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DSM to License Technology After Biofuel Production Starts

Royal DSM NV, the Heerlen, Netherlands-based chemicals company, plans to license cellulosic ethanol technology after completing its first commercial plant, Chief Executive Officer Feike Sijbesma said.

The Iowa plant will be able to make 20 million to 25 million gallons of fuel a year from corn waste and will begin production by early next year, Sijbesma said in an interview today at Bloomberg’s offices in New York.

DSM expects the facility to be one of the first sites to turn corn husks and other types of crop waste into fuel at commercial volume, and demand is ensured by U.S. regulations that require oil companies to blend it with gasoline. The company is still tweaking the production process and will pursue licensing contracts once it’s ready for commercial production and yields are more predictable, Sijbesma said.

“We believe we can make better deals in half a year,” Sijbesma said.

DSM has been approached about licensing deals by companies that are already producing biofuel from food crops and “newcomers” to the industry, he said.

The company is developing the $250 million plant in Emmetsburg, Iowa, with Poet LLC, the second-biggest U.S. ethanol producer. He doesn’t expect it to reach full capacity in 2014. Once it’s up and running, DSM will consider building one or two more, he said.

Cellulosic ethanol is considered a second generation biofuel, an evolutionary step beyond fuel produced from food crops such as corn and sugar cane.

Federal Requirements

Under the U.S. Renewable Fuel Standard, gasoline and diesel producers are required to blend 36 billion gallons of biofuel a year into their products by 2022, including 16 billion gallons of cellulosic fuel. The policy is designed to promote energy independence in the U.S. and reduce the use of fossil fuels, Sijbesma said.

Oil companies have urged lawmakers to revise or repeal the policy, saying that it’s driving up food prices.

That claim is short-sighted, and using organic material to produce fuel is a better strategy than relying on fossil fuels that will eventually run out, Sijbesma said.

“We didn’t get out of the Stone Age because all the stones were gone,” he said. “We had better alternatives.”

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