Monday, September 11, 2006

FORT LAUDERDALE — Many of the tree limbs and palm fronds that piled up in the yards of South Florida after two powerful hurricane seasons ended up lining landfills.

But one day soon, yard waste like that could be reappearing at local gas stations, having been transformed into ethanol for fuel.

That's the goal of Losonoco Ltd., a company with British roots that wants to build four plants in Florida where so-called cellulosic ethanol can be manufactured. It's considering sites in Palm Beach County, among other places statewide.

Alan Banks, 51, chief executive officer of privately held Losonoco, said the firm moved its headquarters from London, where it still has an office, to Fort Lauderdale in June. The firm, with Steve Percy, a former president and CEO of the North American division of oil giant BP Plc as its chairman of the board, has nine projects under development in the United States.

Its goal is ambitious: Producing 300 million gallons of ethanol annually from agricultural and yard waste. Banks said he thinks it makes more sense to use existing castoff material for ethanol production instead of food crops such as corn and sugar cane.

Using yard waste as the ethanol source also solves the problem of their disposal, he said. Palm Beach County's Solid Waste Authority collects 250,000 tons of yard waste a year, for instance, and that is replicated all over Florida.

"Let's use human ingenuity to try and solve the problem. The alternative is to go back to a medieval society with no mobility and localized groups," Banks said.

Losonoco's U.S. strategy is regional. It is planning operations in the Pacific Northwest and the mid-Atlantic as well as Florida, all areas far from the Midwestern Corn Belt, home to most of the nation's 101 ethanol plants.

"We wanted to be a long way from Midwestern corn," Banks said. "The benefit of making ethanol in Florida for use by Floridians is that it costs a fortune to move it from Iowa."

Two other Florida-based firms, Gate Petroleum of Jacksonville and U.S. EnviroFuels of Tampa, are building ethanol plants in Florida, but both plan to use corn as the source — or "feedstock" — at least initially.

Losonoco hopes to be one of the first to produce cellulosic ethanol commercially. It owns two sites in the United Kingdom and Ireland and expects to begin producing ethanol in both places by the second half of 2008.

In the U.S., Banks estimates it will begin production 30 months after the sites and permits are in hand. Each plant would cost about $150 million and be able to produce 30 million gallons of ethanol a year.

"Buying the land will be relatively easy, as well signing as up the feedstock," he said. "There are plenty of opportunities in Florida. Getting permitted is not as big a job as people think. You have to build it and commission it.

"From the point at which we say 'Yes, that is where we want to be,' we are looking at 2 1/2 years to production."

Banks said Losonoco is focusing on gathering residue from forests, farms, yards and even waste systems. "We have a series of conversations going on in Florida," he said.

The quest for alternative sources of fuel has rapidly accelerated in the past year as oil prices have risen dramatically and the consequences of continued dependence on foreign sources of the commodity have become more apparent. Dozens of companies are now working to make ethanol not only from corn — the most common feedstock for the biofuel — but also from plant cellulose, said Matt Hartwig, a spokesman for the Washington-based Renewable Fuels Association.

Cellulose is the primary component of plant cell walls and is the most common organic compound on earth, Hartwig said.

Dozens of companies around the U.S. are looking to produce cellulosic ethanol and are engaged in research and demonstration projects, he said, but actual regular output isn't here yet.

"Right now the only production of cellulosic ethanol is in pilot plants," he said.

Hartwig said the technology exists to make ethanol from cellulose, but the main stumbling block has been the cost of the enzymes needed to break down the material into simple sugars for fermenting. Unlike corn starches, which are easily digested for food, tree branches, husks, grasses and other forms of cellulose are tougher to break down.

"It is still a few years away, but it's coming," Hartwig said of cellulosic ethanol.

Dyadic International Inc., a Jupiter-based tech firm, isn't planning to build an ethanol plant itself, but has been conducting enzymatic research for a decade and managed to break down cellulose for several applications, including ethanol, said Sasha Bondar, vice president of strategy and corporate development.

"There are few companies trying to do this that will have any reasonable chance of success," he said. "What we are doing is leveraging a decade of research on cellulose and applying it to the cellulosic ethanol process."

Bondar said Dyadic is in negotiations and discussions with potential partners who would actually produce ethanol commercially using Dyadic's technology.

Although many more companies are now working on cellulosic ethanol, the path from research to production is expected to be lengthy. Fred Mayes, chief of the renewables information team at the Energy Information Administration, a division of the U.S. Department of Energy, said the department projects only a trickle of cellulosic ethanol will be available by 2010, and it will take another 20 years for just 2 percent of all ethanol to come from plant waste.

But producing ethanol from cellulosic feedstock instead of corn will be critical to making the biofuel competitive with gasoline, a Department of Energy report said.

"It's clear the resources are there," Mayes said. "That's why people are trying to tap it. There is much more of it than corn."

Sam Tagore, technical manager for the Energy Department's office of biomass programs, said private companies whose research is being monitored by the department say they have reduced the cost of enzyme production by 90 percent.

"By 2012 it should be cost-competitive with producing ethanol from corn," Tagore said. "Commercial production depends on industry. We can show it could be done. It can happen earlier or it can happen later. It is difficult to predict."

Banks said Losonoco's technology differs from others because it does not use enzymes. Instead, it uses organisms called thermophiles, which thrive at high temperatures.

"We use acid hydrolysis, which is a much simpler process," Banks said. "The process is economically viable because the thermophylic organisms ferment most of the available sugar and we therefore get a higher yield of ethanol."

Darin Newsom, an analyst at Omaha, Neb.-based DTN, said cellulosic ethanol's day is coming. Eventually technology will allow things such as wood chips to be used for ethanol instead of corn or sugar cane.

"This is what keeps the potential for ethanol so high," Newsom said. "Once we get out of the corn-sugar argument and think about other possibilities, that is what will keep ethanol in the forefront of the discussions."

Dr. Ellen Strahlman, a Sarasota resident who works in New York as a vice president at Pfizer Inc., is a Losonoco director who has long believed in the importance of alternative energy solutions.

"It's an opportunity to make a difference in the world in reducing the amount of reliance on petroleum and reducing the amount of emissions," Strahlman said.

"We looked at a number of technologies and we chose this one. It made sense economically and looked like you could scale it up," she said. "The field is very hot right now, with President Bush talking about alternative energy. It is an idea whose time has come."