Corvallis cellulosic ethanol start-up receives energy grant

Daily Journal of Commerce (Portland, OR), May 6, 2008 by Libby Tucker

The U.S. Department of Energy last week awarded Trillium FiberFuels a $100,000 grant to test a new method for making cellulosic ethanol - a biofuel made from grass, wood and other fibrous plant material.

The Corvallis-based technology startup was the only Oregon company to receive a Small Business Innovation Research grant and one of 360 companies receiving a total of $36 million nationwide.

The grant money is a pittance for a research company - not even enough to accomplish what Trillium's promised the DOE - but the grant will help lend the renewable fuel company credibility with other investors, said Chris Beatty, a former Hewlett-Packard employee and co-founder of Trillium.

Trillium is seeking a grant from the Oregon Nanoscience and Microtechnologies Institute as well as funding from the state under the Business Energy Tax Credit.

"If they get something going, we'd probably participate in some way with a tax credit," said Rick Wallace, a senior policy analyst for the Oregon Department of Energy. "The time is coming when we back off the incentives for corn and send them to cellulosic."

Cellulosic ethanol is "really where Oregon wants to go" with renewable fuel development, said Wallace. Corn doesn't grow well in Oregon and the state's supply of grass is abundant, he said.

Corn-based ethanol has come under fire for the amount of energy it takes to produce and has fed speculation that diverting grain to ethanol production is contributing to rising food prices around the world.

"There's a huge opportunity for cellulosic (in Oregon)," said Tomas Endicott, a co-founder of SeQuential-Pacific Biodiesel and a renewable energy consultant. "It absolutely is worthwhile to invest in that technology today to bring down the costs and improve the technology."

The grant puts Trillium in the running for the second phase of the small business grants for up to $1 million if the technology proves feasible.

Founded in 2006 by three former Hewlett-Packard employees and an Oregon State University researcher, Trillium is looking for a commercially-viable way to process cellulose, the abundant fiber that gives plants their structure.

To convert cellulose into a suitable form for ethanol production, it must first be broken down into a sugar-like component called xylose. But the yeast used for fermenting sugar in corn-based ethanol production can't process xylose. So companies are taking different approaches to cracking xylose for ethanol production.

In January, Pacific Ethanol received a $24 million federal grant to build the first cellulosic ethanol test plant in Boardman that would use yeast that's been genetically modified to process xylose.

"There's some big money flying around for our competition, genetically modified organisms," Beatty said.

Trillium is experimenting with naturally-occurring enzymes that break the xylose into sugars that can be processed by yeast.

"There's a trade-off between you have to do a little extra processing to make that happen, but then you get to use the yeast we've known for centuries," Beatty said.

Located in Corvallis, which claims to be situated in the grass seed capital of the world, Trillium has a good head start developing a new cellulosic ethanol technology. But the company is still a long way from commercial production.

"What Trillium will have to do is team up with a production firm that actually makes fuel," Wallace, of the Oregon DOE, said. "They're in a good spot in the valley here we have a lot of rye grass and waste that could be used for this."