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DuPont, Genencor form $140M ethanol venture
Wednesday May 14, 4:37 pm ET

DuPont, Genencor invest $140 million to form US venture for cellulosic ethanol

DuPont executives said Wednesday that a new joint venture with a Danish company will enable the production of an alternative fuel that costs less to manufacture than conventional ethanol and won't drive up food prices.

Wilmington, Del.-based DuPont has partnered with Genencor, a division of Danisco, to develop and commercialize cellulosic ethanol, which unlike traditional ethanol is not derived from food sources. The companies plan to invest $140 million in the U.S.-based venture over the next three years and hope to have a commercial-scale demonstration facility operating by 2012.

The venture, to be called DuPont Danisco Cellulosic Ethanol LLC, will focus initially on making fuel from the leaves and stalks of corn and from sugar cane bagasse, the remnants of sugercane stalks after they are crushed for juice. The company plans to eventually explore fuel derived from wheat straw, as well as a variety of energy crops and other biomass sources.

"Both companies are well respected and will bring considerable resources to the quest to develop cellulose technology," said Matt Hartwig, a spokesman for the Renewable Fuels Association, an ethanol trade group. "It's another example of how quickly the ethanol industry is evolving."

An energy bill signed by President Bush in December requires refineries to use 36 billion gallons of ethanol a year by 2022 and mandates that at least 21 billion gallons of that total come from nonfood sources.

The U.S. currently produces nearly 7 billion gallons of ethanol annually, all of it made from corn, thanks in large part to government mandates and subsidies included in a 2005 energy bill. Critics say the reliance on corn has made food more scarce and pushed up prices.

"Clearly there is an urgent need for renewable energy alternatives and management of the rising food prices," DuPont Chief Executive Charles O. Holliday Jr. said in a conference call. "DuPont is committed to bringing part of that solution."

Sen. Joseph Biden, D-Del., who spoke at a hearing Wednesday on rising worldwide food prices, applauded the companies for taking a step toward energy independence, which he says is essential to bring prices down.

"We must push harder in the search for alternatives, and not just because of the price of food," Biden said. "Our foreign policy is held hostage to our dependence on imported oil."

Cellulosic ethanol is not yet commercially available. But executives with the two companies said that sharing DuPont's pretreatment and fermentation technologies with Danisco's innovative enzymes -- which break down cellulosic materials in plants -- will put the new joint venture at the forefront of cellulosic production.

"We think this combination puts the two leaders in their fields together," Holliday said. "Ethanol is a commodity when it's out there. The secret is the lowest cost. We're both actually convinced we will have the lowest costs on a very aggressive timeframe."

Other companies trying to produce commercially viable cellulosic ethanol include POET, Archer Daniels Midland, Verenium Corp., BlueFire Ethanol Inc. and Range Fuels, Inc., which has broken ground on a plant in Georgia.

DuPont Danisco expects its first pilot plant to be operational in the United States in 2009. The joint venture plans to license its technology directly to ethanol producers.

"We're open to deploying this technology to anyone that's out there," Danisco CEO Tom Knutzen said. "Will there be other players investing heavily in this area? Of course there will. I think we have a winning proposition here."

Shares of DuPont rose 57 cents to $49.58 in trading Wednesday on the New York Stock Exchange.

Source: Associated Press

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