper and more abundant cellulosic ethanol, they don't seem to address one of the major challenges the ethanol industry faces today -- low demand compared with production capacity.
After all, ethanol already is cheaper than gasoline. While prices vary widely among states, ethanol averaged $2.29 per gallon in Nebraska in January, compared with $2.43 per gallon of unleaded gasoline. In California, ethanol prices, which peaked as high as $4 per gallon in 2006, fell to between $2.20 and $2.40 in May, compared with gasoline prices above $3 per gallon.
And blenders are allowed to mix up to 10 percent of ethanol with the fuel today. Yet producers have suffered – and canceled plants – as a result of shrinking margins (see Ethanol Stocks Keep Falling, Ethanol Margins Suffer and Ethanol Forecast Buoys a Bit).
Still, cellulosic ethanol has plenty of believers, such as Stanek, who said she is confident that demand will increase as the country strives to meet its goal of using 36 billion gallons of ethanol by 2022, with 21 billion coming from nonfood sources, even though it's unclear whether the goal will come with teeth to persuade blenders, distributors or retailers to move toward it.
Founded in 2006, Coskata says its thermochemical technology to make ethanol from carbon-based renewable sources will be able to produce the fuel for less than $1 per gallon, giving it the ability to deliver prices 50 cents to $1 lower than gasoline at the pump (see Coskata Owes Launch to Swamp Bacteria and Coskata: Behind the Hype).
Coskata claims it will be the first to mass-produce cellulosic ethanol, but others also are vying for that title. Among others, examples include Iogen, RangeFuels, Abengoa (using SunOpta technology), BlueFire and Bioengineering Resouces (in partnership with Alico), all of which already have built pilot plants and received government grants last year.