Inedible Crop Biofuels Need Mandate, Novozymes Says

Sept. 1 (Bloomberg) — Efforts to spur use of clean fuel

from inedible crops will fail unless governments force oil

companies to offer it to consumers, according to Novozymes A/S,

developer of technology to reduce the cost of biofuel output.

“The issue is access to consumers and you see that clearly

in the U.S.,” Chief Executive Officer Peder Holk Nielsen said.

“Oil companies don’t promote this technology and they are the

only interface to the consumers as they control gas stations.”

In the U.S. the Environmental Protection Agency is eight

months past a deadline for a biofuel mandate forcing refiners to

add specified amounts of clean fuel each year into motor fuels.

Companies like Chevron Corp., BP Plc, Royal Dutch Shell

Group Plc and Exxon Mobil Corp. have struggled achieve

commercial-scale output of non-food biofuel and waste as they

need more refining than food plants to break down tough

cellulose. Novozymes is developing enzyme technology that cuts

costs and raises yields.

“Advanced biofuels will be a very, very hard sell outside

those countries where the energy sector is state-controlled

unless politicians get on top of it and mandate the use,”

Nielsen said. “That doesn’t mean subsidies, it just means that

if they don’t mandate the use of it, the oil companies will

always conclude that they would rather sell gasoline.”

The first-generation of biofuel made from edible crops has

been blamed for raising food prices. The European Union in June

proposed to cap the amount such fuel can contribute toward its

2020 target of 10 percent renewable energy in transport at 7

percent. It also proposed that member states set targets for

advanced biofuels at 0.5 percent of total transport-energy use.

“A mandate in Europe on advanced biofuels is a battle with

the oil companies,” Nielsen said in London. “This comes down

to how much does the world really want to replace fossil fuels

with renewables. It doesn’t have to be expensive but it will

require political will to make it happen.”

Novozymes and Dong Energy AS in July won 39 million euros

($51 million) from the EU to build a plant in Denmark that will

use straw to make clean fuel. A final decision on whether to

proceed with the facility is expected in the last quarter and

depends on whether EU states provide enough support.

The company expects to sell enzymes to at least 15 biomass

conversion plants by 2017. It’s already supplying enzymes to a

bioethanol facility operated by Beta Renewables SpA in Italy,

Nielsen said. He believes Beta will roll-out another 15 to 25

facilities and that would represent about 1 billion Danish

kroner ($176 million) in annual sales for Novozymes.

After the initial wave of 25 plants, Nielsen says he hopes

advanced biofuels will be cost competitive with gasoline.

“Advanced biofuels is a transformative part of our

business, where we see long-term growth,” he said. “Corn

ethanol is a great growth journey but it won’t transform the

world of industrial biotechnology.”

Novozymes enzymes are also used in pharmaceuticals, food

and drink, farming and household goods like cleaning products.

To contact the reporter on this story:

Louise Downing in London at

ldowning4@bloomberg.net

To contact the editors responsible for this story:

Reed Landberg at

landberg@bloomberg.net

Tony Barrett

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