Written by Rachel Barron

Novozymes said Wednesday it scored $12.3 million from the U.S. Department of Energy to develop enzymes that would help cut the cost of producing cellulosic ethanol.

Enzymes are used to help break down the starch of cellulose feedstocks, such as switchgrass, corncobs and woodchips, and turn them into sugars. The sugars are then fermented and distilled to become ethanol.The government expects something in return for its investment. The deal calls for the Danish company to increase the efficiency of the enzymes by two folds.

To accomplish this goal, Novozymes will match the DOE's funding, bringing the total amount invested into the project to $25 million. The company said it will have the cost-cutting enzymes ready for the commercial market by 2012.

This is the second time the company has received funding from the DOE. In 2001, Novozymes bagged $18 million from the federal government, again to improve enzymes used in producing biofuels.

The company has received government support at a time when private industry investments are harder to come by. Doing research and building biofuel refineries are multimillion-dollar undertakings, but raising money will be difficult while the financial market continues to take its lumps. Commercializing biofuel technologies could take longer as a result, Arnold Klann, CEO of waste-to-ethanol company BlueFire Ethanol, told Reuters last week.

Still, the biofuel industry keeps moving forward. Here's a breakdown:

  • Mascoma Corp. said Tuesday it grabbed $26 million from the DOE and $23.5 million from the State of Michigan to build a cellulosic ethanol plant. The plant, which will be located in Michigan's Chippewa County, will produce 40 million gallons of ethanol per year from woodchips. Mascoma and JM Longyear, a timber and mining company, plan to form Frontier Renewable Resources to own and operate the new plant.
  • The food vs. fuel debate continued to brown biofuels' green image Tuesday when the United Nations Food and Agriculture Organization released a report that found that biofuel subsidies and policies contributed to rising food prices. The U.N. agency called for biofuel policies and subsidies to be reviewed right away in an effort to preserve the world's food security. The report did have some positive things to say about next-generation biofuels such as cellulosic ethanol, which it said could reduce the fossil energy used and greenhouse gasses produced during biofuel production.
  • We all need a plan to accomplish a goal. And some of us need a plan to create a plan. And that's basically what U.S. Departments of Agriculture and the DOE said Tuesday when the agencies outlined the steps needed to accomplish the country's goal of cutting U.S. gasoline consumption by 20 percent over the next 10 years. Titled the National Biofuels Action Plan, the plan calls for interagency efforts to help drive the development of a sustainable biofuel production. For example, a group led by the USDA, DOE and the Environmental Protection Agency is defining the criteria to be used when assessing the sustainability of biofuel production. And another interagency group is creating a 10-year technology research plan for developing cost-effective ways for producing cellulosic ethanol.
  • In April, the United Kingdom required those supplying more than 450,000 liters (118,890 gallons) of fossil fuel-based transportation to make sure up 2.5 percent of their fuels sold are coming from biofuels over the next year. But that wasn't all. The biofuels will also have to meet the U.K. government's environmental standards. According to an interim quarterly report published Tuesday by the U.K.'s Renewable Fuels Agency, biofuels supplied by several companies, including BP (BP) and Exxon Mobil (XOM) subsidiary Esso, have so far failed to meet the country's green standards.
  • Ethanol producer Poet said Tuesday it is getting the total funding the DOE promised last year. In February 2007, the DOE said it would give Poet up to $80 million to build a commercial ethanol plant that makes fuel from corn as well as corn fiber and cobs. The first part of the deal with the government gave the Sioux Falls, S.D.-based company $3.7 million to help with the preliminary design of the plant and feedstock collection. Now, the company is getting the remaining $76.3 million for construction and plant operation. Upon completion, the plant will make 125 million gallons ethanol per year, 25 million of which will be from corn fiber and cobs. Construction on the plant will begin in 2009, and cellulosic fuel production could come as early as 2011, the company said.
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