Cheaper Butanol from Biomass

A startup has raised $25 million for inexpensively producing biofuel.

Cobalt Biofuels, a startup based in Mountainview, CA, has developed a cheap way to make butanol from biomass. Last week, the company announced that it had raised $25 million to expand from a small laboratory-scale production to a pilot-scale plant that can produce about 35,000 gallons of fuel per year.

"Our models tell us it is a very low-cost process that can be competitive with anything on the market today," says Pamela Contag, the company's founder and CEO. The process is cheaper because it uses improved strains of bacteria to break down and ferment biomass, as well as improved equipment for managing fermentation and reducing water and energy consumption, she says.

Butanol could help increase the use of biofuels, since it doesn't have the same limitations as ethanol, the primary biofuel made in the United States. It has more energy than ethanol: a gallon of butanol contains about 90 percent as much energy as a gallon of gasoline, while ethanol only has about 70 percent as much. What's more, while ethanol requires special pipelines for shipping, butanol can be shipped in unmodified gasoline pipelines. And butanol can be blended with gasoline in higher percentages than ethanol without requiring modifications to engines.

Cobalt Biofuels joins a handful of other companies developing biobutanol. The biggest such effort comes in the form of a partnership between DuPont and BP: the companies plan to be selling commercial quantities of butanol made from sugar beets by 2010. Other companies developing biobutanol are Gevo, a startup based in Englewood, CO, that is commercializingadvances from UCLA, and Tetravitae, based in Chicago, which is commercializing advances from the University of Illinois. In spite of their progress, Andy Aden, a research scientist at the National Renewable Energy Laboratory, in Golden, CO, says that no company has demonstrated yet that it can make butanol cheap enough to compete in the market.

Cobalt Biofuels uses the bacteria Clostridium to break down components of plant matter, including cellulose, hemicellulose, and starch, and produce a combination of butanol, acetone, and ethanol. That is nothing new: Clostridium naturally produces these chemicals and was employed in the early 1900s to make butanol for use in solvents and to make acetone for explosives and other products. What's new, Contag says, is that a combination of fuel prices, government biofuel mandates, and the company's new technology have made butanol competitive as a fuel.

One of Cobalt Biofuels' key advances is a technique for genetically engineering strains ofClostridium so that they produce a luminescent protein whenever they produce butanol. "When the Clostridium are happy and producing butanol, they're also producing light," Contag says. When they're paired with light detectors, the company can quickly sort through new strains of the bacteria, as well as tailor their environment, to increase production. The company has further increased butanol production by engineering a bioreactor in which biomass flows in, the bacteria processes it, and a mixture of primarily butanol and water flows out.

While increasing the amount of butanol produced can decrease costs, two other factors are also important: the consumption of energy, and the consumption of water. Cobalt Biofuels has reduced both of these by 75 percent. To reduce energy, the company has licensed a new technology, called vapor compression distillation, for separating the butanol and water. The addition of pressure to the distillation process, together with the use of an effective heat exchanger that reduces wasted heat, lowers energy consumption. To reduce water use, the company has turned to proprietary water purification and recycling systems.

Eventually, the company plans to produce butanol using waste from paper manufacturing and sugar refining, as well as other sources, and then sell it as a fuel additive for reducing carbon monoxide emissions. As Cobalt Biofuels scales up production, it plans to sell the butanol as a substitute for gasoline.

Cheaper to invest in SE Asian businesses: CIMB

IT is less expensive to acquire equities or put in money in Southeast Asia (SEA) businesses, according to a private equity and venture capital management company.

"Investors are also now looking at SEA with some interest because they find the fundamental still there. There is growth and the demographic is positive," said the head of CIMB Private Equity and Venture Capital, Darawati Hussain.

She said investors are also finding China, Vietnam and India to be quite expensive to deploy their funds, "so there is some interest in looking at investment opportunities in other countries in this region, including Malaysia." 

"Sometimes when you compare the pricing that you have to pay to get a stake in some of the businesses (in the three countries), it is a lot higher than you usually have to pay to get equity in SEAs businesses," she said.

Speaking to reporters on the sidelines of the Asian Venture Capital Journal Private Equity & Venture Forum, Darawati noted that there are challenges to Malaysian entrepreneurs and businesses in trying to compete in the global stage.

"They have the challenge now because they may not be big and they cannot go to the bank to get further lending as their asset base is quite low.

"So private equity and venture capital are very important to businesses which are trying to grow their businesses," she said.

Nevertheless, she said Malaysia has a lot of funding, made available from the government, close to RM2 billion to invest in early stage and growth stage companies.

"In Malaysia, the (private equity and venture capital) industry is still quite small. As we are trying to develop more and more local firms to support and provide funding to local businesses, the government has been very instrumental in providing funding as well." 

CIMB Private Equity & Venture Capital is a subsidiary of CIMB Group, with US$400 million funds under management, primarily third party funds. — Bernama

Palm oil falls to almost 2-year low

PALM oil declined to the lowest in almost two years as crude oil fell for a second day on concern that a US government plan to invest US$250 billion in banks won't be enough to spur economic growth.

Palm oil, used mainly for cooking, tracks crude as analysts consider it viable as biofuels when oil trades above US$80 a barrel. Crude declined 0.8 per cent to US$78 a barrel in after-hours trading on the New York Mercantile Exchange at 11.42 am Singapore time.

Palm oil for December delivery dropped as much as 6 per cent to RM1,738 (US$495) a metric ton EXW on the Malaysian Derivatives Exchange and traded at RM1,752 at 11.50 am local time. Futures have plunged 61 per cent from a record in March.

"If crude oil slides to US$60 a barrel, crude palm oil would average RM2,220," said Ben Santoso, a plantation analyst at DBSVickers Securities Singapore.

Palm oil exports from Malaysia, the largest producer after Indonesia, fell 9.1 per cent to 560,210 tons in the first 15 days of October compared with the same period in September, Intertek, an independent surveyor, said today. Exports fell 12 per cent in September to 1.29 million tons, the first drop in three months, the Malaysian Palm Oil Board said October 10.

Indonesia and Malaysia, which account for 90 per cent of the world's palm oil production, this week proposed export measures to reduce inventory to support prices. Both countries, which are oil producers, also passed measures to introduce biofuels for domestic use to absorb surpluses.

Palm oil for January delivery in Dalian dropped the daily limit of 5 per cent to 5,034 yuan (US$784) a ton. - Bloomberg

Profit in the Canada Biofuel Industry

Canada Biofuels Market Potential
View Report Details

Biofuel is any fuel that is derived from biomass - recently living organisms or their metabolic byproducts, such as manure from cows. It is a renewable energy source, unlike other natural resources such as petroleum, coal, and nuclear fuels. 

Ethanol is manufactured from microbial conversion of biomass materials through fermentation. Ethanol contains 35% oxygen. The production process consists of conversion of biomass to fermentable sugars, fermentation of sugars to ethanol, and the separation and purification of the ethanol. Fermentation initially produces ethanol containing a substantial amount of water. Distillation removes the majority of water to yield about 95% purity ethanol, the balance being water. This mixture is called hydrous ethanol. If the remaining water is removed in a further process, the ethanol is called anhydrous ethanol and is suitable for blending into gasoline. Ethanol is "denatured" prior to leaving the plant to make it unfit for human consumption by addition of a small amount of products such as gasoline. 

Biodiesel fuels are oxygenated organic compounds - methyl or ethyl esters - derived from 
a variety of renewable sources such as vegetable oil, animal fat, and cooking oil. The oxygen contained in biodiesel makes it unstable and requires stabilization to avoid storage problems. Rapeseed methyl ester (RME) diesel, derived from rapeseed oil, is the most common biodiesel fuel available in Europe. In the United States, biodiesel from soybean oil, called soy methyl ester diesel, is the most common biodiesel. Collectively, these fuels are referred to as fatty acid methyl esters (FAME). 

Biofuels have become a growth industry with worldwide production more than doubling in the last five years. The rapid expansion of ethanol production in the United States and biodiesel production (and to a lesser extent, biogas) in Germany and other countries in Western Europe has created a biofuels frenzy that has affected many countries, including Canada. Many measures have been used to stimulate production and consumption of biofuels, including preferential taxation, subsidies, import tariffs and consumption mandates. Recently, Canadian federal and provincial governments have announced consumption mandates and subsidies to assist rapid expansion of biofuel production in Canada. 

Canada has considerable natural resources and is one of the world's largest producers and 
exporters of energy. In 2006, Canada produced 21.1 quadrillion British Thermal Units (Btu) of total energy, the fifth largest amount in the world. Since 1980, Canada's total energy production has increased by 86%, while its total energy consumption has increased by only 48% during that period. Almost all of Canada's energy exports go to the United States, making it the largest foreign source of U.S. energy imports: Canada is consistently among the top sources for U.S. oil imports, and it is the largest source of U.S. natural gas and electricity imports. Recognizing the importance of the energy trade between the two countries, both participate in the North American Energy Working Group, which seeks to improve energy integration and cooperation between Canada, the U.S., and Mexico. 

The report Biofuel Industry in Canada is a complete coverage of the ethanol and biodiesel 
market in the country. 

GET YOUR COPY NOW: Download PDF 

Palm oil for public transport vehicles to shore up prices

NST Online » Local News
2008/10/14

PETALING JAYA: All diesel-powered public transport vehicles may have to use five per cent blend of biodiesel (B5) to help shore up palm oil prices.

Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said this would be decided by the Cabinet Committee on Competitiveness of Palm Oil on Oct 21.

His ministry is pushing for a B5 mandate where five per cent of domestic diesel consumption will be replaced by palm-biodiesel. 

"If the B5 blend proposal is approved, it would create new demand for about 500,000 tonnes of palm oil per year," Chin said after officiating the International Rubber Research & Development Board's Natural Rubber Conference 2008 here yesterday. 

In the last seven months, palm oil prices have plunged by 60 per cent to current levels of around RM1,800 per tonne. 
Oil palm planters have been appealing to the government to take measures to shore up prices. 

Rising fertiliser cost in the last two years have raised oil palm planters' production cost to between RM1,000 and RM1,500 per tonne, depending on the maturity of the trees. 

If palm oil prices were to fall to RM1,500 per tonne, some oil palm planters may find it no longer profitable to harvest the palm fruits. 

The cabinet has to decide who will bear the extra cost if crude palm oil becomes more expensive than diesel. 

Ministry officials said oil companies would be briefed if they had to bear the cost of blending palm biodiesel into regular diesel at their depots. 

Addressing the Federation of Hakka Associations of Malaysia's annual general meeting in Ipoh on Sunday, Chin said Indonesia was already successfully using biodiesel.

"We have to act fast, especially since crude palm oil prices have been hovering at about RM1,800 per tonne lately. Our neighbour produces a much greater volume of crude palm oil but they are able to absorb it locally.

"We, however, depend on exports so when there's an oversupply and limited takers, we could end up with a greater margin of losses than Indonesia."

Chin said Indonesia had begun mixing three per cent methyl ester with every litre of diesel for industrial purposes from Oct 1.

"Jakarta has already implemented the mixture in the transportation sector and it is only a matter of time before it is used in all 17,000-odd islands while we could be left behind."

In another move to reduce the current oversupply of palm oil, the government has decided to raise the annual export quota of tax-free crude palm oil (CPO) to three million tonnes from 1.5 million tonnes. 

This means big palm oil companies such as Felda Group, Sime Darby Bhd, IOI Corp Bhd, Kuala Lumpur Kepong Bhd, United Plantations Bhd, Kulim Bhd and Kwantas Bhd, which have refineries outside Malaysia, can ship out more crude palm oil without being taxed. 

The government controls outflow of crude palm oil by imposing heavy tax to encourage local refining. 

"We are also stepping up efforts to get oil palm planters to chop down unproductive trees and replant with higher yielding seedlings," Chin said. 

"With these three measures (biodiesel mandate, increasing the CPO export quota and replanting), we aim to reduce stock levels to 1.5 million tonnes." 

Malaysia and Indonesia produce almost 90 per cent of the world's supply of palm oil.

RM1.5b fund for ICT, biotech

MALAYSIA Debt Ventures Bhd (MDV), a wholly-owned unit of Minister of Finance Inc, has launched its RM1.5 billion Second Fund, of which RM1 billion will be for information and communication technology (ICT) and the rest for biotechnology.

Managing director / chief executive officer Md Zubir Ansori Yahaya said the second fund would be sourced domestically and raised via a RM1.5 billion Islamic Medium-Term Notes programme.

"This is a 15-year programme and we are dividing it into two issuances. The first is for RM500 million, which we have already got the money last month," he told reporters after the launch of the fund today.

The launch was witnessed by Deputy Finance Minister Datuk Kong Cho Ha who represented Second Finance Minister Tan Sri Nor Mohamed Yakcop. Also present was CIMB Group's chief executive officer Datuk Seri Nazir Razak.

CIMB Investment Bank Bhd is the lead arranger and syariah adviser. Bank Islam Malaysia Bhd and RHB Investment Bank Bhd are the joint lead-managers.

Md Zubir said the average cost of fund was 4.9 per cent.

He, however, declined to disclose if the same cost would be applicable for the remaining fund.

MDV expects the first tranche to be used up by September 2009.

"MDV has not seen much reduction in our list despite the global slowdown. I think with the credit crunch, more and more customers are expected to come to MDV for loans as we offer flexibility in the loans applications and payments," he said.

Md Zubir said the issuance of the rest of the RM1 billion would depend on the demand and market conditions.

"The latest fund will be an alternative to the existing conventional financing — syariah-compliant financing programme.

"The fund will be used to create new and suitable Islamic products and services to add variety and choice for our customers. It is expected to enhance MDV's revenue channels and flow," he said. — Bernama

Wood fiber supplies increase, prices decrease

By Ron Kotrba

Web exclusive posted Oct. 8, 2008 at 9:58 a.m. CST 

After a 13-year record high in wood fiber costs for western U.S. pulp mills just last quarter, prices retreated significantly in the third quarter of 2008 as supplies grew, said Hakan Ekstrom, president and owner of Wood Resources International, which publishes North American Wood Fiber Review. Despite the 13 percent retreat in prices between the second and third quarters, Ekstrom said those prices in the West are still 25 percent higher than they were a year ago. 

"Prices started to move up first quarter this year substantially," Ekstrom told. "This was mainly because the pulp mills out here [in the West] were running out of chips – the inventory situation was pretty tough for them – and the saw mills started cutting back production so they delivered less residual chips to the pulp mills. So they were fighting for those volumes and in some cases they had to go further for those volumes, which increased transport costs." 

For the most part, the biomass-to-energy sector has had minimal influence on wood supply and pricing, but Ekstrom said moving forward that is likely going to change. "More wood is going in that sector," he said. "The marginal volumes going into the energy sector with be competing with oriented Strand board (OSB) plants, pulp mills and the like, and is increasingly going to be an issue."

The aftermath of this year's intense hurricane season also had an effect on raw material wood supplies to saw and pulp mills in the southern United States. The season's winds and rains put a damper on logging and transport activity during the third quarter – a time when mills generally try to build up winter supplies. 

"So far it's been too wet to haul," Ekstrom said. "Between now and through next month they need the weather to be good to try and catch up. A lot depends on the weather." If the weather doesn't cooperate, prices next spring may be higher as a result, Ekstrom said. 

The Northeast continues to see record-high hardwood prices – an astounding 45 percent higher than one year ago – as a shortage of loggers and increasing competition for hardwood drive prices up. 

Palm oil futures fall 8.5pc

JAKARTA: Malaysian crude palm oil futures fell as much as 8.5 per cent today as falling crude oil dimmed prospects for the vegetable oil for alternative energy and amid concerns about slowing demand due to a global economic meltdown.

The benchmark December contract on the Bursa Malaysia Derivatives Exchange stood at RM1,759 (US$500) per tonne at 0328 GMT after previously falling RM161, or 8.5 per cent, to RM1,729 (US$493) a tonne, a level unseen since November 15, 2006.

"Crude oil fell sharply which raised concern that biofuel may no longer be competitive," said a dealer in a local brokerage firm, adding the market expected crude oil could fall to US$80 a barrel soon.

Oil prices tumbled by more than US$4 a barrel today, extending losses to fresh one-year lows below US$83, as traders feared the credit crisis would send the global economy into recession and hurt fuel demand. 

Crude for November delivery was down US$4.26 at US$82.33 a barrel by 0227 GMT, having earlier fallen to US$82.10 a barrel.

US grains fell sharply in early Asian trading today, led by a more than 4 per cent drop in soybeans, also adding to pressure on palm.

Chicago Board of Trade November soybeans fell 4.7 per cent to US$9.33-3/.4 per bushel by 0404 GMT. 

Malaysian crude palm oil stocks rose 5.5 per cent in September to 1,949,498 tonnes from a revised 1,848,130 tonnes in August, official crop agency Malaysian Palm Oil Board said today.

A Reuters poll had forecast palm oil stocks to climb 9.3 per cent in September from a month earlier. 

Cargo surveyors Societe Generale de Surveillance and Intertek Testing Services will report October 1-10 export data on the same day. - Reuters

BioCentric Energy to produce algae oil in China

By Erin Voegele

Web exclusive posted Oct. 7, 2008 at 2:00 p.m. CST 

BioCentric Energy Algae LLC, a subsidiary of California-based BioCentric Energy Inc., is developing an algae oil project in the Guangdong Providence of China. 

According to Dennis Fisher, president and chief executive officer of BioCentric Energy, the Chinese government has granted the company 50 hectares (110 acres) of land adjacent to an industrial site in Wahan, China. 

The industrial site emits 40,000 metric tons of carbon dioxide annually through its smokestack. BioCentric Energy will capture the carbon dioxide and feed it to an algae solution contained within 6.5 miles of 25 inch pipe. The piping system will be constructed in pod formation, with each pod containing 480 feet of pipe. Fisher anticipates BioCentric Energy will have 40 pods producing oil by June 2009. Once complete, the facility is expected to generate approximately 80 tons of algae biomass per day. 

Fisher said the algae utilized by the project will generate approximately 47 percent oil, which will be extracted and sold to biodiesel producers. The remaining algae biomass will be converted into biogas used to fuel microturbines and produce electricity. Engineering on the project has already begun. Construction of the facility is expected to begin in December. 

U.S. could become largest biodiesel market by 2012

By Erin Voegele

Web exclusive posted Oct. 8, 2008 at 9:44 a.m. CST 

California-based SRI Consulting, a business research service for the global chemical industry, released its global 2008 Biodiesel report on Sept. 30. According to the report, the United States is currently positioned to become the largest biodiesel market in the world by 2012, consuming nearly 19 percent of the world's biodiesel supply. Additionally, the report states that the global biodiesel industry grew 50 percent between 2002 and 2007, and is positioned to grow 30 percent between 2007 and 2012. 

SRI's biodiesel report is designed to provide comprehensive timely information on the biodiesel industry and global industry trends. According to SRI spokeswoman Susan Wright, the report is typically updated every three years. However, due to the proliferation of changes in the marketplace, this update has been issued after only two years. 

The report projects a slower rate of growth for the industry over the next several years due to several factors, including the fuel versus food debate and the rising costs of feedstocks. Changing regulatory environments, the slowdown of the global economy and the current financial crisis are also expected to contribute to a slower growth rate.

The report also demonstrated a shift in global biodiesel patterns. Five years ago Europe was the dominant player, with 83 percent of the capacity. By 2007, the European share had dropped to approximately 46 percent as North American and Asian production grew. In addition, the report covers the supply and demand of biodiesel in North America, Central and South America, Europe, Asia, Africa, the Middle East and Oceania. It also provides in-depth coverage on supply and demand, legislation, feedstock production technologies, as well as environmental and agricultural issues for more than 75 countries. The report detailed 19 years of historical data and five years of projected supply and demand figures on a country by country basis.