February 9, 2009 / 10:12 PM / 10 years ago

INTERVIEW-China could take lead on cellulosic-Novozymes

NEW YORK, Feb 9 (Reuters) - China could lead the world on production of next-generation cellulosic ethanol by 2013 as the country moves quickly to alternative motor fuels, the chief executive of the world’s biggest producer of industrial enzymes, said in an interview on Monday.

“The United States will move first to make cellulosic, but then China could overtake it in production,” said Steen Riisgaard, the president and chief executive of Denmark’s Novozymes (NZYMb.CO), which is providing enzymes to ethanol producers including Poet, the top U.S. ethanol producer.

The Renewable Fuels Standard requires the United States to blend 1 million gallons of cellulosic ethanol into gasoline next year. Cellulosic uses enzymes or large amounts of heat and pressure to break down the tough woody bits of crop waste and non-food plants into sugars that can be made into ethanol.

Novozymes is partners with Poet, the largest U.S. distiller of traditional ethanol made from corn, which plans to open a $200 million cellulosic plant in Iowa in 2011 at the site of a traditional ethanol plant. The new plant will break down corn cobs and other waste into cellulosic fuel.

Riisgaard said a wave of U.S. cellulosic plants should be ready to be built at traditional corn ethanol plants in the United States by 2013. But whether the country will reach its potential to make the plants will depend on whether financing will be available.

“The technology is ready to fly, but in this financial climate it needs the right kind of engines to get off the ground,” Riisgaard said.

He said China could overtake the United States as the world’s top cellulosic producer by 2013.

Novozymes and COFCO, the China National Cereals, Oil & Foodstuff Corporation, recently entered a partnership with the Chinese oil company Sinopec to develop cellulosic from corn crop waste.

In China, greenhouse gases regulation is driving a move toward cellulosic rather than tough renewable fuels mandates.

Riisgaard said by next year cellulosic ethanol will be made in the United States for about $2.50 a gallon. When subsidies and incentives are applied, the cost should be about $1.50, which would be competitive with conventional ethanol and gasoline. “The price should go down as we and our partners go up the learning curve,” he said.

Brazil also holds potential to make cellulosic ethanol, especially because sugar cane waste, or bagasse, is a good source for making cellulosic, Riisgaard said. But it may more difficult to make cellulosic competitive with traditional ethanol in Brazil than it would be in either China or the United States, he added. (Reporting by Timothy Gardner, editing by Marguerita Choy)

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