DSM partners with POET on ethanol

Is it just the blog’s imagination or are there seem to be more and more chemical companies venturing into advanced ethanol production, the recent one being DSM?

Let’s see our list here:

  • DuPont Cellulosic Ethanol – No need to introduce DuPont in this case. The company’s cellulosic ethanol business is planning to build a 27.5m gal/year cellulosic ethanol plant in Nevada, Iowa, which is expected to start in late 2013. 
  • INEOS Bio – the advanced biofuel technology business of Switzerland-based petrochemical company INEOS. Through its joint-venture project INEOS New Planet BioEnergy (INPB), the company plans to start commercial production of cellulosic ethanol this year in a 24,000 tonne/year biorefinery in Vero Beach, Florida.
  • Gruppo Mossi & Ghisolfi (M&G) – this Italy-based polymer company formed a joint venture called Beta Renewables with TPG Capital. Beta Renewables is building a 13m gal/year cellulosic ethanol in Crescentino, Italy which is expected to start this year. Novozymes is supplying the enzymes for this project.
  • Celanese – planning for possibly 3 greenfield coal-to-ethanol production units in Nanjing, China with a capacity of 600,000 tones/year expected by mid-2013. Celanese is also looking into producing ethanol from natural gas here in the US and is building a technology development unit for ethanol production at its facility in Clear Lake, Texas.
  • Sud-Chemie – a technology business of Switzerland-based Clariant, the company has been building its 1,000 tonne/year cellulosic ethanol in Straubing, Germany, which is supposed to have already started by the end of 2011.
  • Dow Chemical – I am not sure if Dow and its partner Mitsui will sell sugarcane-based ethanol itself as the companies plan to use if for plastic feedstock but the partnership is currently constructing ethanol mill in Brazil, which will deliver 240m liters/year of ethanol by the second quarter of 2013.

And now…we have DSM forming a joint venture with US ethanol producer POET called POET-DSM Advanced Biofuels. It is actually not surprising that DSM will venture into this path given the company’s enzymes business. Major enzymes producer in the biofuel field today includes DSM, DuPont (via the newly acquired Danisco/Genencor), Novozymes,Verenium, Codexis, Syngenta…who else did I miss?

The 50-50 POET-DSM JV is scheduled to start cellulosic ethanol production in the second half of 2013 via POET’s 20m-25m gal/year facility dubbed Project Liberty currently being constructed in Emmetsburg, Iowa (initial Capex is $250m).

POET-DSM intends to replicate and license the technology to additional plants to be built at 26 other corn ethanol facilities in POET’s network. The JV will also license the technology to other producers in the US and worldwide using corn crop residue as feedstock. POET said if the technology is replicated at all of its 27 existing corn ethanol plants across the US, it could produce up to one billion gallons of cellulosic ethanol per year.

According to DSM, the JV is expected to be profitable in the first full year of production in 2014. In their conference call last Monday, DSM CEO Feike Sijbesma said the JV is expected to get more than $100m revenue from the Project Liberty plant. POET CEO Jeff Broin noted that their cellulosic ethanol will be cost-competitive with traditional corn ethanol.

Looking at ICIS Pricing, anhydrous corn ethanol spot price in the midwest last week was quoted in the range of $2.02-2.06/gal. I remembered asking Novozymes in 2010 what should be the cost of cellulosic ethanol to be competitive with corn, and back then the company said any cellulosic ethanol plant “should be able to reach between $2.25-$2.50/gal in a fully loaded production cost without subsidies to be competitive.”

This includes depreciation and a 10% return on investment (ROI) over 20 years for the plant investment. In the conference call, POET noted that the company’s ethanol cost production is below $3/gal. Since DSM “potentially” plans to produce enzymes onsite, the blog figured that should bring costs down.

By the way, the blog did ask DSM if there is any future synergy on producing biochemicals in any of the JV’s planned cellulosic ethanol biorefinery here in the US, and the answer was “maybe”. Well, ok, this is not really Sijbesma’s direct answer but he said that their biochemical business (such as bio-succinic acid) has a different route although he did add that there could be future consideration of other products.

It just made sense for the blog to ask this question given that DSM is in the bio-based chemicals business after all, and that several biorefinery technologies nowadays can produce both cellulosic ethanol and [or] biochemicals like these companies:

  • Zeachem’s Boardman, Oregon, facility can produce ethyl acetate and ethanol from cellulosics 
  • LanzaTech now acquiring Range Fuel’s cellulosic ethanol plant renamed Freedom Pines Biorefinery in Soperton, Georgia (LanzaTech’s processing tech could produce both ethanol and 2,3 butanediol); 
  • Cellulosic ethanol developer Coskata is also looking at biobased chemicals although the company did not mention any potential biorefineries producing both in the future;
  • Aemetis (formerly AE Biofuels), which has refocused its business into producing advanced biofuels and renewable chemicals
  • BlueFire Renewables‘ biorefinery technology could make a variety of products from biomass including ethanol, biobutanol, and chemical esters such as ethyl levulinate, ethyl lactate, and ethyl citrate.
  • Enerkem’s thermochemical process can convert municipal solid waste into ethanol, methanol and chemical intermediates

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