Nov 30 (Bloomberg) -- DuPont Co., the most valuable U.S. chemical maker, is moving forward with a bio-refinery for churning corn crop waste into ethanol after companies such as BP Plc and Coskata Inc. have halted or redesigned similar U.S. projects that would convert non-food sources into biofuel.
Fagen Inc. began construction today on DuPont’s first commercial cellulosic ethanol project in Nevada, Iowa, that will process 375,000 tons of corn stalks and leaves a year into 30 million gallons of ethanol when completed in mid-2014, DuPont said in an e-mailed statement.
The Wilmington, Delaware-based company is investing about $200 million to demonstrate the technology for potential licensees, James Collins, president of DuPont’s industrial biosciences unit, said yesterday by telephone.
“We’re building the first one as a showcase to prove the technology is viable,” and after that “we expect to license,” Collins said.
DuPont, which makes Kevlar and nylon, last year acquired Danish food-ingredient maker Danisco A/S and its industrial enzyme business, Genencor. It’s vying with companies including Novozymes A/S and Royal DSM NV to provide capability to global biofuel producers as Chief Executive Officer Ellen Kullman shifts her company’s focus to products that help meet global demand for food, energy and security. Collins has said sales in the industrial biosciences unit may increase to $1.2 billion this year from $700 million in 2011.
The market for U.S. biofuels is buoyed by an Environmental Protection Agency regulation that requires oil companies to blend 36 billion gallons (136 billion liters) of biofuels a year with their fuel products by 2022. The mandate, known as the Renewable Fuel Standard, or RFS, calls for 16 billion gallons a year of cellulosic biofuels by 2022, made from crop waste, woody biomass, household trash or energy crops.
“Our estimates are that we could need 100 of these facilities over the next 15 to 20 years,” Collins said. “We expect DuPont technology to play a substantial role,” he said.
Start of construction for the Nevada facility comes after several setbacks for the cellulosic ethanol industry this year, including BP’s cancellation last month of its first commercial cellulosic ethanol plant in Florida, which was first announced in 2008. In July, Coskata said it was pivoting from biomass to natural gas as its primary feedstock due to lower costs and abundance.
The groundbreaking also coincides with criticism of the RFS from the American Petroleum Institute, an oil and gas trade group, which on Tuesday called for the mandate to be repealed. There have been minimal volumes of cellulosic ethanol sold in the U.S., and the government for three years in a row has reduced blending targets for cellulosic biofuels due to lack of industry capacity.
“The RFS was an absolute phenomenal piece of legislation” that created the existing corn-based ethanol industry, Collins said. “To change something that has been that successful, it doesn’t make a lot of sense to DuPont,” he said.
Other cellulosic ethanol producers in addition to DuPont are scaling up production. Poet LLC, the largest U.S. corn-based ethanol producer, is building its first cellulosic ethanol plant in Iowa under a venture with DSM and plans to deploy the technology at its fleet of 27 conventional plants and license to third parties. Abengoa SA expects to open its first plant next year in Kansas, and Ineos Bio expects to begin production at its first facility in Florida before the end of the year.
“We’re about ready to take that next big step in the next wave of growth,” Collins said. “Within five years we’ll have the capacity to meet the mandate,” he said.
DuPont’s Nevada facility scales up operations from its pilot plant in Tennessee, which has been operating since 2009 and originally was a joint venture with Danisco.
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