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Oil Firms are Sweet on Cane-waste Ethanol

While biofuels promoters in the U.S. are wondering what the heck happened to the promise of cellulosic ethanol here, two big oil companies are taking their cellulosic show on the road to Brazil. The feedstock of interest there is what’s left of sugar cane after the sugar is squeezed out.

sugar cane

Sugar cane, minus the sugar, may still yield ethanol. Credit Shutterstock

Royal Dutch Shell has advanced its plans for a $12 billion joint venture with Brazilian sugar cane processor and ethanol producer Cosan. The main thrust will be making ethanol from sugar in the time-tested way (which Brazil began producing for transportation since the 70s and now uses for about half of its liquid fuel needs). But in among a raft of other assets, Shell will kick in its 16% share of recently IPO’d cellulosic ethanol firm Codexis.

Lynn Christenson, communications director for Codexis, explains that this JV is a big deal that will put some fuel behind the firm’s commercialization plans.  She points out that Codexis has been working with Shell since 2006 when the two firms started a pilot program for cellulosic ethanol. The agreement was expanded twice before Codexis went public. But it’s Cosan that has the huge amounts of sugar cane agricultural waste for feedstock – the company is the third largest sugar producer in the world and has the capacity to crush 60 million tons of sugar cane a year.

The deal “gives us access to a very large supply of agricultural waste – a very large supply of raw material. We will be able to work with Cosan to develop next generation non-food based ethanol,” says Christenson.  She acknowledges that there are no specific time frames for cellulosic scale-up, but says “our technology will be a significant part of the joint venture and we believe it will accelerate time to commercialization.”

Meanwhile, in a smaller deal, Brazilian firm Petrobras (or rather it’s U.S. arm) has signed a development agreement with South Dakota-based KL Energy. KLE focuses on thermal and chemical pretreatment steps followed by enzymatic hydrolysis to sugars. The company is currently cooking up Ponderosa Pines at its demonstration plant in Upton, Wyoming. But as you may have already guessed, Petrobras is more interested in what KLE can do to those squeezed out sugar canes. The oil company is pledging $11 million to the cause.

Ethanol from cane sugar has better economics (and a better CO2 return) than ethanol from corn kernels. It will be interesting to see if the cellulosic components of the two crops follow the same pattern. But then again, the world still awaits the first commercial-scale cellulosic facility of any kind.

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