Coskata plans to enter Chinese ethanol market

By Bryan Sims | October 06, 2008
Web exclusive posted Oct. 27, 2008 at 10:45 a.m. CST

Warrenville, Ill.-based Coskata Inc. will be expanding its business scope internationally - and plans to market cellulosic ethanol produced from its novel production process in China. Wes Bolsen, Coskata's chief marketing officer of business development, made the announcement during the Fourth Annual World Biofuels Symposium at Beijing's Tsinghua University on Oct. 20.

According to Bolsen, who was a key note speaker at the conference, Coskata intends to establish technology licensing and/or partnership agreements to bring the company's ethanol production process to China. Though Bolsen said his company wouldn't likely build a cellulosic ethanol plant in China, Coskata's has short- to medium-term goals that focus on developing relationships with potential suitors in China and the entire Asian region to commercialize Coskata's proprietary technology. Bolsen said no agreements have been made as of yet.

"We believe that China has the potential to be one of the largest markets in the world for second generation ethanol given their vast resources," he said. "The meetings in China on this trip are the start of a longer process to figure out Coskata's potential entry into China as intellectual property rights for our technology can be protected. This is why we believe that the Coskata model of partnerships, joint ventures and the licensing of our technology, in addition to building and owning plants is very important."

China could produce 50 billion gallons of biofuel from forest and agricultural waste alone, enough to displace its current oil imports, Bolsen said. Coskata's cellulosic ethanol is expected to be produced using agricultural waste, forest waste and municipal solid waste (MSW) using its novel process technology. According to MarketResearchAnalyst.com, China is the third largest ethanol producer in the world, behind the United States and Brazil, respectively.

In June, China decided to restrict its ethanol production, opting to focus on using its grain supply for food production rather for energy production. Coskata's ability to convert non-food based feedstocks, such as MSW and other hydrocarbon-rich biomass waste, wouldn't hamper China's food security.

"We see great potential for reducing the global dependence on oil by having the world's largest emerging economy embracing second generation ethanol," Bolsen said. "Coskata has been very pleased with the warm reception by the Chinese to a technology which as the potential to use non-food sources to make renewable fuel. With more than 1.3 billion people, China is very focused on using agricultural and forest residuals as well as other waste materials to help reduce their oil imports and provide for long-term energy security."

Even though Coskata has announced it plans to enter the Chinese ethanol market, Bolsen said the company is still very committed in developing its technology at commercial-scale within the United States first. Coskata is currently developing a 40,000-gallon-per-year cellulosic ethanol demonstration facility in Madison, Pa.

Coskata plans to have a United States-based commercial-scale plant producing between 50 MMgy to 100 MMgy of cellulosic ethanol by 2011. The location of the commercial facility has not yet been identified, but Coskata said it expects to break ground before the end of this year. As well, the company said it has been in preliminary discussions with several engineering firms but no agreements have been made yet.

The ethanol produced at Coskata's $25 million Madison, Pa., pilot plant would be used by General Motors Corp. to test its flex-fuel vehicles by April 2009, Bolsen said. The production cost of its cellulosic ethanol, when produced at scale, is expected to be less than $1 per gallon, not counting the cost of building the plant.

GM is a major stakeholder in Coskata, as well as Mascoma Corp., which has started test producing ethanol with its "consolidated bioprocessing" cellulose-to-ethanol pathway. Mascoma expects to incorporate the technological breakthrough in its New York pilot plant by mid-2009.