Virent Energy, Shell Poised for Second-Gen Biofuels Race

BNET Energy

By Kirsten Korosec | May 7th, 2009 @ 4:5

Now that the dust kicked up over the Environmental Protection Agency’s proposed rules for the biofuels industry has settled just a little bit, it’s worth taking a look Virent Energy Systems and Royal Dutch Shell, companies well-positioned in the advanced biofuels race.

The EPA released this week its draft regulations requiring biofuels to curb greenhouse gases emissions compared to the fossil fuels they replace. BNET discussed earlier the potential impact on corn-based ethanol,which would fail to meet the requirement because the EPA measures the release of emissions and its impact over the biofuel’s entire lifecycle — from the time the feedstock is planted to its eventual use in cars and trucks.

There are a number of protections included for corn ethanol. But as BNET mentioned in its earlier post, the inclusion of lifecycle emissions measurements represents a shift in attitudes and investment from corn-based ethanol to advanced biofuels such as cellulosic ethanol and algae-to-fuel technology.

The Obama administration backed up its support by forming a Biofuels Interagency Working Group and providing nearly $800 million to fund biofuels research as part of legislation to increase the volume of renewable fuel blended into gasoline from 9 billion gallons in 2008 to 36 billion gallons in 2022.  

The EPA says the U.S. will rely on cellulosic ethanol to meet biofuel requirements over the next decade and figures about $50 billion of the $59 billion projected investmentthrough 2022 will be in renewable fuels. 

That leaves 1,865 biofuels companies to duke it out in a fight to develop the most efficient and cheapest way to turn biological material into fuel.

One of the winners under the EPA’s proposed regulations and California’s recent approval of a low carbon emissions standard is Brazil, a country that has dedicated a lot of money to develop its sugarcane ethanol industry.

Enter Madison, Wis.-based Virent Energy.

The company has developed a method to produce gasoline, not ethanol, by turning plant sugars found in broken-down plant matter like sugarcane into hydrocarbon molecules like those produced at petroleum refineries. This means an efficient fuel that uses less energy to produce and provides more energy than ethanol.

Virent also has some big money and a major strategic partnership with Shell, keeping it a bit more protected from the whims of venture capitalism.

Virent Energy spokeswoman Mary Blanchard said the company is still sifting through the EPA’s hefty proposal and would not go too far in her comments about the potential benefit of the EPA rules. She did say “policies that reward performance are good for us.”

Virent does look like a company ready to roll. Last month, the company’s execs traveled down to Brazil to meet with the Brazilian Sugarcane Industry. According to the industry’s press release, Virent was in Brazil to seek out potential partnerships with companies and may transfer part of its research and development to the country.

Shell, considered a player in Brazil’s sugarcane ethanol industry, isn’t putting all of its feedstocks in one basket, of course. The energy giant’s CEO recently said it is pulling back investments in wind and solar and putting more funds into biofuels and carbon capture and storage technology.

Shell has other partnerships, such as the one with Codexis, a Silicon Valley biocatalyst firm working to develop enzymes that break down biomass into fermentable sugars, which can then be made into cellulosic ethanol. Shell invested $33.5 million for a 13 percent stake in the company back in 2006 and 2007 and more recently made an undisclosed equity investment.

See BNET’s previous coverage of the biofuels industry:

• Does EPA Biofuels Proposal Really threaten Corn-based Ethanol?
• California Kicks Corn-based Ethanol to the Curb, Welcomes Futuristic Biofuels
• Ethanol Plants Idle, Workers Wait as VeraSun Buyout Drags Out
• Oil Refiner Valero Plows More Money into Renewables with Terrabon Investment
• Aventine Files for Bankruptcy; CEO Miller Points to RINs
• Pacific Ethanol’s Troubles Signal More Bankruptcies to Come
• Oil Giants Wade into Renewables Pool

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