The second series of data illustrated in Fig. 1 shows that development of the bioethanol industry in the USA began in the 1980s. The drivers for the in­dustry were in part the rapid surges in global oil prices experienced in the 1970s and 1980s, which led to rising prices of fuel. There was also the presence of a strong agricultural lobby which was (and is) interested in creating ad­ditional revenue streams for farmers. The US bioethanol industry uses corn, and to a lesser extent wheat, as a feedstock for wet — and dry-milling processes. A number of different policy options have been employed to help build the industry. Both federal and state governments have offered the industry dir­ect funding in the form of public-private partnerships and research funds, as well as tax incentives and state-level renewable fuel mandates, i. e., legislated amounts of renewable fuels contained in fuel sales within the state, defined by blending level or by renewable fuels [22,23]. A more focused discussion of state-level funding and tax incentives, and the effectiveness of these options, may be found in Sects. 3 and 4, respectively.

In the USA, most bioethanol production capacity is concentrated in the Midwest, where corn is found in abundance, and where state and federal government incentives have combined to make an attractive en­vironment for investment in the infrastructure required for bioethanol production. Over half of US production capacity is found in just three states, each of which have supplied significant capital resources to the bioethanol industry. The US states with the highest bioethanol capacities include Illinois (annual bioethanol production capacity, 5.1 billion L), Iowa (3.7 billion L), South Dakota (2.2 billion L), Minnesota (1.9 billion L), and Ne­braska (1.8billionL) [18]. These states are notable in that they have provided direct funding incentives in addition to federal funding, as discussed in Sect. 3.

The total financial commitment that the USA has made to biofuels dwarfs the investment that other countries have made. By 2006, total cumulative US funding through national or state programs applicable to bioethanol has ex­ceeded US $ 2.5 billion [23]. The largest amount of funding has been offered by the federal government. Annual program spending by all government agencies, primarily the US Department of Agriculture and the US Depart­ment of Energy, on alternative fuels exceeded US$ 253 million in 1998 and has risen since to more than US$ 300 million [18,24]. This has resulted in improving the technology that is utilized by the industry, and has broadened the potential number of coproducts that can be generated from the bioethanol production process. The remainder of federal funds supports a number of in­centive programs, including the Alcohol Fuel Credit (a corporate tax credit designated for industry producing bioethanol), deductions for both clean — fuel vehicles and refueling properties, and the Renewable Energy Systems and Energy Efficiency Improvements Program. The latter program is designed to aid in the construction of new facilities, and will cover up to 25% of con­struction costs. Maximum grants for a single project under this program are US $ 500 000, and the fund generally pays out between US $ 3-5 million in any given year [22,23]. Finally, it should be pointed out that significant funding in the USA has been directed towards developing cost-effective coproducts from the biofuel production process, allowing the creation of “biorefineries” with improved economic and environmental performance. Pilot facilities are already operating under some of these funding programs [23].

Most recent policy developments in the USA stem from the Energy Pol­icy Act of 2005, H. R. 6, which was signed into law by President G. W. Bush on 8 August 2005 [25]. This act created a nationwide renewable fuels standard (RFS) that will raise the use of biofuels (mostly bioethanol and biodiesel) to 28.4 billion L year-1 by 2012, which is effectively 5% of the total fuel sales. The Act also introduced credits for the purchase or lease of flex-fuel vehicles by taxpayers, although these credits diminish as the sales of flex-fuel vehicles progress by manufacturer through the fiscal year [25]. The 2005 Energy Policy Act has had some unintended consequences as related to biofuels, however. Section 701 of the Act requires flex-fuel vehicles in the US federal fleet to op­erate on alternative fuels 100% of the time. By Executive Order 13149, federal flex-fuel vehicles were previously required to operate on alternative fuels the majority of the time (i. e., 51% or more) [26]. Thus, Section 701 has effectively doubled E85 use by the federal fleet, and the increased demand has raised prices and decreased the practical availability of E85 fuels. The long-term impact of this policy on the market has yet to be seen.

The recently-announced “20/20” vision for biofuels (introduced as a Sen­ate Bill on 29 July 2005) defines a future biofuel production goal for the USA as 20 billion gal (approximately 75.7 billion L) by 2020 [27]. As the US starch — based bioethanol capacity is already quite high, it is unlikely that continued growth could achieve this goal. Accordingly, in his State of the Union Address for 2006, the President outlined the Advanced Energy Initiative, which seeks to reduce US dependence on imported oil by accelerating the development of new, renewable alternatives to gasoline and diesel fuels [28]. These alter­natives include bioethanol and other future biofuels derived from cellulosic biomass. Cellulosic biomass is an attractive energy feedstock because it is an abundant, domestic, renewable source that can be converted to liquid trans­portation fuels including bioethanol, which can be used readily by current — generation vehicles and distributed through the existing transportation-fuel infrastructure. To determine feedstock availability for cellulosic bioethanol processes, the US Department of Agriculture commissioned a report that explored the technical feasibility of a billion-tonne annual supply. This re­port found that approximately 1.24 billion t of dry cellulosic biomass can be sustainably produced each year, with about 910 million t coming from agri­culture and an additional 330 million t from the forest sector [29]. Using the efficiency of conversion technologies observed in the literature to date [6], this would translate to between 110 and 250 million L year-1, compared to current US gasoline use of approximately 500 million L year-1.

US production of biofuels is significant, but today only comprises about 2.6% of liquid fuel consumption. In order to become a more significant component of the transportation fuel sector, biofuel production must grow tremendously, which will require access to cellulosic biomass. The Advanced Energy Initiative includes the Biorefinery Initiative, which sets a goal of mak­ing cellulosic bioethanol cost-competitive by 2012 and which provides signifi­cant funding to achieve this goal (US $ 91 million in 2006, US $ 150 million in 2007) [30]. Biorefining pilot facilities are already operating with starch — based feedstocks, and these processes have the potential to be applied to cellulose-based biofuel production facilities, which will contribute to the eco­nomic viability of these operations. If these measures are successful, cellu — losic bioethanol production could easily become the dominant biofuel within the USA.

2.3

R-phenylacetylcarbinol (PAC), an intermediate in the production of ephedrine and pseudoephedrine, is currently produced by the controlled addition of benzaldehyde to an actively growing culture of yeast (usually Saccharomyces cerevisiae). A decarboxylation/condensation biotransformation is effected by pyruvate decarboxylase (PDC) between pyruvate produced by the yeast and added benzaldehyde (see Fig. 9). Using this traditional process, 12-15 gL-1 PAC is usually produced in 10-12 h with a yield of 70% theoretical based on benzaldehyde [100].

Confirmation of PAC production from benzaldehyde and pyruvate using purified PDC from various sources, including Z. mobilis, S. carlsbergenis, S. cerevisiae, S. fermentati and S. delbrueckii, was demonstrated by sev­eral groups during the late 1980s to mid 1990s [101-105]. Bringer-Meyer et al. [106] isolated and characterized PDC obtained from Z. mobilis. By comparison with yeast PDC (Saccharomyces sp., Candida sp.), bacterial PDC (Zymomonas sp.) had a lower benzaldehyde affinity and was inhibited more strongly by benzaldehyde, even though its affinity for pyruvate was similar or higher than that of yeast PDC.

However, interest in PDC from Z. mobilis continued due to its greater sta­bility than yeast PDC at room temperature with an enzyme half-life in the absence of benzaldehyde of over 100 h [107,108]. Unlike yeast PDC, it is also able to utilize the lower cost acetaldehyde as an alternative substrate to pyru­vate for production of PAC [109]. Advances in site-directed mutagenesis tech­niques have facilitated the production of mutant PDC from Z. mobilis with greater carboligase activity and higher stability towards acetaldehyde [110]. This mutant enzyme, designated PDCW392M, resulted from replacement of the bulky tryptophan residue 392 with methionine. A continuous process with PDCW392M was used in a biotransformation process for conversion of acetaldehyde and benzaldehyde to PAC in an enzyme membrane reactor. A volumetric productivity (space-time yield) of 81 gl-1 day-1 was reported with final PAC concentration of 22 mM and molar yields of 45% (initial sub­strates), based on 50 mM reaction mixture of both aldehydes [111,112].

In further studies by Rosche et al. [113], a biphasic enzymatic biotransfor­mation system for production of PAC from acetaldehyde and benzaldehyde with Z. mobilis PDCW392 was evaluated. Higher concentrations of benzalde — hyde and PAC in the organic phase (octanol) provided protection for the aqueous phase PDC. As a result, a specific PAC production of 11 mg PAC U PDC-1 was achieved compared with 1.2 mg PAC U PDC-1 in the absence of an organic phase. A similar two-phase system has been developed sub­sequently for conversion of pyruvate and benzaldehyde to PAC using PDC from yeast (C. utilis) with higher concentrations and productivities being at­tained [114,115].

A similar aqueous/organic two-phase system has been used also to screen a number of yeasts and bacteria for the enantio-specific reduction of the al­pha, beta-unsaturated carbon bond in citral to produce citronellal [116]. In comparison to the bacteria tested, the eukaryotes showed at least 5-fold lower citral reductase activities. Bacterial strains were found to produce the (S)- enantiomer of citronellal preferentially with ee values > 99% for Z. mobilis and 75% for Citronella freundii. The possible use of a Z. mobilis biofilm biore­actor for production of other fine chemicals has been proposed also [117] as it has been demonstrated that increased tolerance to aromatic substrates such as benzaldehyde can occur with such a bioreactor.

5

While hemicellulose represents a large potential biomass source that is not presently utilized, pretreatment is required for depolymerization of its sol­uble components. Many depolymerization techniques are available, but re­search in this laboratory has focused on hydrolysis with dilute mineral acid at modest temperatures [85,86]. Unfortunately, dilute acid hydrolysis produces toxins that negatively affect biocatalyst growth and metabolism (reviewed in [87]); many of these toxins are listed in Fig. 1. Recent work has focused on an increased understanding of the underlying mechanisms of toxicity and methods for toxicity quantification and reduction.

Furfural, a pentose sugar derivative, is present in hemicellulose hydrolysate at a concentration of 1-4 gL-1 [88] but can inhibit E. coli growth at con­centrations as low as 2.4 gL-1 [89,90]. While other aldehydes, such as 4- hydroxybenzaldehyde and syringaldehyde, are more toxic than furfural on a weight basis, the presence of furfural enhances the effect of other tox­ins [90]. Despite the observed toxicity, ethanologenic E. coli KO11 and LY01 and K. oxytoca P2 have demonstrated a native ability to transform furfural to furfuryl alcohol [91]; the size and substrate specificity of the LY01 furfural re­ductase suggests that it is a new type of alcohol-aldehyde oxidoreductase [92]. Strain LY01, which has higher ethanol tolerance than KO11, also has higher furfural tolerance: KO11 growth was completely inhibited by 3 gL-1 furfural but LY01 was not, although growth was reduced by more than 50% [90]. Con­trastingly, there is no difference in the syringaldehyde tolerance of the two strains [90].

The toxicity of representative alcohol, aldehyde, and acid components of hemicellulose hydrolysis were investigated and found to affect ethanologenic E. coli LY01 in various ways [90,93,94]. In all cases, toxicity was related to hy — drophobicity. The organic acid data suggests that aliphatic and mononuclear acids both inhibit biocatalyst growth and ethanol production by collapsing ion gradients and increasing the internal anion concentration, and not by in­hibiting central metabolic or energy pathways [93]. At least some inhibitors are present at sufficient concentrations to account for the observed growth in­hibition: 9 g L-1 of acetic acid in rich media inhibits LY01 growth by 50%, and acetic acid concentration in hydrolysate can exceed 10 gL-1.

While all of the tested aldehydes did inhibit growth, only furfural had an impact on ethanol production [90]. Alcohols have a lower toxicity than alde­hydes and acids and appeared to inhibit ethanol production primarily by inhibiting growth [94].

Total furan content is representative of total toxicity and can be estimated from UV spectra [95]. The adjustment of hydrolysate pH to 9-10 by the add­ition of Ca(OH)2, a process known as overliming, is an effective method of hydrolysate toxicity reduction [96]. LY01 was able to produce less than 1 g L-1 ethanol from hydrolysate adjusted only to pH 6.5-6.7 but produced 33 gL 1 ethanol from baggase hydrolysate that was overlimed to pH 11 [97].

4.4

Despite the high interest and rapid development of biomass-based fuels, it is not anticipated that oil-based fuels will be completely replaced by renewable fuels in a foreseeable future of 50 years [29]. Conventional refineries convert­ing crude oil to fuels, starting chemicals, and other products, therefore, will operate decades ahead. In the biorefinery literature it has been a common practice to compare conventional petroleum-based refineries with biorefiner­
ies [30,31], but to our knowledge a combination of the two refinery types has not previously been suggested. Integrating conventional and bio/catalytic refineries in the transition period from petroleum-based to biomass-based refineries might lead to several potential synergies with respect to processes, chemicals, and logistics.

Several process streams of intermediates, wastes, and heat from a conven­tional refinery might be utilized in a biorefinery (Fig. 6). Cooling water and some effluent water streams can be used as process water in the biorefinery. A conventional refinery has big volumes of low temperature energy, which could be exchanged and used as process energy in the biorefinery.

Products from the biorefinery can be used as input for various conven­tional refinery processes. As discussed elsewhere in this book, ethanol is mainly used as a blending component in gasoline products. Integrating the two refineries will improve the logistics of this mixed fuel production.

Hydrogen produced from fermentation processes of the biorefinery can for instance be used in the traditional hydrogenation processes of a conventional refinery. Methane produced in the biorefinery can be used as fuel gas, but also as a raw material for further catalytic reforming, producing more hydro­gen. It could also be used for production of H2/CO (synthetic gas), which is a feed gas for gas-to-liquids or methanol production. Introducing catalytic steps between the two refineries might further enhance the beneficial coup­ling since the hydrocarbon output from catalytic conversion of methane and ethanol might serve as a substrate for further refining and modification in the conventional refinery process streams.

Heat waste streams

Ethano

Fig.6 Combination of bio/catalytic refinery and petroleum-based refinery. cat indicates chemical catalytic conversion

5

Conclusion

In this chapter we have shown the potential of producing more than bioethanol out of biomass raw material. While carbohydrates will be the precursor for ethanol production, the rest of the biomass can be used for production of other fuels. By this integration the net energy production will increase and the CO2 reduction will be higher than in biorefineries with­out the integration. Furthermore, reuse of water and nutrient will allow for a more sustainable process with much lower environmental impact on the ecosystem.

An early attempt was made to construct a xylose-utilizing strain of Z. mo — bilis by Liu et al. [45,46] involving expression of genes for xylose isomerase (XI), xylulokinase (XK) and the xylose transport protein from X. albilineans XA1-1. Although the recombinant strain was shown to possess both XI and XK activity, it was unable to grow on xylose as the sole carbon source. Subse­quently, Feldmann et al. [47] constructed a recombinant strain of Z. mobilis ZM4 (pZY228) that expressed the xylA and xylB genes from Klebsiella pneu­moniae for XI and XK, respectively, and the tktA gene for transketolase (TKT) activity from Escherischia coli. However, this recombinant strain was also un­able to grow on xylose.

On the basis of these earlier studies, Zhang et al. [10] constructed a recom­binant strain that successfully converted xylose to ethanol by expression of a transaldolase (talB) gene from E. coli in addition to those expressing XI, XK and TKT activity. This recombinant strain encoded genes for enzymes both for xylose assimilation (XI, XK) and for completion of the pentose phosphate pathway (TKT, TAL) in Z. mobilis. The transformation of wild-type strains of Z. mobilis with the 14.4 kb expression vector (pZB5) was then shown to fa­cilitate the efficient conversion of xylose to ethanol via a completed pentose phosphate pathway (Fig. 1).

This research at NREL was continued further by Deanda et al. [11] who successfully developed a strain capable of arabinose utilization. This recombi­nant strain harbored a plasmid (pZB206) expressing five heterologous genes from E. coli encoding L-arabinose isomerase (araA), L-ribulokinase (araB), L-ribulose-5-phosphate-4-epimerase (araD), transaldolase (talB) and trans- ketolase (tktA).

In related studies on the development of a xylose utilizing strain of Z. mo­bilis, De Graaf et al. [48] built on the earlier research by Feldmann et al. [47] and introduced a further plasmid (pZY228) into strain ZM4 (pXY228). This former plasmid harbored talB from E. coli thereby facilitating expression of all the requisite additional enzymes in Z. mobilis for xylose assimilation and metabolism.

Although there were differences in their construction of these two recom­binant strains, the metabolic pathway for both recombinant strains resulting from expression of xylA, xylB, tktA and talB was the same as shown pre-

viously in Fig. 1. Xylose enters the Entner-Doudoroff pathway via fructose — 6-phosphate and glyceraldehyde-3-phosphate and is converted into ethanol. The following balance equations represent the metabolism of glucose and xy­lose by these recombinant xylose-metabolizing strains of Z. mobilis.

Glucose + ADP + Pi ^ 2Ethanol + 2CO2 + ATP,

3Xylose + 3ADP + 3Pi ^ 5Ethanol + 5CO2 + 3ATP,

Theoretical ethanol yield = 0.51 gethanol/g sugar (glucose or xylose).

Further studies on recombinant strains created at NREL have involved the construction of integrant xylose-utilizing strains [36-38] and additionally an
integrant xylose/arabinose-utilizing strain designated AX101 [39]. This strain was produced using random insertion and site-specific insertion via homolo­gous recombination.

The specific enzyme activities of the various xylose-utilizing recombinant strains have been determined as a means of identifying possible rate limita­tions. For the strains developed at NREL, the specific activity associated with XI was the lowest [49,50]. However, based on calculation of the metabolic fluxes associated with the each enzyme introduced for xylose metabolism, De Graaf et al. [48] concluded for their strain that the flux associated with XK was significantly lower than that of others. This suggested that a metabolic bot­tleneck may exist in their strain, ZM4 (pZY228) (pZY557 tal), due to the low expression of xylulokinase.

Subsequent kinetic studies involving the over-expression of XK (Fig. 2) in an acetate-resistant mutant of the NREL-derived strain ZM4 (pZB5) showed no increase in the maximum specific growth rate or specific rate of xylose metabolism, although there was evidence of a small increase (0.4 gL-1) in production of xylitol for the over-expressing strain [51]. Further research on

these recombinant strains is likely to focus on potential rate-limiting sites, as well as expression of heterologous enzymes from other microbial sources for increased ethanol tolerance.

2.3

For the member states of the European Union, the primary policy tool behind the development of a bioethanol industry is the Directive on the promotion of the use of biofuels for transport (Directive 2003/30/EC) [31]. The motiva­tions behind this Directive include improving the security of energy supply, and reducing the environmental impact of the transportation sector [32]. The Directive mandates an increasing share of biofuels from 2% of total fuel sup­ply in 2005 to 5.75% of total fuel supply in 2010 (based on energy content) in order to meet these priorities. Due to relatively slow growth in the industry, it is currently anticipated that renewable fuels will occupy about 4.8% of the market by 2010, which is significantly less than the existing policy target.

The overriding priorities of the European Commission will impact the be­havior of each member nation in setting national policies relating to biofuels. It can be expected that, while economic factors are not the political prior­ity of the EU, the member nations will have a strong interest in utilizing the proposed Directive to meet national goals of employment and economic di­versification. From an economic standpoint, it is anticipated that a biofuel contribution of 1% of the total EU fossil consumption will create between 45 000 and 75 000 new jobs [32].

At the time of writing, many member states have passed the biofuels Di­rective into national law, including Belgium [33], the Czech Republic [34], France [35], Germany [36], Greece [37], Latvia [38], Lithuania [39], and Swe­den [9]. Some countries have announced indicative targets that are below that of the Biofuels Directive, including Malta (target value for 2005 of 0.3%) [40], Hungary (0.4-0.6%) [41], Poland (0.5%) [42], Spain (0.55-0.65%) [43], and Cyprus (1%) [44]. Each of these countries still plan to achieve national targets of 5.75% for the end of 2010. Slovenia follows a slightly different set of tar­gets, ranging from 1.2% in 2006 to at least 5% in 2010 [45]. The Netherlands has set a target percentage of 2% biofuels for 2006, which will be followed in 2007 by requiring suppliers to ensure that these blends are achieved [46]. The UK has announced a Renewable Transport Fuel Obligation, which will place a legal requirement on transport fuel providers to ensure that a specific per­centage of their fuel sales is renewable, ranging from 2.5% in 2008/09 to 5% in 2010/11 [47].

In implementing the biofuels Directive, some countries have set slightly more aggressive targets, including Austria (revised Fuels Ordinance, 4 Novem­ber 2004: BGBI. II, No 417/2004), which mandates that all petrol and diesel marketers blend at least 2.5% biofuels on an energy content basis in all fuels sold within the country [48]. Sweden has set their national target of at least 3% biofuels after 2005, and has mandated that renewable fuels be made avail­able at petrol stations, starting with the largest stations (> 3000 m3 year-1) in 2006, and progressing to smaller stations (> 1000 m3 year-1) by 2009 [9]. Swe­den also has a very aggressive long-term target of 40-50% reduction of fossil fuel use, which should engender significant increases in biofuel use over the next 13 years [49].

Another important piece of legislation is the Directive restructuring the community framework for the taxation of energy products and electricity (Directive 2003/96/EC), which allows excise-tax exemptions for biofuels pro­duced or blended within European countries [50]. This legislation is very important within European nations due to the high level of excise tax that is currently levied on petroleum and diesel in these countries, particularly when compared to North America. Within these countries, a reduction of even a few percent can mean cents per liter, which translates into significant cost savings. For instance, in Austria, a 10% reduction in excise taxes on biodiesel reduces the cost by US $ 0.028 L-1 [51]. This sum is almost equivalent to the federal ex­cise taxes paid for diesel fuel in Canada. A similar percentage reduction in the US federal excise tax for diesel would result in a selling price of US $ 0.058 L-1 and a savings of only US $ 0.006 L-1 [32,52].

Before the release of the second Biofuel Directive, European governments did not always utilize excise tax exemptions to the same extent as their Cana­dian and US counterparts. This was because national controls over excise tax rates were complicated by the rules of the European Economic Community (EEC). A Directive issued by the EEC on 16 October 1992 was intended to harmonize the structures of excise duties among all member nations [52,53]. When France decided to create an aid scheme for biofuels that would ex­empt these fuels from national excise taxes, objections were raised and an appeal to the Commission of the European Communities was made by BP Chemicals [54]. Ultimately, however, the Commission decided to validate the French decision, allowing an exemption amounting to US $ 0.06 L-1 to be extended through 31 December 2003 [13,55,56]. This move created the prece­dent within the EU to allow excise tax exemptions for biofuels, freeing a pow­erful policy tool for decision-makers within the nations of the Union. The second Directive Regarding Tax Relief Applied to Biofuels (2003/96/EC) was issued in 2003, permitting other countries to make the decision to grant ex­cise tax exemptions as biofuel production becomes more widespread within Europe.

Today, most EC member states, including Austria, Belgium, Cyprus, Den­mark, Estonia, France, Germany, Hungary, Italy, Latvia, Lithuania, Luxem­bourg, Malta, Poland, Slovakia, Slovenia, Spain, Sweden and the UK have introduced exemptions at various levels up to 100%, using the precepts laid down in Directive 2003/93/EC. These exemptions are summarized in Table 1.

In implementing tax exemptions, Germany was careful to include a measure that allowed for adjustments to be made in the case of overcompensation. Per­ceived overcompensation has recently been observed in regards to vegetable — oil based fuels, and accordingly, the German government has introduced an Energy Tax Act, which from 1 August 2006 places a tax on these fuels [36].

Currency exchange rates (December 2006): US$ 1.0000 = € 0.7567 = CDN$ 1.1545 “Canadian Federal excise tax rate is shown. Provincial rates are variable, ranging from US 4.5 /L-1 (Yukon Territory) to US 12.1 /L-1 (Newfoundland and Labrador). Provin­cial excise tax exemptions range from US 0.7 /L-1 (Alberta) to US 1.8 /L-1 (Manitoba) b Mexican and Russian rates are ad valorem and vary on a monthly basis, depending on world petroleum prices

c US Federal excise tax rate is shown. State rates are variable, ranging from US 2.0 /L-1 (Georgia) to US 7.7 /L-1 (Rhode Island). State excise tax exemptions range from US 0.1 /L-1 (Florida) to US 0.7 /L-1 (Idaho)

Italy also incorporated measures to adjust in the case of overcompensation; that country currently provides tax exemptions for an annual quota of200 000 t of biodiesel for the period 2005-2010, as well as reduced excise duties on bioethanol and related bio-derived additives [57]. Several countries have ex­perimented with pilot excise tax exemptions on a project-by-project basis, including Finland [58], Ireland [59], and the Netherlands [46]. Latest reports indicate that Greece [37] is also considering tax exemptions for biofuels.

As of late 2005, only one country exceeded the goals set out in the Direc­tive. German biofuel use (primarily biodiesel) accounted for 3.75% of total fuel consumption in 2005 [36]. Swedish biofuel use (primarily bioethanol) accounted for 2.2% of the total in the same year [9], which came closest to achieving the goal; however, since most cars in Sweden are now running at E5 bioethanol blends, the country has encountered a constraint in the form of the EU Directive on Fuel Quality, which limits renewable fuel blends to 5%. Other countries, including the UK, have identified this Directive as a barrier to achieving the goals of the Directive on Biofuel Use [47]. In France, about 1.2% of fuel sales consisted of renewable fuels in 2005, mostly in the form of bio-ETBE or bioethanol [35]. In Austria, biodiesel production had reached almost 100 million L, which is approximately 1.1% of national fuel consump­tion [13,48]. Spain used significant amounts of both bioethanol (1.49% of total petrol) and biodiesel (0.10% of total diesel) [43].

Most EU members had not yet reached their biofuel use goals under the biofuel Directive in 2005, although the situation is changing rapidly as new capacity comes on-line. Lithuania’s use of biofuels has grown, rising to 0.72% in 2005 [39]. Both Italy and Malta report increasing biofuel produc­tion characterized by significant amounts of biodiesel, achieving about 0.57% and 0.52% biofuel use, respectively, in 2005 [40,57]. Other growing biofuel producers include Poland (0.48%) [42] and Latvia (0.33%) [38]. Countries with less than 0.2% biofuel use in 2005 include Greece (0.18%) [37], the UK (0.18%) [47], and Finland (0.1%) [58]. In the case of Finland, it should be noted that a new biodiesel plant designed to be online in 2007 will produce about 200 million L annually, raising this percentage significantly.

Countries reporting less than 0.1% biofuel use in 2005 include Hun­gary (0.07%) [41], the Czech Republic (0.046%) [34], and Luxembourg (0.021%) [60]. Countries with no appreciable biofuel use include Cyprus [44], Ireland [59], the Netherlands [46] and Slovakia [61]. In Denmark, a limited number of Statoil stations began selling 5% bioethanol blends in 2005, but total sales are as yet unknown and unlikely to meet 2% of total transporta­tion fuel sales. Biodiesel is produced in Denmark but exported, primarily for use in Germany [10]. Estonia has some biofuel production, but this volume is completely exported to other EC member countries [62].

Direct funding mechanisms have been implemented in a number of EU member states. In Belgium, the Federal Public Service of Finance has issued a call for tenders to market increasing amounts of biofuels, beginning in November 2006 for biodiesel and in October 2007 for bioethanol. Some re­search funding has also been made available [33]. In Cyprus, legislation to comply with the biofuel Directive includes a grant scheme for energy conser­vation and renewable energy utilization. Under this legislation, four applica­tions for biodiesel plants have been submitted [44]. In the Czech Republic, state aid for biodiesel production has been introduced at a level of about US$ 39 million (CZK 821 million) [34]. In Estonia, about US$ 5000 (EEK 57 600) was granted as support to draw up business plans for the production of liquid biofuel in 2005 [62]. Ireland announced a renewable energy grant aid package in 2005 which provides up to US $ 86 million (€ 65 million) annually to a range of projects, including biofuel initiatives [59]. Latvia provided about US $ 680 000 (LVL 358 980) for bioethanol and US $ 380 000 (LVL 201 770) for biodiesel production [38]. Lithuanian producers of biofuels may claim re­funds on every tonne of feedstock used in biofuel production [39]. Poland has provided approximately US $ 550 000 (PLN 1 601 700) in funding to research projects related to biofuels, and an additional US$ 95 000 (PLN 271 500) to­wards two production start-up projects [42]. Sweden has provided an invest­ment of approximately US$ 120 million (SEK 815 million year-1) for energy research, which includes research into transportation fuels [9]. The UK has created grant programmes to help upgrade infrastructure and to provide dir­ect support for the development of a biofuels industry [47].

Some countries have also implemented other measures to promote bio­fuels. The Czech Republic has introduced policies that provide resources to support biomass production for non-transport energy purposes [34], and Es­tonia has set aside resources to support the expansion of energy crops [62], as has Slovenia [45]. Ireland has established a number of initiatives, including tax exemptions for corporate fleets and for flex-fuel vehicle sales [59]. The UK created a fleet biofuel mandate for its Government Car and Dispatch Agency in 2005, which specifies 5% biodiesel use in the fleet [47]. Sweden has created a number of progressive measures, including a provision that state-owned vehicles be environmentally sound (which includes power by biofuels), and introduction of a congestion charge for Stockholm to which biofuel-powered vehicles are exempt [9]. Sweden has also released a report entitled “Making Sweden an oil-free society”, which has among its goals the reduction of petrol and diesel in transportation fuels of 40-50% by 2020 [49].

2.4

As outlined in the earlier reviews and summarized in Table 3, wild-type strains of Z. mobilis (and their mutants) can convert simple sugars to ethanol at faster rates and higher yields compared to yeasts. However, the ethanol industry has traditionally used yeasts, and despite the apparent advantages of Z. mobilis, there appears to be little incentive for change with sugar and

Table 3 Characteristics of Z. mobilis for production of fuel ethanol and higher value products

1. Considerably faster specific rates of sugar uptake and ethanol production (specific rates 2-3 times faster than yeasts).

2. Higher ethanol and lower biomass yields compared to yeasts due to different carbo­hydrate metabolism (Entner-Doudoroff vs. glycolytic pathway).

3. Higher reported productivities (120-200 gL-1 h-1) in continuous processes with cell recycle (maximum reported values for yeasts are 30-40 gL-1 h-1).

4. Simpler growth conditions. Z. mobilis grows anaerobically (not strict anaerobe) and does not require the controlled addition of oxygen to maintain cell viability at high ethanol concentrations.

5. Ethanol tolerance comparable if not better than yeasts. Ethanol concentrations of 85gL-1 (11% v/v) reported for continuous culture and up to 127gL-1 (16% v/v) in batch culture.

6. Laboratory scale studies with strains of Z. mobilis over many years in controlled fer­mentations (pH = 5.0, T = 30 ° C) have not revealed any significant contamination or bacteriophage infection problems.

7. The wide range of techniques developed for the genetic manipulation of bacteria (such as Escherichia coli) can be applied to developing recombinant strains of Z. mo — bilis and/or their metabolic engineering.

8. Integrant rec strains of Z. mobilis available for efficient ethanol production from glu­cose, xylose and arabinose. Ethanol concentrations above 60 g L-1 in 48 h reported for medium containing 65 g L-1 glucose, 65 g L-1 xylose.

9. Sequencing of ZM4 genome now provides information for its metabolic engineering for additional higher value products (e. g., succinic acid).

10. Potential for use of its enzymes for fine chemical biotransformations.

starch-based raw materials. Some of the reasons lie in the concerns that Z. mobilis may be less robust than yeast and more susceptible to contamina­tion in large-scale processes, as well as the lack of ethanol industry experience with large-scale bacterial fermentations. In addition, an established feed mar­ket exists for the high protein yeast by-product (as dried distiller’s grains) and any new market for a high protein by-product from a Zymomonas process would need to be established. The key issues and alternative capabilities are summarized in Table 4.

The construction of recombinant strains of Z. mobilis able to use the addi­tional C5 sugars xylose and arabinose have now opened up new opportunities as illustrated by the recently announced Dupont/Broin partnership to develop a Zymomonas-based process for conversion of corn stover to ethanol [43]. In an Integrated Corn Biorefinery (ICBR), this would be associated with conver­sion also of the corn starch to higher value products (e. g. to 1,3-propandiol using recombinant strains of Escherichia coli). Experience with large-scale re­combinant bacterial fermentations could provide a future platform as well for an increased range of higher value products generated via the metabolic en­gineering of micro-organisms such as Z. mobilis which are capable of both rapid and highly efficient sugar metabolism.

Cellulose is organized into insoluble crystalline ribbons with extensive hydro­gen bonds between strands [98,99]. This structure is not easily hydrated and the fungal cellulase enzymes used for hydrolysis have low catalytic rates in comparison to other glycosidases. Thus, the cost of these enzymes is a ma­jor consideration in cellulose utilization [100]. An additional challenge is the feedback inhibition of cellulose hydrolysis by glucose and cellobiose, the products of the hydrolysis process. Simultaneous saccharification and fer­mentation (SSF), developed by Gulf Oil Company in 1976, combines cellulose saccharification and fermentation of the resultant glucose by Saccharoymyces in a single vessel [ 101,102]. Recent work in this area has focused on reducing the supplemental cellulase demand by engineering the biocatalysts to produce recombinant cellulase enzymes.

Erwinia chysanthemi contains two endoglucanases, CelZ and CelY, which work synergistically to degrade amorphous cellulose and carboxymethyl cel­lulose [103]. In order to effectively reduce the demand for cellulase supple­mentation, CelZ and CelY need to be expressed at high levels and secreted by the biocatalyst. The use of a surrogate Z. mobilis promoter and addition of the E. chrysanthemi out secretion system resulted in high levels of CelZ expres­sion in E. coli and K. oxytoca P2, with active glycan hydrolase representing approximately 5% of total cellular protein in both organisms [104,105]. High endoglucanase activity from recombinantly expressed CelZ and CelY enabled K. oxytoca M5A1 to produce ethanol from amorphous cellulose without the addition of supplemental cellulase enzymes [106,107].

As described above, the primary product of cellulose digestion by en — doglucanase and cellobiohydrolase is cellobiose. Unfortunately, cellobiose is a potent inhibitor of these enzymes [108]. The ability to metabolize cel — lobiose is widespread in prokaryotes [108] and is desirable for biomass­utilizing strains. Ethanologenic K. oxytoca P2 has the native ability to trans­port and metabolize cellobiose, reducing the initial demand for supplemental P-glucosidase [50]. The K. oxytoca cellobiose-utilization operon casAB has been functionally expressed in E. coli KO11, enabling production of ethanol from cellobiose or, with the aid of commercial cellulase, from mixed-waste office paper [50,109].

In the pursuit of a decreased supplemental cellulase demand, an alterna­tive approach to biocatalyst engineering is the use of non-biological processes to improve cellulose hydrolysis. For example, the use of ultrasound during SSF resulted in a 20% increase in ethanol production from mixed-waste office paper by K. oxytoca P2 [110]. Additionally, fungal cellulase demand dur­ing mixed waste office paper fermentation by P2 was reduced by recycling cellulase [54].

5

Mats Galbe1 • Per Sassner1 • Anders Wingren2 • Guido Zacchi1 (И)

department of Chemical Engineering, Lund University, P. O. Box 124, 221 00 Lund, Sweden

Guido. Zacchi@chemeng. lth. se

2SEKAB E-Technology, P. O. Box 286, 891 26 Ornskoldsvik, Sweden

1 Introduction……………………………………………………………………………………………… 304

2 Flowsheeting……………………………………………………………………………………………… 309

2.1 Simulation of Ethanol Production from Lignocellulosic Materials…………………. 310

3 Process Economics…………………………………………………………………………………….. 311

3.1 Effect of Various Parameters on the Energy Demand and Production Cost 318

3.2 Lignocellulose versus Starch—a Comparison……………………………….. 322

3.3 Co-location with other Plants…………………………………………………………………….. 325

4 Conclusions………………………………………………………………………………………………. 325

References……………………………………………………………………………………………………. 326

Abstract This work presents a review of studies on the process economics of ethanol production from lignocellulosic materials published since 1996. Our objective was to identify the most costly process steps and the impact of various parameters on the fi­nal production cost, e. g. plant capacity, raw material cost, and overall product yield, as well as process configuration. The variation in estimated ethanol production cost is considerable, ranging from about 0.13 to 0.81 US$ per liter ethanol. This can be ex­plained to a large extent by actual process differences and variations in the assumptions underlying the techno-economic evaluations. The most important parameters for the economic outcome are the feedstock cost, which varied between 30 and 90 US$ per metric ton in the papers studied, and the plant capacity, which influences the capi­tal cost. To reduce the ethanol production cost it is necessary to reach high ethanol yields, as well as a high ethanol concentration during fermentation, to be able to de­crease the energy required for distillation and other downstream process steps. Improved pretreatment methods, enhanced enzymatic hydrolysis with cheaper and more effective enzymes, as well as improved fermentation systems present major research challenges if we are to make lignocellulose-based ethanol production competitive with sugar — and starch-based ethanol. Process integration, either internally or externally with other types of plants, e. g. heat and power plants, also offers a way of reducing the final ethanol production cost.

Keywords Bioethanol production • Biomass • Flowsheeting • Process economics

1

Introduction

There is no single process design offering the most cost-efficient way to pro­duce ethanol from biomass. Many factors that affect the desired product have to be taken into consideration. Regarding ethanol production, some of the most important parameters are the capital cost of the plant, the type and cost of raw material, the utilization efficiency of the materials involved in the pro­cess and the energy demand. The design of the plant, as well as its individual process steps, must be based on accurate and reliable data. These comprise both physical and chemical data and cost estimation data. It is naturally best to use data gathered from the same or a similar type of plant as the intended one. Most of the data required are available, or can be adapted and used for a new plant design. This is not the situation when lignocellulosic materials are considered as feedstock for ethanol production.

Ethanol has traditionally been produced from sugar cane and sugar beet juice [1] or from various starch-containing materials, e. g. corn or wheat [2-4]. Figure 1 shows a simplified flowsheet of an ethanol produc­tion process based on starch-containing materials. Liquefaction of the starch fraction is accomplished by adding hydrolytic enzymes (a-amylases) at tem­peratures of around 90 ° C. After the liquefaction step the starch molecules are further hydrolyzed by the addition of glucoamylases. This produces sug­ars, which are readily fermented by yeast, e. g. Saccharomyces cerevisiae, to ethanol. The main co-product is usually animal feed, consisting of the re­maining fraction of the raw material, mainly proteins and fiber, which is sometimes referred to as DDGS—distillers dried grains with solubles [5]. There is considerable experience in starch-based ethanol production, and the technology can be considered mature. The design and cost estimates of new plants are, therefore, rather accurate.

The availability of agricultural land for non-food crops and the limited market for animal feed places a limit on the amount of ethanol that can be produced from starch-based materials in a cost competitive way [6]. Ethanol production from lignocellulosic raw materials, on the other hand, reduces the potential conflict between land use for food (and feed) production and energy feedstock production. The raw material is less expensive than conventional agricultural feedstock and can be produced with lower inputs of fertilizers, pesticides, and energy. Lignocellulosic materials contain about 50-60% car­bohydrates in the form of cellulose (made up of glucose) and hemicellulose (consisting of various pentose and hexose sugars), which may be fermented to ethanol, and 20-35% lignin. The latter is the main co-product, which could be used for the production of heat and electricity or, in the longer perspective, for the production of specialty chemicals. There is thus no co-product limita­tion on the use of lignocellulosic materials for ethanol production. The only limitation is the availability of the raw material and, of course, the production

cost. During recent years, there has been a considerable increase in interest in research on and the development of the conversion to ethanol of lignocellu — losic materials, such as agricultural and forest residues, as well as dedicated energy crops.

However, in contrast to starch-containing materials, cellulose-containing raw materials, such as forest residues and straw, have not yet been commer­cialized in the ethanol industry. The reasons for this are several. For instance, there are physical barriers such as:

• the complex structure of lignocellulosic materials, making them recalci­trant to hydrolysis;

• the presence of various hexose and pentose sugars in hemicellulose, mak­ing fermentation more difficult; and thirdly,

• the presence of various compounds that inhibit the fermenting organism. These compounds either originate from the raw material itself, e. g. ex­tractives, or are formed during the early process steps, e. g. degradation products of sugars and lignin. This makes it difficult to reach high ethanol concentrations during fermentation, which in turn results in a high energy demand and thus high production cost.

There is a big risk involved in being the first to invest in commercialization of a lignocellulose to ethanol plant and this is the main reason why there is no full-size plant in operation today.

Interest in lignocellulose-based ethanol production has recently brought about action on high political levels. For example, in the USA, the Energy Pol­icy Act of 2005 requires blending of 7.5 billion gallons (^ 28.4 million m3) of alternative fuels by 2012 [7] and recently, in his State of the Union Address (Jan 31, 2006), the US President announced the goal of replacing more than 75% of imported oil with alternative fuels by the year 2025 [8]. The major part of this alternative fuel will probably consist of ethanol, and to be able to meet these demands this will have to be largely produced from lignocellulosic materials. In Europe the European Commission plans to progressively replace 20% of conventional fossil fuels with alternative fuels in the transport sector by 2020, with an intermediate goal of 5.75% in 2010 [9]. Bioethanol is also expected to be one of the main means of achieving this goal.

Experience in the production of ethanol from lignocellulosic materials is limited, at least using modern technology. Full-scale plants have only been run occasionally during times of war. Examples are the Bergius process (con­centrated HCl) operated in Germany during World War II, and the Scholler process (dilute H2SO4), which was used in the former Soviet Union, Japan and Brazil [10]. Thus, design and cost estimation for lignocellulosic-based processes cannot be based on reliable operational experience, but data gath­ered on lab scale, or at best on pilot scale, must be used. It is true that some of the process steps are of the same type as in a starch-based process, but there are several major differences. For example, the by-products from the various processes are not the same. Some of these are considered valuable co­products, which will contribute to the profit from the process, while others are waste materials that must be dealt with in wastewater treatment plants, or disposed of by other means.

During the past 20 years or so, a great deal of effort has been devoted to research on various areas, such as the pretreatment of raw material, enzy­matic hydrolysis of cellulose, including the production of more cost-effective enzymes, and the development of new microorganisms and fermentation techniques to ferment all the sugars available in lignocellulosic materials. An enormous amount of data has been generated (see the work by Galbe, Vikarii, Cherry, Hahn Hagerdal, and Ingram, all in this volume), which today forms the basis for techno-economic calculations. However, although the re­sults may be accurate, there is still a huge scale-up problem involved in going from batch pretreatment reactors on the liter scale, to continuous reactors of several cubic meters, and from 1- to 100-liter fermentors to vessels with a vol­ume of 1000 cubic meters or more. Issues such as material corrosion, rapid heat evolution, excessive foaming, and precipitation of solids and incrusta­tion, which may not even be considered on the lab scale may become serious problems in a full-scale process.

Pilot-scale trials have been run in several places during the past decade. The National Renewable Energy Laboratory (NREL) (Golden, Colorado, USA) has constructed a pilot fermentation facility to test bioprocessing technolo­gies for the production of ethanol and other fuels or chemicals from cellulosic biomass [11]. The Process Development Unit (PDU) of the Bioethanol Pilot Plant was set up to investigate biomass fuel and chemical production pro­cesses from start to finish on a scale of about 900 kg day-1 of dry feedstock. The plant is, however, not a fully integrated unit that can run continuously.

A 1000 kg day-1 plant, using spruce as the raw material, has been in op­eration in Ornskoldsvik in Sweden since the middle of 2004 [12]. Abengoa Bioenergy Corp. has constructed a pilot plant in York, Nebraska, USA [13] and is now constructing a demonstration scale plant in Salamanca, Spain, with an annual production capacity of 5000 m3 ethanol. This will be brought into operation at the beginning of 2007 [14]. This demonstration plant, which will be co-located with a 195 000 m3 y-1 starch-based plant, will utilize the straw from wheat and thus contribute to the overall production capacity. Furthermore, Iogen Corp. is operating a pre-commercial demonstration fa­cility, located in Ottawa, Canada, where ethanol is made from agricultural residues [15]. The plant is able to handle up to 40 metric tons of feedstock daily, consisting of wheat, oat, and barley straw, and is designed to produce up to 3 million liters of ethanol annually.

Data from these types of plants will increase the reliability of cost estimates significantly. They can also be used to identify process problems associated with continuous processing, such as the accumulation of toxic substances in various process streams, and fouling of heat exchanger surfaces. However, in most cases this will be proprietary information not available in the scientific literature.

Two process concepts have been investigated more than others regarding ethanol production from lignocellulosic materials. The main difference be­tween the two is the way in which the cellulose chain is broken apart; either dilute sulfuric acid or cellulolytic enzymes are used to hydrolyze the cellulose molecules. Figure 2 shows the main features of a dilute acid hydrolysis pro­cess. The raw material is treated with 0.1-3% (w/w) H2SO4 at temperatures normally ranging from 160 to 200 °C. It may be advantageous to perform dilute-acid hydrolysis in two steps since the hemicellulose fraction is more easily degraded than is the cellulose fraction. A disadvantage of the dilute acid process is the somewhat low ethanol yield and the necessity of using ex­pensive construction materials that are resistant to corrosion by acid at high temperatures. The acid must also be neutralized, which leads to the forma­tion of large amounts of gypsum, CaSO4, or other compounds that have to be disposed of.

An alternative to acid hydrolysis is enzymatic hydrolysis (Fig. 3). Cellu­lolytic enzymes are produced by microorganisms and have the ability to cleave off short sugar units from the cellulose chain, as described in detail

by Vikarii 2007 and Merino 2007 (this volume). The enzymatic process is op­erated at much milder conditions than the dilute acid process, which is of great importance for several reasons. The yield can be expected to be higher, the construction materials will be less costly and the formation of toxic by­products will also be reduced. However, the enzyme action suffers from being slow if the raw material is not pretreated prior to enzymatic hydrolysis. Pre­treatment can be performed in a number a ways. Depending on the type of raw material (hardwood, softwood or agricultural residue) a certain pre-

treatment method can be more or less successful. Pretreatment is described in more detail by Galbe 2007 (this volume). Fermentation can be performed either in a separate fermentor tank, a process configuration normally re­ferred to as separate hydrolysis and fermentation (SHF), or simultaneously with the hydrolysis of the cellulose chains, so-called simultaneous sacchar­ification and fermentation (SSF). If the pentose sugars are also fermented, the process is sometimes referred to as simultaneous saccharification and co­fermentation (SSCF). The downstream processing section is similar for the dilute acid hydrolysis and the enzymatic processes, or at least includes the same process steps (Figs. 2 and 3).

Simulation of processes with the aid of flowsheeting programs is an in­valuable tool in studying how changes in process design affect the overall performance of a plant. Plants operating 24/7 cannot be experimented on, since the profit loss may be considerable if an ill-planned test causes standstill for a day or two. By performing “experiments” on a plant using computers the outcome of a design change can be evaluated beforehand, which will make a change in the process less risky.

This work will focus on the process economic aspects of ethanol pro­duction from lignocellulosic materials and provide targets for where process improvements should be investigated. The enzymatic process will be consid­ered in detail, as most research over the years has been concentrated on this type of process. However, as mentioned earlier, the process suffers from the fact that process data from large production plants are very scarce. Neverthe­less, the data gathered so far on lab and bench scales can be used as input data in flowsheeting programs for comparison of various process alternatives and to help identify bottlenecks in a process. A summary of various pub­lished reports and papers will be made. Unfortunately, this is an area that has clearly been neglected by many researchers, since the number of publications is small.

2

The application of 13C and 31P Nuclear Magnetic Resonance (NMR) spec­troscopy can provide information on both metabolic and energy status dur­ing cell growth through determination of the levels of various phosphorylated intermediates and energy rich compounds as shown in earlier studies on wild-type strains of Z. mobilis [48,52-55].

More recent research with 31P NMR has identified a less energized state of ZM4 (pZB5) when grown on xylose media [56,57]. 31P NMR studies have established that levels of nucleoside tri-phosphates (mostly ATP) and sugar phosphates were lower for growth on xylose compared to that on glu­cose, with this energy limitation resulting in a potential growth restriction. The presence of by-products identified as xylitol, acetate, lactate, acetoin and dihydroxyacetone by 13C NMR spectroscopy and high-performance li­quid chromatography may also result in some inhibition of growth. Further 31P NMR studies [58] have shown that the addition of inhibitory concentra­tions of sodium acetate caused decreased levels of nucleotide tri-phosphates and sugar phosphates, together with increased cytoplasm acidification.

2.4