BP and Verenium join hands to accelerate the commercialisation of cellulosic ethanol

BP and Verenium Corporation, today announced the creation of a strategic partnership to accelerate the development and commercialisation of cellulosic ethanol. The partnership combines a broad technology platform and operational capabilities in an effort to advance the development of a portfolio of low-cost, environmentally-sound cellulosic ethanol production facilities in the United States, and potentially throughout the world.

Cellulosic ethanol is a renewable fuel source produced from biomass-derived products such as sugarcane waste (bagasse), switchgrass, rice straw and wood chips.

Under the initial phase of the strategic alliance, Verenium will receive $90 million in total funding from BP over the next 18 months for rights to current and future technology held within the partnership.

The companies have formed a special purpose entity (SPE) that is equally owned by BP and Verenium and will license existing intellectual property from each company and own jointly-developed intellectual property in the field of cellulosic ethanol production.

Beyond the initial phase of this alliance, the companies expect to negotiate a second phase of the relationship focused on the development of a joint venture (JV) to accelerate the commercial deployment of the technologies from the SPE into commercial-scale cellulosic ethanol production facilities. While the primary and initial focus of the JV will be on facilities jointly-owned by BP and Verenium in the United States, the SPE technologies may also be licensable to third-party commercial projects.

The production of cellulosic ethanol in the United States is supported by the Energy Independence and Security Act of 2007, which mandates 21 billion gallons of advanced biofuel production by 2022, of which 16 billion gallons must come from cellulosic ethanol.

Cellulosic ethanol is a renewable fuel source produced from biomass-derived products such as sugarcane waste (bagasse), switchgrass, rice straw and wood chips. Cellulose, a long-chain polysaccharide found in nearly all plant life, is the most abundant molecule on earth.

Cellulosic ethanol uses advanced biological science to reduce the cost of ethanol production and enable access to a wide variety of biomass. Unlike traditional ethanol manufactured from corn cellulosic ethanol production utilises non-food, plant biomass as its feedstock source. The biomass is first broken down into fermentable sugars using acid or enzymatic hydrolysis and industrial enzymes, after which the sugars are fermented into ethanol using various fermentation organisms. Ethanol produced from cellulosic biomass is believed to have many benefits over first-generation ethanol including, the use of non-food feedstock, substantially greater yield than grain ethanol per acre of feedstock, minimal exposure to volatile commodity price risks across the production process and a more favorable environmental impact. It also offers the potential to deliver significant greenhouse gas emission reductions of 80 - 90 per cent compared to grain ethanol at GHG emission reductions of 0 - 70 per cent.

The production of cellulosic ethanol in the United States is supported by the Energy Independence and Security Act of 2007, which mandates 21 billion gallons of advanced biofuel production by 2022, of which 16 billion gallons must come from cellulosic ethanol.