Loan approved to build Brazil’s first commercial-scale cellulosic ethanol plant

Funding to build Brazil's first commercial-scale cellulosic ethanol plant has been approved, according to reports. Brazilian development bank BNDES has approved a BRL 300.3m (USD 150m) loan to develop the plant, which will be used to produce biofuels and renewable chemicals. The plant is for a second generation ethanol project of Brazil's GranBio Investimentos Group.

The plant, which will be built in the municipality of São Miguel dos Campos in the northeastern state of Alagoas, will produce 82 million litres of ethanol a season using cane bagasse as a biomass feedstock, Reuters reports. GranBio plans to develop green plastics as well as biofuels and enhanced genetic material for sugar cane varieties with the project. The 100 per cent Brazilian-owned company acquired a 25 per cent stake in April in the US American Process Inc, giving it access to the company's biomass processing technology.

Research into cellulosic ethanol production has made "major advances in the laboratory over the past decade but the technologies have not been fully tested on a commercial or industrial scale," which raises the stakes for investments in plants at this stage, Reuters reports.

The first plants to produce large volumes of cellulosic ethanol will get a premium for their product. But chemical engineers currently hammering out designs for new second generation ethanol plants say many of the first commercial cellulosic plants built may be obsolete or unsustainable in a matter of a few years.

Reuters said Brazil's sugar cane ethanol sector has also announced a slew of new investments into building cellulosic ethanol plants in the past several months, including eight plants by Raizen – a joint ventures between Brazilian sugar and ethanol giant Cosan and oil major Royal Dutch Shell.

In October 2012, the Raízen Group also announced it was working with Canada's Iogen Energy to develop a commercial cellulosic ethanol project in Brazil.