Concord Monitor, NH
04-09-07
Beyond high-fructose fuel
Firm makes ethanol out of wood chips
By Chris Fleisher
Valley News
It would seem ethanol's time has come.
Once considered a boutique fuel with limited mainstream potential, ethanol has
become the most popular answer to the question of how to wean America from
its oil addiction. But just as the market for the alternative fuel is taking off, rising
prices for commercial ethanol's main ingredient - corn - have added new
concerns about the fuel's long-term sustainability. And investors are ever more
eager to find and fund new, more efficient ways of making it.
One Lebanon company thinks it is on the verge of finding the answer.
"In the long run, we want to see ethanol from cellulose be more cost-effective
than corn," said Dave Hogsett, vice president of research and development at
Mascoma Corp. "And we think it's possible."
Since its founding a year ago, the scientists at Mascoma have been making
ethanol - essentially grain alcohol that can be mixed with gasoline - from
materials other than corn, such as grass or wood chips.
---ADVERTISEMENT--Although corn is still the cheapest way to make ethanol, the crop is a limited
resource with many competing interests in the nation's food supply. It is used to
feed livestock, is a vital component of hundreds of processed foods, and is
widely used as a sweetener - high-fructose corn syrup - in soft drinks, breads,
cereals and condiments.
The growing demand has increased average corn prices 50 percent in the past
year, said Wally Tyner, an agricultural economist at Purdue University. That has
placed a higher premium on the kind of research done at Mascoma's labs.
Instead of fermenting corn into alcohol, which can then be used as fuel,
Mascoma uses cellulose - a main component in plant fiber. The problem has
been that cellulose is tougher to break down than corn, which adds extra time
and effort to the process.
Making ethanol from cellulose now costs roughly twice as much as making it
from corn. But Mascoma has been developing yeast and bacteria that will be
better at breaking down the plant matter, Hogsett said, and will do it cheaply
enough to make the process cost effective.
The company's research stems from work that company co-founder Lee Lynd of
Plainfield, a professor of engineering at Dartmouth College's Thayer School of
Engineering, began in the late 1970s as a college student.
Coming from a "service-oriented family," Lynd said, he wanted to apply his
interest in biology to a problem that was very much on people's minds at that
time - the energy crisis.
Even then, Lynd said, he felt ethanol made from plant fiber was more realistic
than using corn. He wrote his senior thesis on the subject and continued his work
in graduate school at Thayer in the 1980s.
"It seemed obvious to me then that one wanted to have a plant source that would
be a relatively low-impact resource, benign to produce . . . and potentially
plentifully available," he said. "Corn didn't fit the bill."
Unlike corn, which requires fertile land, plants such as switch grass can be grown
just about anywhere and don't have many other competing uses.
The catch is that making ethanol from cellulose costs more to produce. It even
costs more simply to transport the raw materials, Tyner said in an interview.
"When you're hauling cellulose, you're hauling a lot of water," he said. "It's really
expensive to haul water."
That means that whatever plant material is used - be it grass or wood chips - it is
likely going to come from within a 50-mile radius. Mascoma has concentrated on
wood chips, Hogsett said.
Although Lynd's work goes back more than two decades, the burgeoning industry
for cellulosic ethanol is still far behind corn-based fuel, which has been around
since at least the early 20th century, said Bruce Jamerson, who was hired as
Mascoma's chief executive officer last month.
Most experts believe cellulosic ethanol is still at least five years away from being
produced commercially, although Jamerson said he believes it could happen
sooner than people think.
"Within several years, I don't see any reason why this industry, and Mascoma in
particular, shouldn't be operating on a profitable basis," he said. "It's not five or
10 years out. That's just too long."
Jamerson came to Mascoma after six years in the corn-ethanol business with
VeraSun Energy Corp. in South Dakota.
That company capitalized on growing interest from Wall Street with an initial
public offering of stock last June that was well-received - a promising sign for
cellulosic ethanol, he said.
Proving that ethanol's future is stable enough to attract market interest will
encourage oil companies to invest in infrastructure, such as gas pumps and
pipelines, needed to encourage production and further research, Jamerson said.
The industry still relies heavily on government subsidies, however. Much of the
infrastructure investment hinges on a 51 cent per gallon tax credit given to oil
companies that blend ethanol with gasoline. Without it, Jamerson said, they likely
wouldn't show much interest.
"We have to encourage oil companies to invest in the infrastructure," Jamerson
said.
American ethanol makers are also protected by way of a 54-cent tariff on
Brazilian ethanol. Manufacturers in that country use sugar cane, which is more
efficient than corn. Despite some pressure from Brazilian President Luiz Inacio
Lula da Silva last month to remove the tariff, U.S. government officials have
committed to keeping it in place.
"Competition from Brazil is not an immediate concern," Hogsett said.
Nevertheless, he said industries in both countries could benefit from shared
research.
So far, most of the financing for cellulosic ethanol is still coming from government
grants and venture capitalists.
The private sector reached a "genuine tipping point" in the summer of 2005, Lynd
said, when oil prices were starting to head north of $50 a barrel and the security
of the world's oil supply was becoming an increasing concern.
"Fundamentally, the investors have been asking themselves, assuming science
and technology advance sufficiently, will the world want what we produce?" Lynd
said.
Over the past year, more and more investors have answered "yes."
The number of production plants (mostly for corn ethanol) under construction has
more than doubled in the past year - going from 31 in 2006 to 76 in 2007,
according to the Renewable Fuels Association, a trade group for the ethanol
industry. By 2016, corn-based ethanol production is expected to increase more
than 200 percent to about 14.7 billion gallons per year and make up 10 percent
of projected U.S. fuel consumption, according to the Iowa State University
Center for Agricultural and Rural Development.
Less than two weeks ago, the U.S. Department of Agriculture projected farmers
would plant 15 percent more corn acres this year to feed the growing ethanol
demand.
So far, Mascoma has received about $39 million from private investors and
nearly $20 million in state and federal funding, Hogsett said. Last month, it
received a $4.9 million grant from the Department of Energy and was given $14.8
million by New York state to build its first demonstration plant there.
But Tyner said cellulosic ethanol still needs a "policy bridge" in order to work
commercially.
One way would be giving an additional federal subsidy, on top of the 51-cent tax
break, to oil companies for blending cellulosic ethanol with gasoline, he said.
Another would be to have what Tyner called a "reverse auction," whereby
producers would bid on long-term government contracts to make a certain
amount of ethanol. That would eliminate price uncertainty and encourage better
investment, Tyner said.
Regardless, it seems to be something that people want to support, Hogsett said.
Whether for environmental benefits, energy security or supporting local
agriculture, Hogsett said, the general populace seemed on board with the
company's work.
How far that enthusiasm continues is anybody's guess.
"I'm sure that people are underestimating the challenges to be overcome," he
said. "But when you look at the most readily available solutions to our energy
problems, ethanol is the leading candidate.
"I see it as a reflection of what people want to see happen."