MADRID Oct 15 Spanish energy company Abengoa
(ABG.MC) could start selling cellulose ethanol in four years
from a new plant it is building in the United States, the
chairman of the firm's renewables subsidiary said on Monday.
Industrial production of cellulose ethanol -- using
vegetation like wood, switch grass or straw -- is seen by many
as preferable to producing biofuels from cereals, alcohol or
sugar aS it will not put the same pressure on world food prices.
Abengoa Bioenergia said on Monday it will build and open the
biomass ethanol plant in Hugoton, Kansas after signing a
contract with the U.S. government for $38 million to fund the
first stage of the plant.
The U.S. government's Department of Energy will later
provide further subsidies for the plant to bring its total
investment to $76 million.
"The construction (of the plant) will take no less than two
years, so we are talking about three-and-a-half to four years",
chairman Javier Salgado told Reuters/EP.
Abengoa will refine its methods of producing cellulose
ethanol at a pilot plant which it opened last week in the state
"In the pilot plant we are going to try to reduce costs and
try new primary materials because we want the plant to be able
to process various (materials), including the bagasse (waste)
from sugar cane", said Salgado.
Over the next five years, Abengoa plans to invest more than
$500 million on research and development into cellulose ethanol
Made from biomass, cellulose ethanol emits between six to
eight times less CO2 than traditional ethanol produced from
cereals, alcohol or sugar.
As the biofuels sector sees its margins squeezed through
higher grain prices, Abengoa hopes these second generation
biofuels will start to command higher prices in the market.
"I think we are going to be able to extract greater value
because this is a product which has a better life cycle", said
Salgado said even at current oil prices, which on Monday
reached a record above 85 dollars per barrel CLc1, Abengoa
Bioenergia's cellulose ethanol plants would be competitive.
Abengoa could open further cellulose ethanol plants in
Europe, building them next to current plants, said Salgado. The
company is already studying opening one in Galicia, in the
north-west of Spain.
Despite its efforts to develop second generational biofuels,
the Spanish group is maintaining its strategy to increase
production capacity for traditional bioethanol, said Salgado.
"We are going to continue with our plans. In fact, we are
going to go even further since others are doing less", he said.
Abengoa Bioenergia is currently arranging financing for a
plant in Rotterdam, which will have capacity of 480 million
litres a year and require investment of 500 million euros.
The company is also planning two plants of similar capacity
in the UK and Germany and does not expect to have financing
problems in spite of current nerves in Spain's credit market.
"We have closed all our financing successfully and we expect
to continue doing so," said Salgado.
Abengoa Bioenergia will close 2007 with healthy results in
spite of rising grain prices, he said.
At the end of September, Abengoa said it had suspended
bioethanol production at the biggest of its three Spanish
plants, in Salamanca in central Spain, because high barley
prices were making it unprofitable.
Production remains suspended, said Salgado.
Abengoa's plants in Galicia and Murcia, in southern Spain,
have started to import maize as a primary material, he said.