Making incursions into the diesel market in Br itself might also facilitate increased ethanol use in Brazil if it reduces demand for oil for diesel. As I understand it, Brazil is near an economic ceiling for domestic ethanol use right now because gasoline demand is easily provided by all that diesel refining they're doing. The U.S. is roughly 2:1 gasoline:diesel and Brazil is roughly 1:2 gasoline:diesel. That diesel demand in Br is on the order of 15 billion gallonsl/yr, a major market for Amyris. There's even a biodiesel a Br govt biodiesel mandate ~600million gallons/yr by 2013.
Here is the ratio from 2004 U.S. vs. Br use of oil products.
a
| 3.5 World Apparent Consumption of Refined Petroleum Products, 2004 | |||||||||
| (Thousand Barrels per Day) | |||||||||
| Motor | Jet | Distillate | Residual | Liquefied | Total Apparent | ||||
| Region/Country | Gasoline | Fuel | Kerosene | Fuel Oil (diesel, etc.) | Fuel Oil | Petroleum Gases | Other | Consumption | |
| United States | 9,105.41 | 1,629.97 | 64.32 | 4,058.26 | 864.71 | 2,264.03 | 2,744.46 | 20,731.16 | |
| Brazil | 303.66 | 51.00 | 1.88 | 699.37 | 188.97 | 204.86 | 673.07 | 2,122.81 | |
a
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Technology
Sweet New Fuel
Kerry A. Dolan 04.23.08, 11:05 AM ET
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BURLINGAME, CALIF. -
The secret to venture capital is turning a tiny resource into
something huge. And that's exactly what Bay Area biofuels startup
Amyris, is proposing to do: put specially designed microorganisms to
work on sugarcane in hopes of generating massive amounts of a new kind
of biodiesel fuel.
And just as Silicon Valley's mightiest financiers lean on friends for
help, Amyris, too, is working with a key ally: Wednesday, the start-up
said it had teamed up with Crystalsev, one of Brazil's largest ethanol
distributors and marketers, to commercialize fuels made from
sugarcane.
The joint venture aims to produce a biodiesel by 2010 that will work
in conventional car and truck engines. Amyris executives say they
believe the new fuel will reduce emissions by 80%, compared with
burning petroleum-based diesel. Even better--Amyris targets the
sugarcane diesel to be cost-competitive with
petroleum based-fuels, with crude oil prices as low as $60 to $65 a
barrel.
"Sugarcane is the most energy-productive crop per acre of land, so,
economically, Brazil is the most attractive place to be," says Amyris
Chief Financial Officer Jeryl Hilleman. Amyris' ambitions are
enormous: within four or five years of commercializing its new diesel,
Amyris aims to be producing 1 billion
gallons of fuels a year across a number of avenues, Hilleman says.
The new joint venture, with the unwieldy name Amyris-Crystalsev
Pesquisa e Desenvolvimento de Biocombustiveis Ltda., (translation:
Amyris-Crystalsev Research and Development of Biocombustibles Ltd.)
will build a pilot plant in the state of Sao Paulo, Brazil. It will
also try to coax existing ethanol producers to make manufacturing
changes that will enable them to churn out biodiesel from their
sugarcane stock, as well as ethanol.
Santelisa Vale, the second largest ethanol and sugar producer in
Brazil and the majority owner of Crsytalsev, will supply two million
tons of sugarcane crushing capacity and will adopt the new technology
at its flagship mill. Santelisa Vale will produce 25 million bags of
sugar and 770 million liters of ethanol in 2008.
Because the new fuel has the same molecular structure found in
traditional fuels, it can be distributed through existing pipelines,
as well as the rest of the petroleum distribution infrastructure.
Ethanol cannot be shipped in existing pipelines; it needs to be
trucked or transported on trains. The sugarcane biodiesel is expected
to blend at high levels with other petroleum fuels, and should have
far lower emissions than petroleum diesel.
Producers in Brazil used about half of the sugarcane grown there last
year to produce 20 billion liters (about 5 billion gallons) of
ethanol. Some 80% of the production was consumed in Brazil. The market
for biodiesel in Brazil was 200 million gallons last year, and Amyris
says it is expected to triple in size over the next five years.
The plan is to work with other sugar producers once the first fuel is
launched. In addition to biodiesel, Amyris plans to produce synthetic
jet fuel and gasoline.
This is the second international partnership for Crystalsev aimed at
exploiting novel technology. In 2007, Dow Chemical (nyse: DOW - news -
people ) announced it was forming a joint venture with Crystalsev to
make polyethylene from sugarcane ethanol. That venture will build a
new facility and is slated to start production in 2011.
Amyris' technology harnesses a modified yeast that essentially "eats"
the crushed sugarcane and spits out a hydrocarbon-like renewable fuel.
The technology came from research at the lab of Jay Keasling, a
professor at the University of California, Berkeley.
The approach Keasling's group takes is the equivalent of redesigning
the chemical reactions that take place within the walls of a cell:
Change the reactions and the byproduct changes, too. In this way,
scientists can set up chains of reactions so that hundreds of enzymes
will work together to produce a specific and complex
molecule--including a hydrocarbon that can be used as fuel.
Keasling and his former post-doctoral students started Amyris to
develop a synthetic anti-malarial drug. But the process of modifying
either yeast or bacteria to churn out specific byproducts is general
enough that they could make products as varied as drugs or fuels.
Amyris has raised $90 million in venture funding from Vinod Khosla's
Khosla Ventures, Kleiner Perkins Caufield & Byers, and other
investors.
Khosla has another Brazilian biofuels investment, Brazilian Renewable
Energy, known as Brenco, that aims to become one of Brazil's largest
ethanol producers, reportedly building 14 mills at a cost of $2.4
billion. Production is slated to begin next year. Amyris' Hilleman
said that Amyris-Crystalsev would not compete with Brenco, and in
theory, could become a Brenco customer and use its mills to produce
the new diesel as well as ethanol.
Even with big partners, the pace of commercialization outlined by
Amyris and other next-generation biofuels companies is aggressively
brisk.
"I think it will take them longer than they think it will," says
Arnold Klann, chief executive of BlueFire Ethanol, a cellulosic
ethanol company in Irvine, Calif. BlueFire plans to develop a factory
that will turn the "green matter" portion of municipal waste--wood
waste and lawn cuttings--into ethanol in urban areas.
Klann has been working for more than a decade to develop the
technology and raise financing. Although Klann's technology is already
in use in Japan, he is still waiting to receive permits to build a
similar cellulosic ethanol plant in Lancaster, Calif.
"All of these processes for producing ethanol or the hydrocarbon
equivalent, they all work technically. But do they work economically
in the marketplace? Probably not. They've got a lot longer distance to
go," says Klann.
We'll check back in 2010 to see if Amyris meets its timeline.
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