Big Oil Still Likes Cellulosic Ethanol

This week saw two major partnerships between large energy companies and smaller cellulosic biofuel producers.

The developments will not only help Brazil solidify its status as a global leader in biofuels – they could be a sign of hope for the struggling cellulosic ethanol industry.

The first development was a $12 billion joint venture between Shell and the Brazilian ethanol producer Cosan. Given that Shell has already partnered with the cellulosic companies Codexis and Iogen, the new joint venture will give these smaller players greater access to capital and the vast Brazilian ethanol market. The annual production capacity of the Shell-Cosan venture will be about 2 billion liters. No word on how much effort they’ll devote to cellulosic fuels, but Shell has signaled that it wants to use the partnership to expand its next-generation fuel offerings.

The second partnership is between another oil giant, Petrobas, and KL Energy Corporation to commercialize cellulosic fuels from sugarcane bagasse.

KL has a demonstration plant in Wyoming that uses waste wood as a feedstock for ethanol.

Under the agreement, Petrobras will provide $11 million to adapt KL’s demonstration facility for bagasse and expand operations in Brazil. The two companies will work on large commercial-scale facilities in Brazil, taking advantage of the already-mature sugarcane-based ethanol industry in the country.

These two partnerships show that large oil companies are still serious about next-generation fuels. There’s hope yet for cellulosic ethanol.