The Holy Grail

Will Cellulosic Ethanol Replace Petroleum?

Some 30 years ago, Patrick Foody started on a mission. The Canadian entrepreneur and engineer heeded warnings of an impending worldwide food shortage and embarked on a quest to convert wood into food. The predictions didn’t pan out, but by then Foody was knee deep in his research.

Iogen needs a million tons of straw a year to make cellulosic ethanol.© GETTY IMAGES

Along came the energy crisis, and Foody shifted his focus from food to fuel, re-directing his years of biotechnology experience to explore a biological alternative to gasoline. But when oil prices suddenly dropped, he found himself producing a product that couldn’t compete in efficiency, price or convenience. It was more expensive, got fewer miles per gallon, and retail outlets were virtually nonexistent. Undaunted, Foody and his son, Brian, newly graduated from MIT, kept their company afloat by contracting government research projects, supplemented with profits siphoned from other business ventures.

The Foodys developed a steam explosion process, a first step in collapsing the tough cellulose fibers of wood chips, straw, or grass to extract the sugars (carbohydrates) needed to make ethyl alcohol, or ethanol.

The second step was a gift from nature. They had heard of a military problem in Guam during World War II—Army tents and soldiers" uniforms were rapidly rotting. Scientists implicated a tropical soil fungus called Trichoderma as the culprit. The Foodys tested the fungus" enzyme for breaking down wheat straw, and re-engineered it to speed up the decomposition rate.

By the time climatologists began to express concern about human-caused greenhouse gases, Brian Foody—now president of Iogen—and his research team were close to perfecting their lab process to convert wheat straw into a biofuel that reduced vehicle carbon dioxide (CO2) emissions by 90 percent: cellulosic ethanol. The timing was right.

With financial assistance from the Canadian government and Petro Canada, they made the leap from lab bench to demonstration plant. In 2004, the Iogen biorefinery was built in the suburbs of Canada’s capital, Ottawa, thousands of miles from the wheat fields of the prairies but close to the nation’s political decision makers. The plant could convert up to 40 tons of wheat straw into 1,800 gallons a day of ethanol.

After three years of perfecting the system, Brian Foody is ready to launch North America’s first commercial cellulosic ethanol plant. "We’re looking at Idaho, as well as Saskatchewan or Alberta," he says.

Iogen needs abundant and cheap supplies of raw material—the straw left over after wheat or other grains have been harvested. Western farmers today generally practice zero tillage, so the fibrous residue is simply left standing in fields. With Iogen, they will now have a market for the waste. Marketing Director Maurice Hladik reports the company has 10-year options to purchase a million tons of straw a year.

Blended with 90 percent gasoline for use in virtually every car, SUV or light truck on the road, or into E85 (85 percent ethanol) that can be burned by the six million flex-fuel vehicles thus far sold in the U.S., the ethanol era is emerging.

Unlike corn-based ethanol, no planting, irrigation, chemical fertilizers or pesticides are required to produce the raw material, beyond what goes into growing the grain crop. No farmland has to be taken out of food production to produce energy, and no marginal farmland or wildland is diverted to crop production. Also, no fossil fuel is needed to drive the process, another downside of today’s corn ethanol distilleries.

But cellulosic ethanol shares some of the same shortcomings as its corn-derived equivalent. Though cleaner burning than gasoline, it is less efficient, averaging 25 percent fewer miles per gallon or less. And although the number of retail outlets pumping E85 is growing, only a thousand or so exist in the U.S., mostly concentrated in the Midwest. Industry experts predict that will change if stations are offered $30,000 federal subsidies to add E85 storage tanks and pumps.

Of course, the cellulosic ethanol process will also consume energy as diesel fuel is burned to truck bulky bales of straw to the biorefinery and the finished product to the nation’s 176,000 retailers.

And building an operational plant will be expensive—up to 10 times the cost of the average corn ethanol plant. Enter giant oil producer Royal Dutch Shell and Wall Street investors Goldman Sachs, contributing $76 million in the last year in exchange for minority stakes.

Brian Foody’s vision is to prove the viability—and profitability—of a full-scale cellulosic ethanol operation, and then license other companies to use his family’s patented enzymes and processes. Some call this the Holy Grail of transportation fuels: A technology that can be applied virtually anywhere in the world, uses a renewable waste as its raw material, supplies its own power, and is a boon to agriculture-based economies.

Sod turning for Iogen’s first fully operational cellulosic ethanol plant is scheduled for late this year, most likely in Idaho.

If the plant is successful, it won’t be the last. When Joanna Schroeder of the Ethanol Promotion and Information Council (EPIC) was asked who is closest to making cellulosic ethanol a reality, she didn’t hesitate. "Iogen," she said, "up in Canada."

—Glenn Blouin