ZeaChem, a company that uses the microbes in termite guts to make ethanol, said on Thursday it has raised $34 million to build its first plant.
The biorefinery, which could be located in Boardman, Ore., will begin operating next year, making 1.5 million gallons of ethanol a year from a non-food feedstock, such as wood chips or grasses, according to ZeaChem CEO James Imbler.
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ZeaChem)
Investors in the series B round were Globespan Capital Partners and PrairieGold Venture Partners, with follow-on participation from MDV-Mohr Davidow Ventures, Firelake Capital, and oil refiner Valero Energy.
There are a number of research initiatives and a few companies working with the micro-organisms in termites' digestive tracts to make fuel or other chemicals.
ZeaChem has developed a process to make ethanol from these bugs, rather than try to develop new yeasts or bacteria as start-ups like Mascoma or Genomatica are doing. It also intends to use existing industrial equipment, lowering the technology risk involved.
"One advantage of our technology is that there's no new bug and no new equipment," he said. "It's really an engineering challenge because all of the equipment is industrially proven."
ZeaChem is one of several companies developing technology for cellulosic ethanol, or making the gasoline additive ethanol from non-food sources.
Thus far, though, there are only a handful of cellulosic ethanol plants being tested in the U.S., each pursuing slightly different avenues.
ZeaChem claims it can squeeze a lot of fuel from cellulose, making its ethanol yield 40 percent higher than competing cellulosic ethanol firms. It expects to be able to get 135 gallons of ethanol from a ton of feedstock, according to Imbler.
Its technology uses sulfuric acid to break down the cellulose--the molecules that give plants structure--into sugars. The termite-derived micro-organisms convert those sugars into acetic acid.
ZeaChem also plans to make use of the lignan in plants that's left after the cellulose has been broken down. Using a gasifier, it creates synthetic gas, or syngas. Hydrogen from that syngas is combined with the acetic acid after fermentation to make ethanol, Imbler explained.
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ZeaChem)
Using the gasification step means ZeaChem's process emits less carbon dioxide than other cellulosic ethanol techniques, according to the company. There's also enough syngas left over to burn and make steam to power the operation, Imbler said.
Imbler said that the process is flexible enough to use different feedstocks, but at this point, its preferred fuel source is poplar trees, which grow quickly and can be harvested cost effectively.
The company plans to break ground on its first facility this year. It envisions production at the facility starting in 2010 and plans to break ground on a commercial-scale plant in 2011.
To make ethanol, you want to make vinegar first, according to ZeaChem.
The biofuel start-up, which has moved from Colorado to Silicon Valley, says it has come up with a method of making cellulosic ethanol that results in close to 40 percent more fuel per ton of wood chips than competing processes. By 2010 or so, the company hopes to be producing ethanol commercially for 80 cents a gallon at wholesale. That could translate to anywhere from $1.10 to $1.50 at the pump, depending on a host of factors.
How does it work? Most cellulosic ethanol producers convert cellulose into ethanol in somewhat of a direct manner. Wood is separated into three principle ingredients--cellulose, hemicellulose, and lignin. The cellulose and hemicellulose are then converted into alcohol through biological fermentation (for instance, microbes and enzymes) or thermochemical engineering, which can also be combined with biological fermentation.
Click here for the ZeaChem video.
Mascoma, which was spun out of Dartmouth, is one of the more notable biological companies, while Range Fuels, which uses a process akin to the coal-to-liquids process, is known for thermochemical conversion. The alcohol harvested from fermentation is then concentrated through distillation.
Traditional fermentation and thermochemical processing, however, typically give off carbon dioxide as a byproduct, according to James Imbler, CEO of ZeaChem. It's why beer has bubbles.
ZeaChem takes an indirect route. After separating the cellulose, hemicellulose, and lignin, it employs a microbe to convert cellulose and hemicellulose--which can account for 61 percent of the material in wood--into acetic acid, the signature ingredient of vinegar, rather than alcohol. The conversion into acetic acid does not give off carbon dioxide, leaving more carbon in the fuel.
Meanwhile, the company cooks the lignin to extract hydrogen. The hydrogen is subsequently combined with the acetic acid to produce ethanol. Two-thirds of the energy in the ethanol comes from the acetic acid, while one-third comes from the added hydrogen, said Imbler, which is similar to the ratio of initial molecules from the wood. In a sense, the company is blowing apart wood and reforming it as an alcohol.
Using that extra carbon adds up. ZeaChem's process results in 160 gallons of liquid per bone dry ton of raw material, says Imbler. Corn ethanol producers can get 100 gallons per ton. Other cellulosic producers get 115 gallons per ton, ZeaChem claims.
Like nearly everyone else in the cellulosic ethanol business, ZeaChem hasn't proven its method works on a large scale yet. The company has shown lab results and is mapping out plans for 100 million-gallon-a-year processing facilities. (See a video of a tour of their labs here.) Other cellulosic companies will also likely tout higher gallons per ton figures than ZeaChem gives them credit for. (We contacted some, but have not heard back yet. We'll update you when we do.)
What to do with the waste?
Most cellulosic ethanol processes, however, do leave a lot of waste products. Mascoma's CEO Bruce Jamerson told CNET News.com last year that 30 percent to 40 percent of the plant material can remain after fuel is made--one of the challenges is figuring out what to do with the leftovers.
The fact that ZeaChem does seem to know what to do with its leftovers makes the process interesting. Fuel, Imbler asserts, is a commodity. In a commodity market, suppliers can't control the price, he said. Thus, the only way to survive is to adopt efficient processes and keep raw material costs low.
How come this company came up with it? It's a cross pollination between biological and thermochemical know-how. The founders, biochemists, came from Coors while the rest of the bulk of the management team comes out of the petrochemical industry.
Unlike some other ethanol start-ups, ZeaChem won't try to rely on garbage or waste products for feedstocks. It is cutting deals with poplar tree farmers to buy trees. The company's processing plants will be located near existing poplar farms that themselves are located near rivers for easier shipping.
The company employs one species of microbe to perform the conversion process. It's a fairly common species that required no genetic modification and can be found in manure, the guts of termites, and other lovely places.
"Anything that falls on the ground it will eat," said co-founder Dan Verser.
Verser further added that similar microbes can be used to produce different types of fuel. If the ethanol market doesn't take off, ZeaChem can switch to butanol or some other fuel--just like you might change an ingredient in salad dressing.
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