Biotechs try to take corn out of ethanol

By PAUL ELIAS, AP Biotechnology Writer

Scientists are engineering microscopic bugs to extract fuel from a variety of non-corn sources, including the human urinary tract, a Russian fungus and the plant responsible for tequila.

The quest for alternative energy is more complicated than just finding a replacement for petroleum. Scientists and a growing number of biotechnology companies are attempting to remove corn from the ethanol equation because it has created huge demand for the global food staple.

"There is enormous growth potential" for alternative fuels, said McKinsey & Co analyst Jens Riese. "But we need to be smarter than just building the next corn ethanol plant."

Researchers are racing against time. Already, 114 U.S. ethanol biorefineries are in operation and 80 more are under construction. Producers made nearly 5 billion gallons of ethanol last year, a 25 percent increase from the previous year.

In February, the U.S. Energy Department awarded $385 million in grant money over four years to six projects dedicated to producing so-called cellulosic ethanol, which avoids the corn problem by making fuel from straw and other inedible agricultural leftovers. Cellulose is the woody material in branches and stems that makes plants hard.

Breaking cellulose into sugar to spin straw into ethanol has been studied for at least 50 years. But the technological hurdles and costs — specifically the expense genetically engineering exotic microbes to produce enzymes — have been so daunting that most ethanol producers instead relied on heavy government subsidies to squeeze fuel from corn.

That's now changing. Enzyme costs have fallen from about $5 a gallon to less than 20 cents a gallon. Analysts said once enzyme prices gets below a dime, cellulosic ethanol will become affordable.

"There really has to be an incredible improvement in the enzyme cost," said Kevin Baum, an executive vice president at Diversa Corp. "This can't be underestimated."

The growing number of biotechnology companies redirecting resources to capitalize on ethanol's popularity said they are getting close to making cellulosic ethanol profitable.

"It will be a very large chunk of what we do," said Per Falholt, an executive vice president with Novozymes Inc., an enzyme maker and the largest industrial biotechnology company. "It has the potential to transform the company."

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