Iogen: Biofuel breakthrough in Brazil opens door to global expansion

Iogen: Biofuel breakthrough in Brazil opens door to global expansion

For Brazil, it is a dream come true. For Ottawa-based Iogen, the first large-scale commercialization of the firm’s cellulosic biofuel processes in Brazil is both a huge win, and a validation of the company’s global potential, says Iogen CEO Brian Foody.

When Brazilian President Dilma Rousseff officially opened the new advanced biofuel facility in Piracicaba, São Paulo, in 2015 she spoke about “the realization of a dream for the country.”

Brazil’s vision to become a global leader in the mass production of clean-burning ethanol made from sugarcane waste is now materializing at the cellulosic ethanol plant at energy giant Raízen’s Costa Pinto sugarcane mill.

Brazil’s milestone achievement is a significant breakthrough for Iogen, the Canadian company that developed the enzyme-fermentation technology behind the ethanol plant.

“This market has enormous potential. The world is looking to cleaner, biologically based fuels as a key component of reducing greenhouse gas emissions and fighting climate change,” says Iogen CEO Brian Foody.

Cellulosic ethanol is a second-generation or advanced biofuel. First-generation biofuels, which have been produced for many decades, are primarily sourced from food crops, such as sugar cane or corn. Cellulosic technology uses non-food biomass – waste material that would otherwise be discarded. With lower costs and a renewable feedstock that doesn’t put pressure on food supplies, the second-generation market holds much promise.

The $105-million Brazilian plant will produce 40-million litres of cellulosic ethanol a year from sugarcane straw and bagasse – the pulpy residue left behind after the juice is extracted from the sugar cane. Raízen has announced plans to use Iogen’s technology at seven additional plants to be built over the next 10 years.

Iogen’s pursuit of second-generation biofuel production began more than 30 years ago and it became an early leader. “We were a pioneer in cellulosic biofuels. In the early 1980s, we were the first in the world to produce ethanol motor fuel from agricultural residues and wastes,” says Foody.

Iogen was incorporated in 1986, following several years of R&D into its proprietary enzymatic process. Through its research into fibre-digesting enzymes for biofuel production, the company discovered that the enzymes themselves had commercial potential.

“For more than 20 years, we sold our industrial enzymes all over the world,” says Brian Foody. “They were used for ‘stonewashing’ blue jeans, and for making beer, animal feed, low-chlorate paper and many other products.” Iogen sold its successful commercial enzymes business in 2013 to Denmark’s Novozymes.

Meanwhile, the company had continued on the path to advanced biofuel development. In 2002, Royal Dutch Shell became a major investor in Iogen’s technology and the two companies formed Iogen Energy.

In 2004, Iogen began to produce commercial quantities of cellulosic ethanol for field demonstrations out of its large demonstration plant in Ottawa – built with the support of Technology Partnerships Canada and Petro Canada. The next logical step of full commercial production appeared well within reach.

“But commercialization posed challenges,” explains Foody. “We developed plans for projects in places such as Manitoba and Saskatchewan, and Kansas and Idaho, and as a partner with Volkswagen, in Germany. But none got off the ground because they were very capital intensive.”

The change came in 2012, when Iogen and Shell turned their energies towards Brazil and forged a partnership with Raízen, itself a joint venture between Shell and a leading Brazilian ethanol company.

Building a facility from the ground up was expensive and potentially risky but here was an opportunity to make use of existing infrastructure, Foody says. “Raízen already had much of the equipment we needed and co-locating with the sugarcane mill meant the feedstock was available on site. We were able to scale-up plant operation more quickly and with significant cost savings.

“With renewed global focus on fighting climate change, the commitment to clean renewable energy is going to strengthen,” says Iogen’s CEO. “A multi-billion-dollar cellulosic biofuel market is on the horizon – we envision an industry globally on the scale of Canada’s oil sands industry or larger.

“In the U.S. alone, we could see over a billion tonnes of plant residue making 100-billion gallons of fuel every year; that’s more than 50 per cent of U.S. gasoline needs today.”

Five questions

1) What was your first export sale?

It was an enzyme for clarifying apple juice. We called it “Apple Ace” and in 1991, we sold it to America’s largest apple-juice manufacturer.

 

2) How did that first opportunity arise?

One of our team members connected with the U.S. company at a food industry conference.

 

3) When it comes to exports, what do you know now that you wish you knew then?

I wish we had known about EDC at the start. EDC became a key supporter of our industrial-enzyme sales worldwide but early on, we had difficulty getting the financing to deliver a large order of animal-feed enzymes to a foreign pharmaceutical company. Local banks were nervous to take credit from a foreign firm.

 

4) How has the trading world changed since you started in business?

The energy industry has been through significant changes. When we started, the first energy crisis was on and there was a push to develop alternative fuels. Then, global oil prices tumbled and there was a “black period” for renewable energy. Today, with renewed urgency over climate change, our technology is again recognized as important and relevant.

 

5) What is the #1 thing that new SMEs need to know about exports and trade?

It’s easy for young businesses to be drawn into doing things without getting money. I hear companies say they have a great partner in another country “who will pay for my technology but I have to get it developed first.” Particularly in export markets, promises in the future won’t necessarily come through. Having products that people will pay for now is critical.

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