Washington Editor

WASHINGTON - The push for biofuels is mounting, with efforts here aimed at President Bush's recent call to end America's addiction to oil, and many think that reality is not too far around the corner. That's because as gas prices rise, fossil fuel alternatives have become fertile grounds for discussion, and more.

Notably, in the Energy Policy Act of 2005, which passed last summer, federal lawmakers mandated the annual use of 7.5 billion gallons of ethanol by 2012. That's an attainable goal based on current domestic ethanol production, which at present stands at about 4 billion gallons each year made through fermented starch yielded primarily from corn.

In contrast, it is estimated that 140 billion gallons of petroleum-based transportation fuel is used in the U.S. every year.

But there is a limit on starch-based ethanol production, and those in the industrial section of the biotech industry believe that they hold a key to unlocking further stocks of ethanol from biomass, much of which remains unused in the form of crop waste. The enzymatic technology needed to produce waste- or energy crop-derived ethanol (collectively called cellulosic ethanol), has advanced to the point of being affordable. That is a culmination of a multiyear effort between the private and public sectors.

Industry estimates point to a 30-fold reduction in costs to produce enzymes that convert biomass into fermentable sugars, down from more than $5 per gallon to less than 30 cents per gallon, and efforts to mine diverse environments - ocean floor vents, volcanoes and Yellowstone National Park geysers - are seeking additional advances.

"It's all about cheap, fermentable sugar in this business," explained Paul Zorner, the senior director of business development for Diversa Corp., a San Diego company that uses microbes found inside termite stomachs to produce cellulase enzymes for turning biomass into sugars. His comments came during a recent discussion here on cellulosic ethanol, one of many energy-related meetings taking place in Washington these days.

But "solving the enzyme economics was only one piece," said Garret Screws, the corporate affairs liaison for Novozymes A/S in Bagsvaerd, Denmark. So now industrial biotech companies are seeking government aid to establish the first refineries for commercial scale production. Traditional lenders will not yet put up the capital for those investments.

The industry knows additional public-private partnerships are necessary for investments into early biorefineries, plants for producing cellulosic ethanol. Facilities for bioethanol cost between $150 million and $300 million to build, and so far only a single pilot scale facility is in operation - in Canada. Later this year, a larger biorefinery will open in Spain under the management of Abengoa Bioenergy, a subsidiary of the holding company Abengoa SA, of Seville, Spain.

Congress has an opportunity to provide some of the needed seed funding for facilities in the U.S., through grants and loans, and the issue is in lawmakers' hands right now, said Jim Greenwood, the president and CEO of the Biotechnology Industry Organization.

The Washington trade association, which says the U.S. could produce more than 70 billion gallons of cellulosic ethanol per year, also points out that biorefineries will create jobs in rural areas.

That latter assertion is key to gaining support in the agricultural community, as is the promise of financial gain for producing biomass. Environmental concerns are being softened by cellulosic ethanol's potential to reduce greenhouse gases, as well as the belief that future biorefineries will supply all their own internal power.

BIO and other advocates are pushing for the kind of government support that already has worked in Brazil, where ethanol is a common fuel. There, the government fomented its adoption by subsidizing the technology, which is used in many cars that run on it, or a combination with petroleum-based fuel - so-called flex-fuel cars. Also in Brazil, the world's largest producer of sugar, ethanol gas pumps are commonplace.

So "it's all about appropriations right now" in Washington, said Brent Erickson, BIO's executive vice president for industrial and environmental biotechnology. He told BioWorld Today that some of BIO's principal efforts have focused on getting congressional approval for full funding of a program outlined in the energy bill at $213 million, a significantly higher amount than the $150 million requested by the president for the coming fiscal year.

Called the Biomass and Biorefinery Systems R&D Program, it is the primary Department of Energy vehicle for advancing biofuels, and $57 million of the total $213 million is tabbed for biorefineries. The law also authorized $250 million in biorefinery construction grants for next year, but the president's budget requested no such funding.

Greenwood said problems would only occur "if Congress doesn't step up to the plate," and cautioned against a situation in which products fizzle in the absence of a sustainable market. So BIO also is pushing the government to guarantee cellulosic ethanol's penetration into the dominant petroleum market.

Efforts in the energy bill aimed at market creation and expansion include renewable fuel standards, per-gallon production incentives to cellulosic ethanol makers until U.S. production reaches 1 billion gallons annually, federal procurement for government fleet vehicles and tax credits to gas stations that install flex-fuel pumps.

Importantly, there is a positive political climate in the background of the biofuel discussions, Erickson said at another recent cellulosic ethanol gathering. Given what he termed bipartisan support on Capitol Hill and at the White House, "they're fighting to see who can be the bigger supporter," a rarity inside the Beltway.

In addition, there is a growing and public interest among big oil companies, and one of BIO's newest members is BP. The trade association also is talking to Shell, Chevron and other traditional petroleum firms. Shell invested more than $45 million in the Canadian biorefinery, which is run by Iogen Inc. in Ottowa. That prototype plant has an annual capacity of 260,000 gallons.

Though much more needs to fall into place to realize the full promise of cellulosic ethanol, Erickson labeled all these efforts "a sea change" on renewable energy policy.