Industrial enzymes leader Novozymes conservatively predicts 5% growth in the US bioethanol industry to 13.8bn gallons in the coming year, depending on investment in second generation biofuel and how the blending wall is handled.
Novozymes Chief Financial Officer, Benny Loft:
"There's a lot of uncertainty linked to that number. The Renewable Fuels Standard talks about 12.6 billion gallons being produced in 2011, so that is the minimum. So that part of the uncertainty will disappear. The uncertainty is there today, but it won't impact 2011.”
"People who are going to invest in plants producing second-generation biofuel, they need to see this work in real life. The production of these new plants will not happen in 2011 as was said a year ago. If we are lucky it will happen in late 2012 or perhaps even at the beginning of 2013. It helps when the oil price is close to $100 per gallon. Studies have shown that the market can go as high as 60 billion gallons of ethanol at that price level ... so if you see an even higher oil price in 2011, it will certainly help the economy of producing second-generation biofuels. A big player like DuPont could perhaps promote the second generation biofuel even better than Danisco has. And since they are in the U.S. they can do things that we might not be able to do in developing that market. But I think we need to see how they will actually integrate the Genencor part of Danisco, and how they would like to focus that business to say how it will impact the competitive situation."
Novozymes has a global market share of about 47% in industrial enzymes. The bioethanol industry is one of Novozymes’ biggest clients, 19% of Novozymes sales are to ethanol companies. Novozymes is continuing to develop its technology; in early 2010 it released CTec2: technology to produce second generation biofuels from non-food biomass. As its technology develops, Novozymes believe that they can produce ethanol for just over $2 a gallon; whether this can compare with oil prices remains to be seen.
This ethanol production estimate from Novozymes is higher than the Renewable Fuel Standards estimate because it accounts for shifts in the price of sugar in Brazil; exported US ethanol can compete with Brazilian ethanol in the present climate. Loft also commented on the blending wall, the point at which the demand for ethanol plateaus because of limits on how much can be blended into standard gasoline and limited use of higher ethanol percentage fuel. Novozymes does not see the blending wall as a problem. Relaxing regulations for the use of E15 will mitigate the problem for a while; the US government will probably allow cars produced from 2001 onwards to use E15 (currently only cars produced after 2007 are allowed to use it). As production continues to increase it will become a problem again by around 2015 however. Increasing that percentage again after that is unlikely to happen as this is approaching the limit of what most conventional gasoline engines can safely handle.
Novozymes Chief Financial Officer, Benny Loft:
"There's a lot of uncertainty linked to that number. The Renewable Fuels Standard talks about 12.6 billion gallons being produced in 2011, so that is the minimum. So that part of the uncertainty will disappear. The uncertainty is there today, but it won't impact 2011.”
"People who are going to invest in plants producing second-generation biofuel, they need to see this work in real life. The production of these new plants will not happen in 2011 as was said a year ago. If we are lucky it will happen in late 2012 or perhaps even at the beginning of 2013. It helps when the oil price is close to $100 per gallon. Studies have shown that the market can go as high as 60 billion gallons of ethanol at that price level ... so if you see an even higher oil price in 2011, it will certainly help the economy of producing second-generation biofuels. A big player like DuPont could perhaps promote the second generation biofuel even better than Danisco has. And since they are in the U.S. they can do things that we might not be able to do in developing that market. But I think we need to see how they will actually integrate the Genencor part of Danisco, and how they would like to focus that business to say how it will impact the competitive situation."
Novozymes has a global market share of about 47% in industrial enzymes. The bioethanol industry is one of Novozymes’ biggest clients, 19% of Novozymes sales are to ethanol companies. Novozymes is continuing to develop its technology; in early 2010 it released CTec2: technology to produce second generation biofuels from non-food biomass. As its technology develops, Novozymes believe that they can produce ethanol for just over $2 a gallon; whether this can compare with oil prices remains to be seen.
This ethanol production estimate from Novozymes is higher than the Renewable Fuel Standards estimate because it accounts for shifts in the price of sugar in Brazil; exported US ethanol can compete with Brazilian ethanol in the present climate. Loft also commented on the blending wall, the point at which the demand for ethanol plateaus because of limits on how much can be blended into standard gasoline and limited use of higher ethanol percentage fuel. Novozymes does not see the blending wall as a problem. Relaxing regulations for the use of E15 will mitigate the problem for a while; the US government will probably allow cars produced from 2001 onwards to use E15 (currently only cars produced after 2007 are allowed to use it). As production continues to increase it will become a problem again by around 2015 however. Increasing that percentage again after that is unlikely to happen as this is approaching the limit of what most conventional gasoline engines can safely handle.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.