Thursday, December 8, 2011

Report: Ethanol hottest alternative fuel through 2015

By Rodney H. Brown

Ethanol will be the dominant alternative fuel by 2015, according to a new report by Lux Research Inc., but the United States won’t be where development of it will grow the fastest.

The new report titled “Nations Race to Build Alternative Fuel Capacity” shows that production capacity for ethanol will grow to 35.1 billion gallons per year by 2015, and the “best opportunities for ethanol growth are in Brazil, Australia, China, Sweden, and Thailand.” However, the report predicts that the entire alternative fuels sector will only grow by less than 5 percent annually in that period, due to “systemic hurdles” it needs to overcome. After 2015, ethanol in particular will face an even greater challenge as it starts to really compete with foodstock crops.

The second fastest growing alternative fuel is biodiesel and the traditional powerhouses of diesel use – France, Canada and Germany, as well as Thailand again – will “emerge as the best nations for biodiesel capacity opportunities,” the report stated.

In a release about the new report, Andrew Soare, Lux Research Analyst and lead author of the report, said that ultimately “the market is shifting to second generation fuels like renewable diesel and cellulosic ethanol. These fuels bypass the major logistical hurdles of first-gen alternative fuels, and investors, as well as governments, are realigning investment to grow capacity.”

Among the local players in cellulosic ethanol are Mascoma Corp. of Lebanon, N.H., which announced plans for an initial public offering valued at up to $100 million in September. The company plans to develop commercial-scale facilities to convert hardwood feedstocks into cellulosic ethanol using that technology, which originated at Dartmouth College.

In the biodiesel space are companies like Bedford startup Altranex Energy LLC, which is working with Brown University to develop process technology to make biodiesel that works in cold climates.