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Cellulosic Ethanol: Ready, Set, Go

For 40 years Ottawa-based Iogen Corp. has researched and developed enzymes to turn cellulosic material into low carbon dioxide-based cellulosic ethanol. Today, the company is in its fourth year of producing ethanol at one of the world's first demonstration-scale cellulosic ethanol plants, manufacturing enzymes and continually improving operations.
By Hope Deutscher | June 03, 2009
In 1978, Patrick Foody Sr., a civil engineer and Montreal financier, began researching how to turn forest and farm waste, such as straw, grass or wood, into animal feed and fuel.

After initially using enzymes to break down wood into cattle feed, Foody turned his attention to using enzymes to produce renewable fuel.

"Back in the early 1980s, the price of oil was forecast to hit $80 a barrel and the world was going to need alternative fuels, and so we started looking at whether we could take fiber and use enzymes to turn that fiber into fermentable sugars to make alcohol. Indeed, that is what we do," says Jeff Passmore, executive vice president of Iogen Corp. "As it turned out, of course, the price of oil didn't go to $80 a barrel in the 1980s, but in the meantime Iogen learned a lot about how enzymes behave with fiber."

And so began Iogen's commercial enzyme business. Today, the company owns and operates a large-scale, state-of-the-art enzyme manufacturing facility in Ottawa that provides enzymes for the pulp and paper, textile and animal feed industries. As well, Iogen says, its cellulosic ethanol process combines innovations in pretreatment, state-of-the-art enzyme and fermentation technologies to produce ethanol from biomass. Using enzymes, pretreated fiber is converted to sugars, which are subsequently fermented and then distilled to make ethanol.

Since the 1980s, Iogen has moved from conducting fundamental basic research to applied research to pilot-scale, to demonstration-scale. Since 2004, the company's 2 MMly (500,000 gallons) demonstration plant has been producing cellulosic ethanol from wheat and barley straw. The facility can process up to about 30 tons of feedstock daily. As a result of operating a demonstration plant, Passmore says, Iogen has learned a lot about the integration of the various processes that combine to develop the fuel and has upgraded the plant several times.

Use
"I think it is fair to say we are on the cutting edge," Passmore says, as he proudly talks about the company's success stories of demonstrating cellulosic ethanol. His own car, a flexible fuel Chevrolet Impala, runs on the company's straw-based E85. "It always amazes me that there are all these straw bales here at the plant, and I go and fill up and the fuel I run my car on comes from that straw. I never cease to be amazed by that," he says.

Not only does Iogen's own vehicle fleet run on its fuel, but the company has also provided E85 to various departments within the Canadian federal government.

To demonstrate the environmental benefits of Iogen's fuel, during the summer of 2004, renowned Canadian adventure traveler Garry Sowerby drove a GMC Yukon fueled with the company's E85 more than 9,000 miles, from Halifax, Nova Scotia, to Victoria, British Columbia, stopping in 85 communities along the way. The "Mission Green" trip was sponsored by General Motors Canada.

For the past two years, Green Alternative Motorsports has used Iogen's E85 to fuel its high-performance race vehicles for the 25 Hours of Thunder Hill Endurance Race in Willows, Calif. In 2007, GAM team member and driver Steve Zadig wanted to use cellulosic E85 to reduce his environmental footprint as he raced two GAM LeMans Prototype (LMP3) cars. "So he went out to procure some and, not surprisingly, he couldn't find anybody to sell him any cellulosic ethanol other than a company in Ottawa called Iogen," Passmore says. Iogen shipped GAM the requested 800 gallons of fuel. In the fall of 2008, Iogen again supplied the company with 300 gallons of E85 for one of its racecars.

"For two years in a row, Iogen has been the only firm actively producing cellulosic ethanol and able to reach into its inventory to provide us with the volume we need - enabling us to go green' again," Zadig said in a press statement.

The Canadian government has set a 5 percent renewable fuel mandate by 2010; and a renewable fuels standard enacted in the U.S. Energy Independence & Security Act of 2007 establishes annual renewable fuel volume targets, reaching 36 billion gallons in 2022, of which 16 billion gallons is mandated to be cellulosic biofuels.

Even if oil prices remain below $100 per barrel, Passmore hopes that the U.S. and Canadian federal governments will continue to establish renewable fuels targets. "We need the kind of initiatives that governments have established, such as mandates. You need mandates and you need price signals," he says. "If the goal here is to get off that addiction [imported fossil fuel from the Middle East], then you want to ensure that when conventional energy prices are low, you don't walk away from your commitment to alternative fuels because, if you do, then there won't be any when oil prices go back up again. We need regulatory certainty and we need those kinds of price signals and mandated fuel use. Our customers are the oil companies and some are being very progressive in terms of their involvement in the field, like Royal Dutch Shell plc, but there are others who would prefer not to use ethanol. So, I think that you create a market for the product through mandating it."

Working With Partners
What has led to Iogen's success? Perseverance, dedication and hard work, Passmore says, adding that it also includes strategic partnerships with major oil companies such as Shell and Petro-Canada, global investment banker Goldman Sachs & Co. and the government of Canada.

Goldman Sachs & Co. of New York invested $30 million in May 2006 to help accelerate commercialization of Iogen's renewable cellulosic ethanol technology.

Shell first took an equity stake in Iogen in 2002. In July 2008, the two companies announced an extended commercial alliance to accelerate development and deployment of cellulosic ethanol. The agreement includes a significant investment by Shell in technology development with Iogen. Just a few months later Iogen shipped the first 100,000 liters (26,417 gallons) of cellulosic ethanol to Shell for use in fuel applications.

Passmore says the Shell partnership is on-going. "Last July we announced that Shell had increased its share in Iogen from 26 percent to 50 percent. As far as the use of the fuel is concerned, immediately following the conclusion of the new strategic partnership they stepped up the amount of fuel that they were purchasing from us and so we have been shipping fuel to them pretty much every few weeks." As for how the fuel is being used, Passmore says announcements will be made in the future. "Obviously, we want to have some commercial use of the cellulosic fuel."

Another benefit of having a partnership with a company such as Shell, says Passmore, is the proven project management and methodology of advancing from one stage to the next.

Public and private investments are extremely important, he adds. Through different federal government departments, the government of Canada has been a development partner with Iogen for several years. In January 1999, Iogen secured a $10 million loan from Technology Partnerships Canada. "Because they know that the government is involved and the government is spending money and the government has done due diligence, this helps leverage private sector investment," Passmore says. "When Shell came to the table, they were quite encouraged by the fact that we already had commitments from and partnerships with the government of Canada."

The strategic investments by Shell and Goldman Sachs are critical to the long-term success of an emerging technology company, he adds. "We are a technology company, but the model for commercialization, especially in today's world, is a joint venture between large companies with large financial resources like Shell, partnering with governments. Financing high capital cost cellulosic ethanol commercial facilities isn't going to come from venture capital. Commercialization of our first plant here in Canada will be the private sector joint-venturing with government."

Passmore says that model has already been established in the U.S., as the federal government awards grants and loan guarantees to biofuels projects. In 2007, it was announced that the U.S. DOE would support Iogen's proposed commercial-scale cellulosic ethanol facility in Idaho. However, last year, Iogen turned its focus to building the facility in Saskatchewan, opting out of any potential DOE funding. The company has applied for funding from Sustainable Development Technology Canada and plans to start construction on a commercial-scale facility in 2010, with production beginning the summer of 2012.

The Past, Present and Future
Passmore says he has seen many changes in the ethanol industry in the 11 years since he joined the Iogen team. "When I first started working at Iogen, the current level of public interest and support didn't exist," he says. "Governments over the past 10 years have come to the realization that there is a huge advantage in cellulosic ethanol, so we have lots of new legislation. Governments around the world are supporting renewable fuels because they can deliver on four policy initiatives - environment, energy security, new economic opportunities for agriculture, and science and innovation."

In addition, Passmore says legislation and loan guarantee programs have brought more players into the field. He also sees more conferences dedicated to cellulosic ethanol. "When I first started in the business, there were only ethanol conferences. Nobody took cellulosic ethanol seriously. Now it is a major part of biofuels conferences."

Once Iogen's first commercial-scale facility is completed, Passmore says the company plans to do multi-plant rollouts, selling technology licenses and becoming a leading contributor to the North American market, helping to fulfill Canadian and American biofuels mandates and targets.

"I imagine a future where we are doing commercial rollouts in Canada and in the U.S., potentially in Europe as well; but the U.S. has set the most aggressive targets and we're anxious to compete in that market. Cellulosic ethanol will soon be a key industry - certainly well within the next 10 years. Iogen expects to be a leader in that industry globally."

Hope Deutscher is an Ethanol Producer Magazine associate editor. Reach her at hdeutscher@bbiinternational.com or (701) 373-8046.
 

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