From: Reuters
Published January 14, 2008 08:52 PM

DuPont sees ethanol as path to new fuels

By Matt Daily

NEW YORK (Reuters) - Corn-based ethanol may dominate the nascent U.S. biofuels industry for now, but fast-developing technologies will likely create new biofuels and markets in the next few years, the head of chemical giant DuPont's biofuels development said on Monday.

"I think over the period of the next five years or so, you'll start to see biofuels move from something monolithic -- corn to ethanol -- to multiple entries into this field," Thomas Connelly, DuPont's chief innovation officer, told the Reuters Global Agriculture and Biofuel Summit.

"We'll start to see the first of the advanced biofuels -- that is to say, molecules other than ethanol, molecules with improved fuel properties -- enter the market," he said.

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DuPont, whose agriculture unit Pioneer produces genetically modified seed corn designed for ethanol, has set its sights on biobutanol, another motor fuel that can be made from corn or sugar cane, but has not proven it can be economically feasible.

DuPont owns a 10 percent stake in a planned BP Plc ethanol plant in Britain, which the companies plan to convert to a biobutanol production facility in the coming years.

"Certainly, we view biobutanol as something that can find a place in the market globally," Connelly said.

Biobutanol has a higher energy density than ethanol and can be blended at higher ratios with gasoline. It can also be transported by pipeline, a major hurdle facing ethanol shippers, who must rely on trains, trucks or barges.

Car engines have also shown they tolerate more butanol in the gasoline mix than ethanol, Connelly said.

"We have run street vehicles with up to 20 percent (butanol) in our own testing," he said.

Ethanol's rise in the United States has triggered a backlash by critics who charge the fuel gobbled up 24 percent of the nation's corn output in 2007 and drove up costs for the grain and other food products that rely it.

The surging prices for corn, which reached a record above $5 per bushel on Monday, have also eroded profit margins for ethanol producers, who have relied on high oil prices and government usage mandates and subsidies to survive.

CELLULOSIC PROMISE

Like other biofuel proponents, DuPont also supports development of cellulosic ethanol from plant waste, timber byproducts and switch grass as the best alternative to fossil fuels, since they would not compete with food supplies.

That will not only benefit the United States, he said, but could help poorer nations that are feeling the pain of oil prices that reached $100 a barrel this month.

"That will be incredibly important to the economies of those developing nations, since most countries have the potential to grow biomass even though they're not endowed with the fossil forms of energy," Connelly said.

But that technology is still in its infancy, and creating fuel from cellulosic sources on a large scale is not yet economically feasible.

"We're three to four years away from that goal," Connelly said. "Our goal is by the end of 2010 to have our process ready to go and comparable" to the economics of corn-based ethanol.

That will require additional help from the U.S. government, he said, even with the new energy law's mandated increase in ethanol usage in the coming years.

"If we want to move to that advanced level of biofuels, beyond the current generation, (government) policy, as well as research, will be important drivers ...(and) subisidies play a role. Simply mandating volumes of biofuels doesn't neccesarily accomplish that goal," he said.

(For summit blog: http://summitnotebook.reuters.com/)

(Reporting by Matt Daily; Editing by Walter Bagley)

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