Ethanol is a clean burning, high octane, renewable fuel produced from abundant agricultural and cellulosic feed-stocks. Ethanol is made by fermenting and then distilling starch or sugar rich waste from sugar-cane, maize, sorghum, and wheat and other grains. With shift in focus towards cellulosic ethanol, there is a possibility of deriving fuel ethanol from almost any type of biomass waste that is rich in cellulosic content. Cellulosic ethanol is produced from agricultural wastes such as corn stover, sugarcane baggase and also from wood, grasses, or the non-edible parts of plants.
The most potential application of bio derived ethanol is its utility as a fuel blend in gasoline engines. E10 is a blend of 10% ethanol and 90% gasoline. It is approved for use by every major automaker in the world. E85 is a blend of 85% ethanol and 15% gasoline, and is designed for use in Flex-Fuel Vehicles (FFVs) only. Other than fuels, ethanol has many other applications in industrial sectors such as chemicals, perfumes, paint, cosmetics. It is also uced for medical purposes as tinctures, medical wipes and in most common antibacterial hand sanitizer gels.
While bioderived ethanol could be either starch based or cellulosic, the analysis of business opportunities presented in this section is to a large extent specific to cellulosic ethanol as it is the fuel for future and the lions share in waste to ethanol industry and market segment belongs to cellulosic ethanol.
The sourced feedstock is initially subjected to size reduction so as to make it easier for subsequent handling. The feedstock is processed to homogenize the bulk density and to reduce the composition and pre treatment impact. Biochemical (Fermentation) Conversion involves ethanol production through the pretreatment and hydrolysis process while thermochemical conversion involves ethanol production by gasification.
Business Opportunities from the Value Chain
While cellulosic ethanol value chain opens up diverse avenues of opportunities, following are the steps which are more preferred for investments than others because breakthroughs in these stages could significantly enhance the commercial viability of cellulosic ethanol.
- Pretreatment - Low cost enzymes and/or little or no enzymes
- Integrated Biochemical Plant Systems for Homogenous Waste Streams - Full value is recognized from systems that can produce high volumes of low cost sugar and convert sugars into ethanol at the highest possible concentrations
- Integrated Gasification Systems for Homogenous and Non Homogenous Waste Streams Full value is recognized from producing large volumes of low cost syngas and catalytically converting syngas into ethanol or other biofuels.
- Ethanol Recovery
- Alternatives to distillation
- Improved Catalysts
- Energy Reduction/Water Reduction Technologies
The primary advantage provided by cellulosic ethanol is the wide variety of biomass that can be used as feedstock. Wasts such as Municipal solid waste, Yellow/trap grease, Paper pulp, urban wood waste could be used. Also, agro wastes including Corn cobs, fiber, and stover, Grain, rice, and cereal straw, Leafy material and Sugarcane bagasse can be used as feedstock. Since ethanol could be produced from a diverse list of feedstocks, the opportunities for feedstock suppliers are indeed promising. With increasing pressure biofuel mandates, the market for ethanol and hence the demand for feedstock is poised to grow at an exponential pace. Feedstock supply would be the most attractive of all business opportunities and would be the sweet deal for suppliers.
Opportunities in Manufracturing Sector
Manufacturing of equipments and machineries such as Distillation equipment, processing equipment for waste biomass, large gasifiers, and pretreatment equipment for cellulosic biomass is in strong demand especially because it is a nascent sector. With increasing demand to meet RFS and other biofuel mandates, new companies are emerging and the existing companies are up scaling their production. Increase in production capacity translates to increasing need for machineries, equipments and components. With the industry poised to grow at a brisk pace, so will the opportunities in the manufacturing sector.
While most cellulosic ethanol producing companies are making attempts towards vertical integration, the opportunities in manufacturing sector would still stay unaffected, since most of the companies which attempt for vertical integration are concentrating towards energy crop production along with ethanol production.
One of the unique opportunities on offer due to the booming cellulosic ethanol industry is for enzyme manufacturing. With biochemical route requiring loads of enzymes, the manufactures can harness the opportunities to build a brand name and reputation in the market. With increasing competition in enzyme supply for ethanol industries, manufactures have to come up with unique and efficient enzymes that could yield high levels of fermentable sugars from feedstock.
Being a budding industry with lots of bottle necks to be solved, consulting service receives paramount importance here. Consultants are responsible for developing cellulosic ethanol plant from concept to commissioning and they undertake a wide range of activities including planning, design, plant development, automation etc. There are consultants who also take up the role of establishing access to capital for investment. They also assist in construction, operation and maintenance of plants.
There is also another type of consulting, which is completely technical and involves selection of right feedstock, optimization of the conversion process to be employed based on the feedstock and cash reserves, selection of efficient enzymes and microbes for the biochemical conversion process etc. There is a need to have sound technical expertise and reputation to seize the opportunities on technical consulting even though the opportunities on offer is considerably high.
Since companies are more oriented towards vertical integration, logistics is not considered a potential opportunity in this industry.
Global Scenario and Market segment
The market for using ethanol as a fuel has highest growth potential. Many countries have attempted to replace some of their gasoline consumption with ethanol by mixing certain percentage of ethanol into gasoline to achieve the resulting product called gasohol. Since 2005, the United States of America have been the largest producer of ethanol. In 2009, U.S and Brazil together produced about 10.6 billion gallons of fuel, accounting for 89% of the world’s production. As of January 2011, the weekly ethanol production in the U.S alone was reported to be 37.3 million gallons. More recently, a new bio energy plant at Florida is expected to produce 8 million gallons of ethanol a year and 6 megawatts of power from local yard, vegetative and household waste.
Ethanol fuel production is a good locally-based industry, providing local jobs and a market for local materials, and helping to keep money and investment within the community. With research breakthroughs in cellulosic conversion technology hitting headlines almost every week, the growth of industry needs no further explanation. Approximately 50 billion gallons of Cellulosic ethanol would be required to supply 30% of U.S gasoline demand by 2030. Cellulosic ethanol could account for up to 20 percent of the world's transport fuel market by 2030.
The U.S government expects 220 cellulosic biofuel plants to be built by 2020, representing about $100 billion over the next decade. Europe, Brazil, and other highly developed countries will also continue to drive demand for cellulosic biofuels. These estimates highlight the enormous opportunity for cellulosic biofuels to become one of the most important sources of fuel.