BP deal targets cellulosic ethanol

London -BP and Verenium Corp.  have started a joint effort to commercialise cellulosic ethanol by combining their technology and operational capabilities to develop a range of low-cost production facilities in the US, and potentially worldwide. Under the initial phase of the strategic alliance, Verenium is to receive $90 million from BP over the next 18 months for rights to current and future technology held within the partnership to advance cellulosic ethanol - a renewable fuel source produced from biomass-derived products such as sugarcane waste, switchgrass, rice straw and wood chips.

The initial phase of the strategic alliance employs Verenium's technology for cellulosic ethanol production as the platform for a joint development effort between BP and Verenium. The companies have formed a Special Purpose Entity (SPE) that is equally owned by BP and Verenium and will license existing intellectual property from each company and own jointly-developed intellectual property in the field of cellulosic ethanol production.

The companies further aim to negotiate a second phase of the relationship focused on the development of a joint venture  to advance the technologies from the SPE into commercial-scale cellulosic ethanol production facilities. While the primary and initial focus of the JV will be on the partners' jointly-owned facilities  in the US, the SPE technologies may also be licensable to third-party commercial projects, said BP.

Energy crops like sugar cane, miscanthus and energy cane are the best feedstocks to deliver economic, sustainable and scaleable biofuels to the world, according to said Sue Ellerbusch, president of BP Biofuels North America, who believes the latest deal will give the company a leadership position in cellulosic biofuels.

"In partnering with Verenium, we now have the most advanced technology for transforming these energy grasses to biofuels, increasing our ability to invest earlier in the US to meet the requirements for cellulosic ethanol laid out in the recent energy bill. We also have the possibility of enhancing the productivity of our Brazilian assets," said Ellerbusch. "Verenium has already demonstrated the technology, making this real and an appropriate fit with our commitment to bring more sustainable biofuels to the market more quickly."

Verenium's Specialty Enzyme business uses the power of enzymes to create a broad range of specialty products to meet commercial needs. The company's R&D organisation specialises in the rapid screening, identification, and expression of enzymes-proteins that act as the catalysts of biochemical reactions.

Unlike traditional ethanol manufactured from corn cellulosic ethanol production utilizes non-food, plant biomass as its feedstock source. The biomass is first broken down into fermentable sugars using acid or enzymatic hydrolysis and industrial enzymes, after which the sugars are fermented into ethanol using various fermentation organisms.

Ethanol produced from cellulosic biomass is believed to have many benefits over first-generation ethanol including, the use of non-food feedstock, substantially greater yield than grain ethanol per acre of feedstock, minimal exposure to volatile commodity price risks across the production process and a more favorable environmental impact. It also offers the potential to deliver significant greenhouse gas emission reductions of 80-90% compared to grain ethanol at GHG emission reductions of 0-70%.