Ethanol

Will cellulose slake the growing thirst for renewables? After decades of hype and hyperventilating by both critics and champions, where is ethanol headed? Alberta Oil looks at some of the myths and mysteries surrounding this perpetually promising biofuel

By Graham Chandler

October 01, 2006

“Think of it this way,” says Passmore. “If you put a kernel of corn in your compost and you come back a week later, it’s gone. If you put a corn cob in your compost it’s still there a year later. It’s the chemical composition of biomass that has been the challenge.”

Passmore says the microorganism Iogen uses was discovered by the U.S. Army in Guam during WWII.

“They couldn’t figure out why their uniforms and canvas tents were degrading so quickly,” he says. “It was the original jungle rot. We use simply a sped-up natural process where these microorganisms secrete the enzymes which attack the cellulose in straw and turn it into glucose. Once you’ve got glucose there’s not much magic to distilling it.”

With a proven process, Iogen has attracted Royal Dutch Shell and Goldman Sachs, who are shooting for $1.35 per gallon production costs, still just a little more than corn-based ethanol at about a dollar. According to Passmore, all they need is the right government incentives, with consistency of incentives across the border.

“The reason is we’re delivering on at least three policy objectives of governments,” said Passmore. “Firstly, reducing greenhouse gases. Secondly, new economic opportunities for agriculture; and thirdly, perhaps less of a concern in Canada but certainly a major concern in the U.S. and Europe, improved energy security by having a domestic renewable source of transportation fuel.”

The Americans, you say

The arguments hold not just for cellulose but for all ethanol. According to Kory Teneycke, Executive Director of the Canadian Renewable Fuels Association, whose group has been lobbying Ottawa hard of late, “our industry doesn’t tend to look at [cellulose ethanol] as separate. [Cellulose ethanol] is a way of expanding your feedstock selection so it’s really not two different industries, it’s the same industry with two different ways of making it.”

The CRFA strongly supports the 5 per cent requirement and this fall produced a paper detailing a renewable fuels strategy to the federal government. Its urgings include removal of the excise tax exemption for renewable fuels and taxing ethanol at 10 cents per litre. In place of the exemption, it wants a refundable 10 cents per litre income tax credit for ethanol producers.

What eventually will materialize, of course, is guesswork. Passmore says the company has both U.S. and Canadian options ready to roll with two sites with contracted straw supplies: Birch Hills, Saskatchewan and southeast Idaho. “We’ll go forward wherever the business case is best,” he says.

So far, Idaho’s ahead. But Bush’s 2005 Energy Policy Act is packed with cellulose ethanol incentives like $250 million loan guarantees per facility, a $650 million grant program and fat R&D incentives – all of which Passmore says far outweigh what is on the table in Canada.

“In the U.S. we have two birds in the bush,” he says. “In Canada, we not only don’t have birds in the hand yet but so far we haven’t even found the bush.”

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