Memorandum submitted by Iogen Corporation
1. INTRODUCTION/EXECUTIVE
SUMMARY
This submission has been prepared by Iogen Corporation,
a Canadian company on the forefront of technology for the conversion
of agriculture residues such as straw or dedicated crops including
miscanthus or coppice willow into fuel grade ethanol. The company
has focused on the UK (as well as North America) over the past
four years and has concluded that this market holds substantial
promise for their technology.
Officials in DEFRA, HMT, DfT, and elsewhere
have a good appreciation of the technology and our belief in the
potential for an EcoEthanol* industry in the UK. From the UK private
sector, the Shell Group recently invested £20 million to
acquire 22.5% of Iogen.
*The term EcoEthanol is used extensively in
this submission. This is an Iogen trademark and refers to ethanol
produced from the cellulose in plant materials such as straw.
It is also known as ligno-cellulosic bioethanol.
2. IOGEN CORPORATION
One of Canada's leading biotechnology firms,
Iogen Corporation, is a manufacturer of enzyme products for the
pulp and paper, textiles and animal feed industries, and is a
leading developer of technology to make clean fuels from plant
fibre. Since it's founding in the early 1970s, Iogen has focused
on the processing of natural fibre, and has made a substantial
commitment to technology in the field. The company's effort has
resulted in a range of enzyme products used around the world to
improve the way fibre is processed.
In May 2002 Iogen signed a £20million strategic
partnership agreement with the Shell Group to aid the development
of Iogen's EcoEthanol on a global basis. The investment will enable
Iogen to more rapidly develop the world's first commercial-scale
biomass to ethanol plant.
Iogen have built a £17 million EcoEthanol
demonstration plant in Ottawa, Canada—the only one of its
kind in the world. The six-storey 35,000 square foot facility
commenced operations in late 2002 and is now converting 45 tonnes
of straw to sugar per week on a continuous basis. Production is
to increase to 40 tonnes of straw per day by late 2003, with EcoEthanol
production commencing this coming summer.
The technology is rapidly maturing with the
construction of the first commercial facility expected to commence
in early 2005.
3. IOGEN AND
THE UK
Iogen's own extensive UK market analysis indicates
that there is an excellent opportunity to establish the production
and distribution of a cellulose ethanol industry in the UK. Production
would be based on cellulose from straw or dedicated energy crops
such as miscanthus or coppice willow. The benefits to agriculture
and the rural community would be substantial and supportive of
related government initiatives.
Furthermore EcoEthanol could play a significant
role in meeting the UK Government's Kyoto Commitments and other
environmental initiatives.
4. POSITION OF
THE UK GOVERNMENT
Iogen is pleased to note the following reference
to ethanol from cellulose in the most recent Pre-Budget statement.
In response, extensive information has been submitted to involved
officials outlining possible areas of support required to move
to the commercial production of EcoEthanol in substantial quantities.
"While the new duty rate will apply to bioethanol
produced from any feedstock, the Government is particularly keen
to support the development of bioethanol from ligno-cellulosic
feedstocks, such as straw or forestry residues, as this looks
likely to offer particular environmental advantages. Production
of ligno-cellulosic bioethanol is at a comparatively early stage
of development, and the Government will therefore consider how
best to give it further support." UK Pre-Budget Report,
Nov 2002
5. ENVIRONMENTAL
BENEFITS
As the feedstock for ethanol is frequently straw,
this material is available with the expenditure of only a small
amount of energy. Given this feedstock benefit and other efficiencies
in the production process, studies by the United States Department
of Energy, General Motors, and others indicate a much greater
reduction in greenhouse gas emissions than conventional ethanol
from grain or sugar. While the results of these studies vary somewhat,
the consensus is that a litre of Iogen's EcoEthanol has close
to a zero net emission of greenhouse gases. In comparison to conventional
ethanol the reduction is usually in the order of 1.5 times more
effective. Furthermore EcoEthanol along with conventional ethanol
has impressive credentials for the improvement of local air quality.
It should be noted that all automobile manufacturers
warrantee their vehicles for up to 10 per cent ethanol blends
so these environmental benefits are achievable without any changes
to the existing vehicle fleet or indeed to the fuel distribution
system.
6. BENEFITS TO
AGRICULTURE
A full sized Iogen facility will require approximately
700,000 tonnes of straw or dedicated biomass crop feedstock per
year. Early indications are that a price of £10 per tonne
for straw laying in the windrow is an acceptable price to farmers
who expect yields of four to six tonnes of straw per hectare.
While this is an immense amount of biomass, a detailed straw survey
in the Humber region indicated that after leaving 2/3 of the straw
for livestock, other industrial applications and good soil management
would still provide an excess of the requirement for a single
facility. Hence, without moving into dedicated biomass crops a
single Iogen plant would add an incremental £7 million to
farmer income in the vicinity of the facility.
7. BENEFITS TO
THE RURAL
COMMUNITY
Besides the direct benefit to the farmer there
would be approximately the equivalent of 125 full time jobs related
to the collection and transport of the feedstock that increases
in value to over £30 a tonne by the time it is delivered
to the plant. Furthermore, the direct employment in a combined
ethanol facility, co-generation electrical plant and the enzyme
unit would be approximately 100 jobs. Beyond this base employment
approximately 400 indirect jobs would also be created in the local
community. Thus total direct and indirect incremental jobs would
reach approximately 600 on a sustainable annual basis.
During the construction phase of the £200
million project which lasts approximately 24 months, a total of
approximately 1,800 direct and indirect job years would be created.
It should be noted that the above benefits are for a single large-scale
commercial facility. As noted elsewhere in this submission several
facilities are eventually envisioned.
8. OPPORTUNITIES
FOR DEDICATED
BIOMASS CROPS
The Iogen process can utilize the cellulose
from most grasses, straws, and hardwoods such as coppice willow
and chestnut. Miscanthus, with its impressive yields, particularly
if grown on marginally productive land, could provide a substantial
and stable income flow for farmers. The primary reason that miscanthus
has not become an important agricultural crop has been the lack
of a substantial market. Iogen could present the commercial opportunity
for such dedicated crops. While it is anticipated that miscanthus
and straw together would form the feedstock supply in many parts
of the country, a full sized Iogen facility could create an equivalent
demand for 700,000 tonnes of miscanthus or the production from
35,000 hectares assuming a yield of 20 tonnes per hectare.
9. ENERGY AND
CO -PRODUCTS
IN A TONNE
OF STRAW/DEDICATED
BIOMASS CROPS
An Iogen facility is essentially a bio-refinery
and through converting a tonne of material such as straw the following
yields can be achieved.
— 260 kilos of lignin (80% BTU content
of typical thermal coal) for electricity production;
— commercial quantities of fertilizer,
animal feed, CO2, and other co- products.
10. VISION OF
AN ECOETHANOL
INDUSTRY IN
THE UK
There is probably sufficient straw with some
support from dedicated crops for three 200 million litre EcoEthanol
plants, utilizing Iogen type technology. This would provide approximately
600 million litres of ethanol or a universal blend of slightly
over two per cent given that current UK petrol consumption is
in the order of 27 billion litres on an annual basis. To achieve
a 5.75% blend at current petrol consumption levels to match the
EU biofuel objective, a total of eight 200 million-litre facilities
would need to be constructed. While the ability of UK agriculture
to achieve these feedstock requirements has yet to be tested,
the opportunity exists for the introduction of an industry that
could have a major impact throughout the UK farming community.
11. INTERNATIONAL
BEST PRACTICES
Feedstock assembly techniques are normally based
only on the large ½ tonne bale. While this method has the
advantage that it is well tested, it is also expensive. Preliminary
work has been conducted in Canada where the baling process is
bypassed and the straw is reduced to 1/8-inch particles in the
field so it can be handled like grain. This provides an estimated
25% reduction in the cost of the straw delivered to the plant.
Agriculture machinery manufacturers in North
America see the commercialization of the harvest of agricultural
residues and biomass crops as a substantial and new business opportunity.
Feedstock collection and transport costs are expected to be reduced
through the introduction of more efficient collection, handling
and transport measures.
In the US, corn stover, the most abundant of
agricultural residues, is plagued by wet conditions at the time
of harvesting in late autumn and is thus an unreliable feedstock
source. Substantial research is planned in the next two years
to develop a system of wet storage similar to conventional silage.
While this has its challenges, the similar problems faced by miscanthus
may be addressed should this concept emerge as a viable feedstock
storage method.
Miscanthus is a warm weather grass that, in
the UK, does well only south of Liverpool. North American grasses
such as switchgrass and reed canary grass may be suitable for
more northerly regions. Indeed there may be wild grasses and other
plants that have yet to be seriously considered that would make
ideal dedicated biomass crops. To avoid the negative elements
of creating a monoculture with a single dedicated crop, it may
be advisable to establish a pool of suitable biomass plants.
12. More information on Iogen can be obtained
at www.iogen.ca or by contacting the authors of this submission.
4 April 2003
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