A new kind of fuel production has launched in Brazil.  Unlike ethanol plants in the country which turn sugarcane to ethanol or traditional oil refining, the new plant produces the equivalent of diesel fuel formed from the waste byproducts of microbes that "eat" and reprocess the sugar.  Built by Emeryville, CA-based Amryis Technologies, the plant aims to produce 10,000 gallons a year (approximately 238 barrels).

While biodiesel and biofuels are not exactly a new concept, this is one of the largest test deployments to date of sugar based biodiesel, particularly of a microbial scheme (most biodiesel is formed from plant oils, such as palm oil).  The plant aims to produce, with government regulation and carbon taxes, fuel at $60/barrel (approximately $1.43 per gallon).  This indicates that their technology may be nearing cost competitiveness with cellulosic ethanol manufacturers -- the best of which, Coskata, claims to be on the verge of $1.00 per gallon ethanol.

Advantages of the cellulosic ethanol include being able to come from waste materials unlike the biodiesel that’s formed from sugar crops.  However, the biodiesel packs more energy per gallon and the microbes could eventually be genetically engineered to process cellulose as well.  It’s hard to tell which solution costs less, given that the target costs for the biodiesel are post-subsidy, while Coskata's targets are pre-subsidy.

The plant will go online in 2011 and should looks to sell its high-grade fuel products primarily overseas as Brazil doesn't use much diesel fuel.

One key advantage of the biodiesel is like ethanol it lacks the harmful impurities found in standard oil.  The fuel features less sulfur, less carbon monoxide, and fewer nitrogen oxides, particulates, and other emissions, compared with petroleum diesel.  States Neil Renninger, founder and chief technical officer of Amyris, "The greenness of the fuel might drive a few people to it, but we need to be cost competitive."

The plant will use existing sugarcane delivery infrastructure.  However, it faces tough competition.  Sugarcane ethanol production is much more energy efficient than that of its American brethren, corn ethanol.  Sugarcane waste is burned and the production consumes less electricity, leading to a net electricity surplus.  Corn ethanol, meanwhile consumes more electricity to produce than it generates.  Lester Lave, a professor of economics and co-director of the Electricity Industry Center at Carnegie Mellon University, in Pittsburgh, praises sugarcane ethanol, stating, "The net energy invested in sugarcane ethanol is not very high and leads to huge gains relative to the gain from corn."

However, sugarcane is unfortunately limited by geography, as it grows best in tropical regions which are warmer and receive more sunlight.  A few states -- Hawaii, Louisiana, and Florida do have conditions conducive to moderate sugarcane yields.  A corn-sugarcane hybrid called corncane might be viable across a broader range of states, though, while retaining much of sugarcane's benefits.