Woodland Biofuels: Cellulosic ethanol cheaper than gasoline

We don’t take regulatory or policy risk — no subsidies, price on carbon, or regulatory change. That’s a tough order for biofuels — most first- or second-generation players require RIN’s or tipping fees to be economically viable. But Woodland Biofuels is on track to produce cellulosic ethanol at half the price of the gasoline it replaces. And their technical and scale-up risk is significantly less than competitors like Kior.

In simple terms: Woodland rips cellulose apart into it’s constituent components — CO, CO2 and hydrogen — then puts them back together to form ethanol. It’s like taking an old sweater, ripping it apart into simple wool, then knitting the wool back into something more useful. Wood to gasoline.

Our own technical diligence built on that of funding partners SDTC, IDF and Investeco. Woodland’s proprietary process takes syngas — gasified cellulose, from wood chips, agricultural or municipal waste — and converts it via a highly efficient three-step catalytic pathway to ethanol: syngas -> methanol; methanol -> methyl acetate; methyl acetate -> ethanol. The first two steps are in commercial operation (with partners Eastman Chemicals) and the third has 1000’s of hours of operational history.

Scale up risk is mitigated by an operating $12 million demonstration plant in Sarnia. Built by world-leading biofuels engineering firm Zeton, it’s designed to demonstrate modular and systemic operations at commercially relevant scales. The core technology is proven, and the plant is producing ethanol from gasified wood chips. Engineering partners AMEC have confirmed commercial plant economics. Off-take and fibre agreements are in place, and a shortlist of commercial sites is ready for development.

The commercial economics are striking: a 20 million gallon commercial plant has low CAPEX ($5–6/gal — less than a quarter of competitor KIOR) and OPEX ($1.10/gal — less than gasoline). Yields are very high, more than 100 gallons per bone dry tonne of input. And the output is limited ethanol. No by-products: what little ‘waste’ they produce is biochar, a useful fertilizer to re-charge soil.

The IP is extensive: 30 patents covering 27 countries, with more pending. Their process patent — syngas to ethanol — covers reformed natural gas as well, which can provide extensive upside to traditional fossil fuel producers.

The team is experienced, with added firepower from recently appointed COO Bill White, ex President of Dupont Canada. Bill knows how to build and operate chemical plants, and that’s just what Woodland will do: deliver a chemical commodity into a large market as the lowest cost provider.

Having led a round in late 2012, we look forward to continuing to support Woodland through this exciting inflection point in the company’s history through to commercial production.

Originally posted Jan 22, 2014 on the ArcternVentures.com