Clariant’s Version of “My Way” in Biofuel Pays Off

Clariant has put the final touches to the first full-scale commercial cellulosic ethanol plant, culminating some 15 years of work on the project.

Once running at full steam, the 2G facility in Podari, Romania will munch through some 250,000 tons of straw and crop waste annually which, using Clariant’s proprietary sunliquid enzyme, gets converted into 50,000 tons of bioethanol for manufacturing sustainable chemicals and fuels.

But to get to the finishing line, the Swiss company opted to fly solo in a nascent market that already produced some casualties. It’s only a couple of years since Dutch rival Royal DSM NV and partner POET halted a similar project in the US. Their plant relied on costly third-party enzymes in a Trump administration that had eased demands for some refineries to blend ethanol.

“We are building this plant in Romania but it’s not our intent as Clariant to build hundreds of bioethanol plants,” CEO Conrad Keijzer said on a call Friday.

Clariant set up differently. It developed its enzyme in-house, avoiding any volatility in third-party products, and chose European pastures as opposed to the US, where first-generation bioethanol is firmly established. From hereon, the Muttenz, Switzerland-based company will capture value from its licensing model, Keijzer said.

Taking on the 2G project’s full risk was needed to ensure proof of concept. It’s a gamble that looks to be paying off. Even before the plant gets going, Clariant has 5 licensing agreements in place, a deal with a major global oil company looking to future-proof its operation via sustainable feedstock, and a partnership with San Francisco-based aviation fuel recycler LanzaTech.

Clariant’s path to success now looks easier, and the market is more than just energy companies facing a long-drawn out squeeze on the use of fossil fuels. IATA, which represents almost 300 airlines, has committed to net zero emissions by 2050. The same is happening in the shipping industry. Biofuels will play their part.

Keijzer expects customers to pay a handsome premium. A ton of 1G bioethanol can sell for around $600 a ton. The price for a 2G version could be at least double that in markets like Europe, which is looking to avoid competition with the food chain, he added.

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