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World’s Largest Cellulosic Ethanol Facility to be Built in Highlands County

Highlands County, FL, soon will be home to the world’s largest facility to make biofuels from inedible plants, including grasses, according to an announcement from BP PLC and Verenium Corp.

The British energy giant is investing $112.5 million in Verenium and received a 50% stake in licensing the company’s technology as part of the project. The new facility, which will cost an estimated $300 million, will be 25 times larger than Verenium’s pilot biofuels project with BP in Mermentau, LA, which was commissioned early this year and currently is the world’s largest cellulosic ethanol operation.

Verenium, based in Cambridge, MA, said the Florida facility will make 36 millions of gallons of fuel a year and is aiming for a cost of $2 a gallon, roughly on par with gasoline. The plant will use Verenium’s specialty enzymes to turn renewable grasses grown adjacent to the plant site into cellulosic ethanol, the company said. The project has received a $7-million grant awarded under the Florida Agriculture and Consumer Services Commission’s $25-million “Farm to Fuel” initiative.

The rapid move from a demonstration-scale refinery to a full-scale biofuels facility reflects the growing interest in cellulosic ethanol, which comes from breaking down plant material and turning it into ethanol that can be used to displace crude-oil-based fuels in cars and trucks.

The joint venture between BP and Verenium also is planning to build a second full-scale facility on the Gulf Coast. Other oil giants, including Exxon Mobil and Royal Dutch Shell are believed to be aggressively pursuing development of next-generation biofuels. The push for biofuels also is expected to get a big boost from the Economic Recovery stimulus bill recently passed by Congress and signed by President Obama. The bill allocates more than $12 billion to fund grants and loans for alternative energy projects. There has been increased interest in recent months on cellulosic ethanol, made from inedible grasses and leftovers from agricultural production, after the growing use of corn-based ethanol was blamed last year for using up crops and driving food costs higher. Verenium’s Louisiana plant uses crushed sugar-cane stalks, and the Florida facility will use grasses.

The U.S. government mandates requiring big increases in the amounts of renewable fuels to be used in the nation’s gasoline tanks—at least 16 billion gallons of cellulosic ethanol by 2022, representing about 7% of total transportation-fuel consumption, up from a negligible amount today, according to industry analysts. Abengoa SA, a Spanish company, is building cellulosic ethanol plants in Spain and Kansas.

According to a report recently released by Sandia National Laboratories and General Motors Corp., large-scale production of advanced biofuels beyond the level of the government’s Renewable Fuel Standard is achievable and sustainable by 2030. The report, entitled The 90-Billion Gallon Biofuel Deployment Study, investigated the feasibility of increasing biofuel production targets to 90 billion gallons.

The U.S. Renewable Fuel Standard sets a target of producing 21 billion gallons of advanced biofuels by 2022. This Sandia/GM study shows that a modest target of 45 billion gallons of cellulosic biofuels by 2030 can be achieved by maintaining the same pace of technology development and using available crop and forest residues as well as dedicated energy crops and trees.

The report also concludes that as technology development and biomass availability accelerate, targets up to 90 billion gallons can be reached. This could reduce direct U.S. greenhouse gas emissions equivalent to 87 coal-fired electricity plants.

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