Thomas White Global Investing
Green Reports

February 2, 2011

The Green Report


Cutting Carbon Emissions with Coal-to-Ethanol Technology

Cutting Carbon Emissions with Coal-to-Ethanol Technology

Celanese hopes to begin constructing the plants in Nanjing and Zhuhai within the next 30 months. Once the Chinese government grants its approval, ethanol production can soon begin.

 

Coal has never been a friend to environmentalists, branded as the most polluting and unhealthiest fossil fuel. But now, the lowly coal nugget has a chance to redeem itself. Celanese, a Dallas-based chemical producer, has patented a technology that converts coal into industrial ethanol.

Why all the fuss about Ethanol? Ethanol or ethyl alcohol is a colorless liquid that was first touted by Henry Ford as the “fuel of the future.” But the fuel didn’t gain prominence until the oil crisis of the 1970s, when governments scurried to seek alternatives to gasoline. Although Brazil is the leader in its usage today, ethanol is a fuel that is widely used everywhere due to easily available sources.

Ethanol, though, is not only used as a fuel. Derived chiefly from corn and sugarcane, ethanol is also used for food and industrial applications. Ethanol is present in beer, wine and other alcoholic drinks, while fruits and vegetables that have undergone fermentation produce ethyl alcohol. Industrial or synthetic ethanol, which is processed differently from that used for food and fuel, is used in pharmaceuticals, cosmetics, detergents, cleaners and solvents. Industrial ethanol can be made using petroleum or through natural resources, like corn. But the sourcing of agricultural products for ethanol has always been under intense debate with many critics saying that it wastes food. In this food vs. fuel debate, ethanol detractors point to rising food prices, placing much blame on ethanol fuel production. Yet, ethanol has become closely knit to our lives over the years; we need it, not only for these myriad applications, but for reducing carbon emissions.

This is where Celanese has an advantage. Their coal-based ethanol can perhaps provide a solution to the food vs. fuel debate, using cheap, abundantly available coal to make environment-friendly ethanol. The process of developing coal-based ethanol integrates Celanese’s existing technology that produces acetyl. In place of the usual fermentation process that is used to make ethanol, Celanese uses a cost effective thermo-chemical process that uses coal and other hydrocarbons as raw materials.

Celanese is targeting the rapidly expanding Chinese market, where the demand for industrial ethanol is a staggering three million tons annually. According to research by Celanese, this Chinese industrial ethanol market is growing at the rate of 8% to 10%, which has prompted the firm to set up two coal-to-ethanol plants in the country. Each of the plants, located in Nanjing in Jiangsu Province and Zhuhai in Guangdong Province, will have a capacity of 400,000 tons per year and will each cost $350 million to construct.


Celanese is targeting the rapidly expanding Chinese market, where the
demand for industrial ethanol is a staggering three million tons annually.

The coal-to-ethanol plants are a huge plus for China, which has an abundant coal supply and is seeking to reduce its carbon emissions. China is the world’s largest emitter of carbon emissions, which stood at 7.5 billion tons in 2009. By the year 2020, the country is aiming to slash its 2005 carbon emission levels by 40% to 45%. But with its blinding pace of growth and an imbalanced economy where 150 million continue to live below the poverty line, China faces a tough challenge. “As climate change accelerates, the range of policy measures taken by China will become increasingly strict, and emissions goals may become increasingly quantified,” worries Xie Zhenhua, deputy head of China’s National Development and Reform Commission. In such a scenario, Celanese’s technology might come as a blessing for China.

For Celanese too, this is an immense opportunity to build on their sales. “China is a big potential market for our coal-based fuel ethanol technology because of the country’s abundant coal feedstock, China’s growing demand for fuel, and the country’s desire to reduce foreign dependency on imported fuel without using subsidies,” points out Steven Sterin, chief financial officer at Celanese. For now, Celanese has developed its coal-to-ethanol technology focusing only on industrial ethanol. But the company adds that the knowhow to make fuel ethanol is very much on the radar screen.

Alternative routes for developing ethanol on the whole seem to be suddenly expanding. Apart from Celanese, Auckland based LanzaTech is proudly showcasing its technology to develop ethanol from non-food resources, chiefly industrial wastes, to be used for fuel as well as industrial purposes. Increasingly, it looks like the colorless liquid will bring green hues back to the world in the near future. And surprisingly, all this stems from that little black coal nugget.

 

 

 


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