Cellulosic Ethanol Projects Enhance Viability Through End-Market Flexibility

21 03 2011

Regardless US Department of Agriculture efforts to continue funding for biofuel programs (“USDA opens application window for biofuel funding programs”), individual projects associated with cellulosic ethanol have expanded their end-market options to increase their probability of operational viability.  In short, investors are asking, “how can we actually profit from wood-based ethanol projects?”

Currently, cellulosic ethanol projects rank last with respect to operational viability in the US according to Forisk’s wood bioenergy screening methodology.  While wood pellet and wood-to-electricity projects use proven technologies, we do not, today, have a cellulosic ethanol facility operating successfully at commercial scale.  Still, of the 445 operating and announced wood bioenergy projects in the US, 33 continue to pursue the conversion of wood to liquid fuels.  For example, ZeaChem has made significant progress in the construction of its cellulosic ethanol demonstration plant in Oregon. Ultimately, researchers will solve the wood-to-transportation fuel technical issues.  Meanwhile, those financing cellulosic ethanol and related projects seek ways to generate cash and develop markets.

For example, start-up Anellotech is developing a catalytic pyrolysis technology that converts wood waste and other agricultural residues for use in the chemicals industry and as fuel additives for gasoline producers (Anellotech’s technology is profiled here). Anellotech is of interest because it indicated that its technology may ultimately be applied to produce  transportation fuels such as gasoline and diesel.

Canadian firm Lignol Energy has refocused away from ethanol towards other chemical products that could be produced from wood wastes (“Lignol Energy hunts for new markets for wood waste products“).  While the firm is marketing a pure form of lignin and exploring applications for, as an example, replacing more expensive carbon fibre products, this road too remains challenging.  Researchers have long pursued lignin applications without clear, public breakthroughs to date.  That said, the conversion of wood to chemicals retains immediate promise.

To explore further the timber market and investment implications of cellulosic ethanol, note that Forisk and the Schiamberg Group have conducted a multi-client study to assess the wood-based liquid transportation fuel sector in the continental US.  This research evaluates projects based on technology risk, with profiles of firms, wood markets and technologies. For more about the study, “Transportation Fuels from Wood: Investment and Market Implications of Current Projects and Technologies,” or to purchase it, click here.

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