The cellulosic ethanol road map from Mascoma's CEO

Cellulosic ethanol, a car fuel made out of forest scraps and prairie grasses, is coming, but there still are a lot of hurdles to overcome, said Bruce Jamerson, CEO of Mascoma in an interview with News.com.

Although you may not be familiar with his name, Jamerson is a major figure in the ethanol world. Between 2003 and 2007, he served as president of VeraSun Energy, which makes corn ethanol. The company's stock shot up 29 percent on the first day of trading after its IPO in 2006, but then came back down to earth asrcorn prices rose.

As CEO of Mascoma, he's now the public face of one of the more notable cellulosic companies. Mascoma has nabbed millions in VC funding and laid plans for demonstration plants in New York and Tennessee and a large-scale production facility in Michigan. It has also received grants from these states and the federal government.

Cellulosic ethanol initially will be a bit costly. "We plan to be very competitive with corn ethanol, but that may not happen in the first year on this," he said.

Still, the advantages will develop as production volumes increase. The energy balance--or the ratio of the amount of fuel consumed in manufacturing to fuel actually produced--for corn ethanol is around 1.5, he said. For cellulosic ethanol, it's 5.5 or higher, meaning companies can produce far more cellulosic ethanol with the same production input. Cellulosic ethanol also puts less carbon dioxide in the atmosphere than gas or corn ethanol.

But now the hard part:

First, the actual process of converting vegetable matter to fuel needs to be refined, he said. The basic process breaks down into three stages: cellulose is extracted from vegetable matter, it is then converted to sugar, which is then converted to alcohol.

Mascoma's ultimate strategy is to exploit microorganisms that can perform both the cellulose-to-sugar and sugar-to-alcohol conversions. Combining the two stages will cut costs and speed up production.

However, in its New York and Tennessee plants, these two stages will still be separate for the next few years.

"There are several species of (so-called) superbugs that we are working on. That is the ultimate game changer," he said. "But it will be several years before that is perfected."

Second, Mascoma's cellulosic ethanol will likely be made from wood chips at first. The company's New York pilot facility, which will be capable of churning out 500,000 gallons of fuel a year, will likely start producing fuel in the first quarter of 2008 and become fully operational in the second quarter. It will rely on wood chips.

The company is also building a facility in Tennessee that will be capable of producing 5 million gallons a year. While this plant will ultimately make ethanol out of switchgrass, a fast-growing grass that needs little irrigation, there isn't a lot of switchgrass in Tennessee at the moment. The state has created an $8 million program to encourage farmers to grow the stuff, but it will take two to three years to get the first crops. Since Mascoma wants to open the plant in late 2008, it will have to start with wood chips.

Third, cellulosic companies are trying to figure out what to do with the solids that are left over after ethanol is produced. Roughly 30 to 40 percent of the plant material that gets fed into the system remains at the end.

"We want to use that as biofuel," Jamerson said. The material could be used to run the plant, or to generate electricity that could be sold over the grid, depending on how much is produced. It could also be palletized and sold to owners of biomass furnaces.

Solid-material recycling is one of the issues the company is working on while planning its Michigan facility.

Finally, building these facilities will take money. New York granted the company $14.8 million so it could build the facility there and Tennessee will jointly fund the facility in that state. Officials from the state of Michigan have said that the state and the company might put up to $150 million for the facilities being slated for the northern part of the state.

But jobs will be created, noted Jamerson. States like Michigan have lost jobs in recent years due to foreign competition in the pulp and paper industry. Michigan State University could benefit as well: forestry and automotive technologies are two of its specialties.