Thursday, Apr 10, 2008
By Devon Maylie
Of DOW JONES NEWSWIRES
Sao Paulo, Brazil (Dow Jones)--Already profiting from the current biofuel boom, Brazil's sugar cane growers are hoping they'll come up as winners again when the next generation of biofuels starts hitting the market.
The reason is bagasse, which looks like shredded cardboard but is actually what's left over after sugar cane is crushed. It's currently burned to help power refineries, but Brazil's sugar industry is betting it can be the basis of a new breed of biofuel.
The use of corn-based ethanol and biodiesel from palm oil has come under fire because their production has caused food prices to increase endangering the world's hungry and deforestation threatening both the environment and animal habitats, so the race is on to develop second-generation fuels made from cellulosic material such as wood chips and grass.
Or bagasse.
Cellulosic technologies use waste products from plants to create ethanol, and Brazil's current sugar and ethanol industries are producing mountains of bagasse.
While production of cellulosic ethanol isn't likely to happen before 2015, bagasse is expected to be the first material to be commercially viable, according to Eduardo Carvalho, director of corporate relations for ETH Bionergy Inc., the ethanol subsidiary of Brazilian conglomerate Odebrecht SA
"The first beneficiary of the second generation of biofuel production will be the sugar cane industry," Carvalho said.
Currently there are no second-generation biofuels in commercial production, only pilot projects and test plants. But the recent U.S. energy bill mandates the use of 100 million gallons of cellulosic biofuel by 2010 and 16 billion gallons by 2022, so the production of a successful second-generation biofuel is urgent.
In February the U.S. Department of Energy announced it will invest $33.8 million, over four years in four different projects, mainly to develop cellulosic material into sugars suitable for production of biofuels. And in January, the DOE said it will invest $114 million in small-scale cellulosic biorefineries.
The DOE's research team said that to overcome current cellulosic production inefficiencies, scientists need to have a better understanding of enzymes and microbes involved in biomass conversion to ethanol, which the investments are aiming to do.
Brazil is already a leader in the production of biofuels. But to maintain its edge, the country needs to be on the cutting edge with bagasse, said Nilson Zaramella Boeta, chief executive of the Center for Cane Technology, a private research institute that's been working for 10 years to try to create ethanol from the cane byproduct.
Brazil's sugar industry already makes use of bagasse. The Usaciga plant in the southern state of Parana, for example, produces about 2,000 tons of bagasse from the roughly 8,000 tons of cane crushed there each day, said factory manager Dario Costa Gaeta. As is the case at many cane mills and ethanol distilleries, it's currently burned to power the turbines, he said.
The mill produces roughly 30 megawatts of energy from its bagasse production - three tons of bagasse produce 1 megawatt of energy. The plant uses about six to seven megawatts and then sells the rest to the state energy company in the region.
Translating that energy potential into a fuel is more complicated, but Boeta said the center has made making ethanol from bagasse a priority and hopes to have a fuel ready for demonstration in three years and one available commercially in five years.
Ethanol from bagasse would be "a major breakthrough for Brazil," Boeta said. While the raw material already exists at the mills, production efficiencies need to be improved to make it economically viable, he said.
Boeta and his team of scientists face stiff competition. Brazil's state-run oil firm Petroleo Brasileiro SA (PBR), or Petrobras, and U.S. company KiOR Inc., a joint venture between Khosla Ventures and BIOeCON, have signed an agreement to develop second-generation biofuels made from bagasse.
Petrobras' research center has been studying the production of biofuel from sugarcane bagasse since 2006 in a pilot plant and it plans the first tests in semi-industrial units in 2009.
Boeta expects Brazil to have a competitive advantage, because the bagasse is already being produced at the mills, that cuts down on transportation costs making it cheaper, he said.
However, while research firms and companies are tossing production targets around, ETH Bionergy's Carvalho warns that "lab success on cellulosic ethanol is not what counts." Citing heavy U.S. investment in second-generation ethanol and no immediate return, Carvalho said not until a number of companies can make it profitably will the technology be viable.
-By Devon Maylie, Dow Jones Newswires; (4420) 7842 9483; devon.maylie@dowjones.com
(END) Dow Jones Newswires
10-04-08 1304GMT
