Wednesday November 18, 2009

New Danish plant turns straw into biofuel

By John Acher

KALUNDBORG, Denmark (Reuters) - A new plant in Denmark has begun converting straw into bioethanol for cars, pellets for biofuel-burning power plants and molasses for animal feed to avoid the carbon emissions from fossil fuels.

State oil, gas and power firm DONG Energy inaugurated the plant on Wednesday in time to serve as a showcase of Danish environmental technology before a U.N. climate conference in the Danish capital next month.

The plant run by DONG's Inbicon unit in the coastal refinery town of Kalundborg will convert 30,000 tonnes of straw yearly to produce 5.4 million litres of bioethanol that can be mixed with gasoline to reduce CO2 emissions, the company said.

The first year's production has been sold to Norway's StatoilHydro which aims to sell the bioethanol at service stations in Denmark starting next year.

The plant will also produce 13,000 tonnes of pellets to burn at power plants as a substitute for coal and 11,000 tonnes of molasses for animal feed, the company said.

It is one of the world's first plants to begin producing "second-generation" biofuels, which overcome an ethical problem associated with producing fuel from food crops.

Up to now, all commercial production of bioethanol has been "first-generation" fuels, made above all from maize.

"In a world where millions of people go to bed hungry every night, we cannot justify using foodstuffs for fuel," DONG's Chief Executive Anders Eldrup said in a speech at the opening.

EXPORT POTENTIAL

The start-up of the Kalundborg demonstration plant is an important step towards commercialising the technology nationally and internationally, DONG Energy said in a statement.

"One possibility is that we may build a bigger plant, but another is that we export the technology," Eldrup told Reuters.

He said that an industrial-scale plant would need to be about 10 times bigger than the Kalundborg pilot plant.

Regardless of whether DONG builds a big plant, the primary markets for Inbicon's technology are outside Denmark, DONG said.

Eldrup said there is an abundance of biomass waste in the world, particularly in tropical and subtropical climates, so the technology could be used in many developing countries.

But the U.S. bioethanol industry will also be a target.

Inbicon is negotiating with several international companies and has closed a deal, for instance, with Japan's Mitsui Engineering & Shipbuilding to test the technology with a view to licensing it, DONG said.

It has also signed a preliminary deal with U.S. utility Great River Energy, which is considering using the technology at a large plant that it could build in connection with a combined heat and power plant in North Dakota due for startup in 2010.

"My guess is we will be an equity partner in that plant," Great River's Chief Executive David Saggau told Reuters at the inaugural, referring to the possible North Dakota biofuel unit.

The 400 million Danish crowns ($80.48 million) pilot plant at Kalundborg will also provide fuel for about 40 Volvo cars to be allocated to officials attending the U.N. climate change conference in Copenhagen in December.

At that meeting, around 190 nations will try to reach a climate agreement that would replace provisions of the Kyoto Protocol expiring in 2012.

Danish enzyme producers Novozymes and Danisco are supplying the new DONG plant and have pinned big hopes on second-generation bioethanol taking off, potentially creating a large market for such supplies.

Danisco's Chief Executive Tom Knutzen, who also attended the opening, told Reuters that second-generation bioethanol raised the prospect of doubling the size of the world enzyme industry.

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