With oil prices higher than they've ever been - at more than $60 a barrel - there's been a sudden increased interest from the public concerning biofuels.

One thing is clear: The U.S. government would like to reduce dependence on foreign oil. By using biotech enzymes to break down crop biomass, and converting it into ethanol, the biotech industry may for the first time have an economical process to compete with fossil fuels.

But that does not mean the country would someday be completely independent of foreign oil.

"I wouldn't go that far at all," said Brent Erickson, the executive vice president of industrial and environmental matters at the Biotechnology Industry Organization. "This allows us to diversify our supply. We're such a mobile society that if we could be producing 25 percent of our gasoline at home, that's a big improvement over what we're doing now."

Some oil companies currently are blending ethanol with their gasoline to reduce prices by as much as 7 cents to 10 cents a gallon. The process of making ethanol has been around since Neolithic times, when people fermented grain to make alcohol. But the biotech industry is finding ways to improve the process: Companies have developed new enzymes, called cellulases, to help in the manufacturing of ethanol.

It's a three-step procedure, said William Baum, executive vice president of bioscience products at Diversa Corp., of San Diego. Companies need an effective pretreatment process in which they take in huge volumes of solid bulk material and try to reduce it down to a form that can be treated using enzymes. The companies then need to find enzymes able to ferment the sugars, and an organism that can convert the sugars into bioethanol.

Diversa entered the biofuels space after the company found ways to modify enzymes through genetic evolution so that they would operate effectively at different temperatures and conditions.

"What we found was there were already existing in our collection of enzymes a whole lot of biomass-degrading enzymes that could convert cellulose into sugars that could be made into things like bioethanol," Baum told BioWorld Today.

The enzymes can come from a variety of sources, including from mushrooms and fungi found in the forest breaking down trees, or from the bacterium found in the gut of a wood-eating termite.

"We're not so concerned about the source as much as we are about pulling out the differentiated enzymes," Baum said. "We'll go to trees, or soil, or to water, or to termite guts, and extract DNA directly."

Earlier this week, Diversa announced that it has delivered to DuPont Bio-Based Materials a set of candidate enzymes that exceed the initial performance targets set by the U.S. Department of Energy. Diversa received a total of $500,000 through two milestone payments - the first for meeting DoE requirements for the enzymes, and the second for the enzymes exceeding those requirements.

But having the enzymes may not be enough to make home-grown bioethanol 25 percent of the country's source of gasoline within the next 25 years. The industry needs the crop biomass, as well as the organisms to convert the sugars.

"Experts think the most ethanol we can make from the existing corn supply is around 10 billion gallons," Erickson said.

There is the possibility, however, of growing tall prairie grasses as a dedicated energy crop, increasing the supply to about 100 billion gallons of ethanol - enough to cover 25 percent of the transportation fuel needs in the U.S.

But finding an organism to convert the sugars into the end-product also is a challenge. The standard process is to take starch from grinding up corn, then converting it to glucose, and sending it to the yeast organism to produce ethanol.

"That process really is not economical, as far as making ethanol, to be able to compete with petroleum feed stocks," Baum said.

Companies Focus On Reducing Bioethanol Costs

Genencor International Inc., of Palo Alto, Calif., recently released a new product from its line of Stargen granular starch hydrolyzing enzymes that could lead to reduced production costs for the ethanol industry. The enzymes include blends of an alpha amylase and a glucoamylase that convert granular or uncooked starch to fermentable sugars through a simultaneous saccharification and fermentation process.

"That's been introduced to the market, which is going to allow ethanol producers to eliminate a processing step, a significant heating and cooling energy synch, from ethanol production," said Jack Huttner, Genencor's vice president of external affairs.

The enzymes will enable ethanol producers to eliminate a "fairly substantial capital requirement" when building new plants, Huttner added. Bioethanol plants cost between $150 million and $300 million to build.

Last fall, Genencor completed a five-year collaboration with the DoE's National Renewable Energy Laboratory to study the savings of using enzymes to enable cellulosic biomass to make ethanol.

"We delivered a 30-fold improvement in the efficiency and economics of the enzymes using advanced protein engineering techniques and biotechniques to develop the enzymes," Huttner said.

While the company knows the technology works well, Genencor is in what Huttner calls the "valley of death in pharmaceutical drug development and company financing." It has the technology but the cost of the first few bioethanol plants would completely overwhelm the rate of return. Government initiatives are needed to make it viable for Diversa and other companies to build the plants.

An energy bill passed by the Senate last month could offer such incentives by funding research and development of new biotech enzymes. The legislation would require American gasoline suppliers to blend 8 billion gallons of ethanol annually into the domestic fuel supply by 2012. (See BioWorld Today, June 30, 2005.)

Without such incentives, biofuels companies might find themselves at a standstill.

"You're competing with incumbent technology that has 100 years of integration and process improvement," Huttner said. "Even at $60 a barrel for oil, it's difficult. Especially if you don't know how long it will be to justify several hundred million dollars for a biomass ethanol plant."

One company, Ottawa, Ontario-based Iogen Corp., already has a pilot plant that produces about 248,000 gallons of bioethanol a year, making it the first firm to produce commercial quantities. A Shell gas station in Ottawa sells the product, and Iogen has plans to build a large-scale commercial-size biorefinery in the U.S., either in Idaho, where it would use wheat straw, or in Iowa, where it would use corn stover.

Biotech companies are becoming increasingly interested in bioethanol, Erickson said, because the global enzyme market is a $3 billion-a-year space. But they also have the altruistic reason of seeing significant global climate change from using bioethanol instead of fossil fuels.

"If you're using a plant instead of burning fermented dinosaurs, you're recycling carbon instead of releasing more carbon into the atmosphere," Erickson said.

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