ETHANOL ABER REFINERY PLANT “MATILDE ESTHER”, LOS RIOS, ECUADOR

BACKGROUNDS

The world of century 2000 presents many critical challenges. One of the most important
challenges concerns the environment. As population increases and the standard of living
improves, there is an increasing concern that there will be a shortage of energy to heat our homes
and power the vehicles we so heavily depend on. We must also remember the need for clean air,
clean water, clean fuel, and biodegradable, renewable materials.

Advances in technology have allowed development of alternative energy sources. Alternative

energy sources are renewable, cleaner, and more dependable than traditional fuels. Ethanol is an
alternative energy source. It is an alcohol made by fermenting corn or other similar products.
There are three primary ways that ethanol can be used as a transportation fuel:

1. As a blend of 10 percent ethanol with ninety percent gasoline,

2. As a component of reformulated gasoline, directly and/or as ethyl
tertiary butyl ether (ETBE) or
3. Used directly as a fuel with 15 percent or more of gasoline known as
"E-85".

Ethanol can be used to increase octane levels, decrease engine emissions, and can extend the
supply of gasoline.

WHAT IS ETHANOL?

Ethanol (ethyl alcohol, grain alcohol, EtOH) is a clear, colorless liquid with a characteristic,
agreeable odor. In dilute aqueous solution, it has a somewhat sweet flavor, but in more
concentrated solution it has a burning taste. Ethanol (CH3CH2OH) is a group of chemical
compounds whose molecules contain a hydroxyl group, -OH, bonded to a carbon atom. Ethanol
made from cellulosic biomass materials instead of traditional feestocks (starch crops) is called
bioethanol.

The liquid ethanol, or ethyl alcohol, can be used as a fuel when blended with gasoline or when in
its original state. It can also be used as a raw material in various industrial processes. Ethanol is
made by fermenting almost any material that contains starch. Grains such as corn and sorghum
are good sources, but potatoes, sugarcane, Jerusalem artichokes, and other farm plants and
wastes are also suitable. About 1.6 billion gallons of ethanol are produced annually in the United
States. As an example, only the annual ethanol production in Iowa “Corn State” is approximately
440 million gallons. Each bushel of corn processed yields 2-½ gallons of ethanol along with
several valuable byproducts. The first blends in the 1970's were 10% by volume (E-10) while a
blend of 85% by volume (E-85) was introduced in the late 1990's.

ETHANOL PROPERTIES

Water Ethanol
Chemical Formula H20 CH3CH20H
Molecular Weight 18.015 46.07
Weight of 1 Gallon 8.33 lbs. 6.59 lbs (100% / 200% proof)
6.80 lbs (95% / 190 proof)
Density in Grams / cm3 1.0 791 (100%)
815 (95%)
Surface Tension Dynes / cm2 54.9 @ 40C 21.38 @ 40C
Freezing and Melting Point OC / 32 F -117.3 C / -178.6 F
Boiling Point 100C / 212 F 78.5 C / 173.3 F
Critical Temperature 374.2 C 243 C

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WHAT IS FUEL ETHANOL?

Fuel ethanol (or “Gasohol) is a high octane, water-free alcohol produce from the fermentation of
sugar or converted starch. It is traditionally used as a blending ingredient at 5% to 10%
concentration (termed E5 or E10, respectively) in gasoline or as raw material to produce high
octane fuel ether additives. In general, ethanol is made primary from grains or other renewable
agricultural and agroforestry feedstocks.

Ethanol is a very high octane fuel, replacing lead as an octane enhancer in gasoline. Fuels that
burn too quickly make the engine “Knock”. The higher the octane rating, the lower the fuel burns,
and less likely the engine will knock. When ethanol is blended with gasoline, the octane rating of
the petrol goes up by three full points, without using harmful additives.

Adding ethanol to gasoline “oxygenates” the fuel, adding oxygen to the fuel mixture so that it burns
more completely and reduces polluting emissions such as carbon monoxide.

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HOW IS ETHANOL MADE?

The process of making alcohol has been around since virtually as long as man has been on this
earth, though it has been immensely refined and upgraded in recent years leading to much
improved efficiency. There are three main uses for ethanol (industrial, beverage and fuel) and the
production processes vary slight for each of them, but the main steps are the same.

Ethanol can be produced from any biological feedstock that contain appreciable amount of sugar
or materials that can be convert into starch, sugar cane are example of feedstocks that contains
sugar. Corn contains starch that can relatively easily be converted into sugar. A significant
percentage of tress and grasses are made up of cellulose, which can also be converted to sugar,
although with more difficulty that required to convert starch.

The energy of the sun is locked in the cellulose molecule. Because biomass and biomass-derived
products contain cellulose in some proportion, the number of feesdstocks suitable for modern
processing is huge. Suitable feedstocks include:

• Agricultural waste such as corn stalks ,cotton gin trash, baggasse, and stovers;
• Purpose-grown crops, such as switchgrass, sorghum, napiergrass
• Municipal solid waste (or, refuse derived fuel)
• Paper mill sludge; and
• Forest residues

On a molecular basis, there is no difference between a chemical derived from sugar and the same
chemical derived from petroleum. The advantage of sugar-derived chemical lies in their origins and
their renewability.

Examples of industrial uses of ethanol would include ethanol used in perfumes, aftershaves and for
cleaners. Beverage ethanol is used for drinking and must meet strict production standard because
it will be used for human consumption.

A vast majority of ethanol produce in the United States is used for fuel. It is blended with gasoline
to increase the fuel blend’s octane or to produce a cleaner burning fuel. Most of the ethanol plants
mainly in the U.S.A. utilize a dry milling process. The major steps are outlined below:

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1.- Milling: The corn (or barley or wheat) will first pass through hammer mills, which grind it into a
fine powder called meal.
2.- Liquefaction: The meal will then be mixed with water and alpha-amylase, and will pass
through cookers where the starch is liquefied. Heat will be applied at this stage to enable
liquefaction. Cookers with a high temperature stage (120-150 degrees Celsius) and a lower
temperature holding period (95 degrees Celssius) will be used. These high temperature reduce
bacteria levels in the mash.
3.- Saccharification: The mash from the cookers will then be cooled and the secondary enzyme
(gluco-amylase) will be added to convert the liquefied starch to fermentable sugars (dextrose), a
process called sccharification.
4.- Fermentation: Yeast will then be added to the mash to ferment the sugar to ethanol and
carbon dioxide. Using a continuous process, the fermenting mash will be allowed to flow, or
cascade, through several fermenters until the mash is fully fermented and then leaves the final
tank. In a batch fermentation process, the mash stays in one fermenter for about 48 hours before
the distillation process is started.
5.- Distillation: The fermented mash, now called “beer” will contain about 10% alcohol, as well as
all the non-fermentable solids from the corn and the yeast cells. The mash will then be pumped to
the continuous flow, multi-column distillation system where the alcohol will be removed from the
solids and the water. The alcohol will leave the top of the final column at about 96% strength, and
the residue mash, called stillage, will be transferred from the base of the column to the co-products
processing area.
6.- Dehydration: The alcohol from the top of the column will then pass through a dehydration
system where the remaining waster will be removed. Most ethanol plan use a molecular sieve to
capture the last of water in the ethanol. The alcohol product at this stage is called anhydrous (pure,
without water) ethanol and is approximately 200 proof.
7.- Denaturing: Ethanol that will be used for fuel is then denatured with a small amount (2-5%) of
some product, like gasoline, to make it unfit for human consumption.
8.- Co-Products: There are two main co-products created in the production of ethanol: carbon
dioxide a distillers grain. Carbon dioxide is given off in great quantities during fermentation.
Distillers grains, wet and dried, are high in protein and other nutrients and are a highly valued
livestock feed ingredient. Some ethanol plants also create a “syrup” containing some of the solids
that can be a separate production sold in addition to the distillers grain, or combined with it.
Ethanol production is a no-waste process that adds value to the corn by converting it into more
valuable products.

Ethanol is also made from a wet-milling process. Many of the larger ethanol producers use this
process, which also yields many other products, such as high fructose corn sweetener. Further we
analyze this process in detailed when considering the ACOS process.

WHAT IS A “Bio-refinery”?

As Chemists and engineers think o a “refinery as an adjustable conversion of petroleum to many

usable commodities. This approach results in a process and business that responds to changing
market condition by “tuning” its output production to suit the market.

This same concept can be applied to renewable biomass conversion process. Biomass can be
converted to usable products through biochemical and thermochemical processes. Through these
processes, produce pharmaceutical, other oils and gases may be manufactured.

EBER Refinery now named “Matilde Esther” Ethanol Refinery to be installed to develop this project
it is a “bio-refinery”.

What is the “Carbohydrate Economy”?

One hundred years ago most of our fuels, construction materials, clothes, inks, paints, and even
synthetic fibers and chemicals were made from matter. Then petroleum flooded the economy and

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a new industrial era began. By the 1980s less than 5 percent of our industrial products and fuels
came from biological materials.

However, new technologies, new laws, and increasingly environmentally aware public are ushering
in a new materials base for the 21st. century; plant matter. We can call it a “carbohydrate
economy”.

The environmental benefits of a carbohydrate economy are significant. Bio-based chemicals

generates a time fraction of the pollution generated by the manufacture and use of petrochemicals.
The use of biological fuels generates far less carbon dioxide than the use of fossil fuels. Finding
commercial uses for billions of tons of cellulosic waste generated annually in our rural and urban
areas itself achieve important reduction in pollution.

The carbohydrate economy promises economic as well as environmental benefit. Thousand of

locally owned bio-refineries that make multiple products from a single biological feedstock could
inject billions of dollars into rural economies. The knowledge generated from this new
manufacturing sector could become an important export.

Bio-fuels are competitive in today’s market

Biomass refineries like ABER Matilde Esther Refinery believes that counts with very profitable
operations on cost structure to compete in fuel and commodity markets. Paszner Technologies,
Inc. would employs a state-of-the-art engineering in developing the ABER Refinery focusing on
cost control to result in significant reductions in the overall cost of a facility in Ecuador. Total cost to
obtain a gallon of ethanol from biomass feedstocks is about US$1.10, considering all the financial
reduction that the logistical, climate, labor and geographical position of the ABER Refinery in
Ecuador, further considered in details in this study.

The U.S. Department of Agriculture says each BTU (British Thermal Unit, an energy measure)
used to produce a BTU of gasoline could be used to produce 8 BTUs of ethanol. The non-profit
American Coalition for Ethanol says ethanol production is “extremely energy efficient” with a
positive energy balance of 125% compared to 85% for gasoline, making ethanol production “by far”
the most efficient method of producing liquid transportation fuels”.

Resuming, ethanol obtained in ABER Refinery is a highly efficient fuel. A study by the Institute of
Local Self-Reliance in the US found that using the best farming and production methods, “The
amount of energy contained in a gallon of ethanol is more than twice the energy used to grow
agricultural crops, herbaceous and trees to convert them to ethanol. Ethanol production is
extremely energy efficient, with a positive energy balance of 125%, compared to 85% for gasoline.

Environmental Risks Associated in Handling the Chemical Used and Produced in the
ACOS’s process.

The reagents used in the process are not peculiar and do not require any unique handling. All of
the chemical are commonly used in many manufacturing processes such that there are established
and accepted standards of handling and storage which can be implemented. Precuations to insure
the safe handling of all chemicals are incorporated in the preliminary design phase of this project in
Ecuador and will be carried off through operations. Equipment and areas where chemicals are
stored are equipped with safety and protective systems designed to meet or exceed all applicable
regulations. Where possible, more inert chemicals are used. Impermeable containment facilities
are installed in areas where accidentals spill may occur. Fire fighting equipment, eyewashes,
safety showers are placed to insure quick response to accidents. The commitment to safety during
construction and operations is instilled upon all site personal through or and written instructions.

Environmental Impact of the ABER Refinery.-

The ACOS process has been designed and engineered to avoid significant impacts to Matilde
Esther Community’s environment in Ecuador. The plant will be designed, constructed, and

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operated in accordance with or better than applicable regulations. In fact, the unique environmental
benefits are based primary in its main product like is ethanol among others are:

• It is a renewable fuel made from plants containing cellulosic fiber

• It is not a fossil-fuel: manufacturing it and burning it does not increase the greenhouse
effect.
• It provides high octane at low lost as an alternative to harmful fuel additives.
• Ethanol blends can be used in all petrol engines without modifications.
• Ethanol is biodegradable without harmful effects on the environment
• It significantly reduces harmful exhaust emissions
• Ethanol’s high oxygen content reduces carbon monoxide levels more than any other
oxygenate by 25-30%, according the USA EPA
• Ethanol blends dramatically reduce emissions of hydrocarbons, a major contributor to the
depletion of the ozone layer
• High-level ethanol blends reduce nitrogen oxide emission by up to 20%
• Ethanol can reduce net carbon dioxide emissions by up to 100% on a full life-cycle basis.
• High-level ethanol blends can reduce emissions of Volatile Organic Compounds (VOCs) by
30% or more (VOCs are major sources of ground-level ozone formation)
• As an octane enhancer, ethanol can cut emissions of cancer-causing benzene and
butadiene by more than 50%
• Sulphur dioxide and Particulate Matter (PM) emissions are significantly decreased with
ethanol

HISTORY OF ETHANOL IN THE UNITED STATES OF AMERICA

In ancient times ethanol was known as an intoxicating drink. In the United States, ethanol is
produced mainly by the fermentation of corn. It is the same alcohol used in beverage alcohol but
meets fuel grade standards. Ethanol that is to be used as a fuel is denatured by adding a small
amount of gasoline to it. This makes it unfit for drinking.

During the late 1800's, ethanol was used for lamp fuel and sales exceeded 25 million gallons per
year. At the request of large oil companies, the government placed a tax on ethanol during the
Civil War. This tax almost destroyed the industry. In 1906 the tax was lifted and alcohol fuel did
well until competition from oil companies greatly reduced its use. The first large scale use of
ethanol as a fuel happened during the early 1900's when petroleum supplies in Europe were
short. In America, Henry Ford's Model T and other early 1920's automobiles were originally
designed to run on alcohol fuels. Hitler and the U.S. relied on ethanol to power their armies during
World War II. After World War II, oil prices decreased which caused the use of ethanol to
decrease. The limited use of ethanol continued until the oil crisis developed in the 1970's.

Increased use of ethanol as a fuel has developed since the late l970's. It was first used as a
product extender because of gasoline shortages. In 1973, the Organization of Petroleum
Exporting Countries (OPEC) caused gasoline shortages by increasing prices and blocking
shipments of crude oil to the United States. The OPEC action called attention to the fact that the
United States was extremely dependent on foreign oil. The focus shifted once again to alternative
fuels such as ethanol. At that time gasoline containing ethanol was called gasohol. Later, when
gasoline was more plentiful, ethanol was introduced to increase the octane rating and the name
gasohol was dropped in favor of names reflecting the increased octane. Unleaded plus or super
unleaded are two examples of names used today.

Ethanol, when used as a gasoline component, improves combustion and reduces carbon
monoxide emissions. Use of ethanol benefits the areas of the U.S. that are considered to exceed
Environmental Protection Agency air quality standards during the winter months. Some studies
have indicated that, used in a correctly formulated fuel, the use of ethanol can also reduce
emissions which contribute to the formation of smog.

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More recently, ethanol supporters have focused attention on other advantages. One of these
advantages is ethanol's ability to provide octane while replacing other environmentally harmful
components in gasoline. Other studies suggest that using ethanol can slow global warming.
Ethanol reduces imports by replacing imported gasoline and crude oil. Reducing gasoline and
crude oil imports reduces American dependence on foreign oil. According to a recent poll
conducted by Research Strategy Management, 75% of American voters believe the country needs
to do something to reduce its dependence on foreign oil.

Today, ethanol is widely used and available in most areas of the U.S. Ethanol is contained in over
11% of all gasoline sold in the United States. It is, or has been, marketed by such companies as
Exxon, Sunoco, Texaco, Amoco, Mobile, ARCO, Super-America, Chevron, Union, Shell, and
Phillips, as well as numerous independent marketers. Since ethanol was first sold in 1978,
American consumers have driven more than two trillion miles (80,000 trips around the world) on
ethanol blended gasoline.

The 1990's experienced the introduction and operation of flexible Fuel Vehicles (FFV). FFV
vehicles are capable of operating on E-85, which is a blend of 85 percent ethanol and 15 percent
unleaded gasoline. The Ford Taurus FFV car was introduced in the national market in 1996 and
was used even in the state fleet and by some city governments. They became available
commercially shortly thereafter. FFV's have been designed for versatility. They will operate on
unleaded gasoline or any mixture of gasoline and ethanol up to an 85 percent blend.

The key component in a flexible fuel vehicle is a sensor which determines the percentage of
ethanol in the fuel, and with the help of a computer, makes adjustments automatically for best
performance and emissions. Beginning with the 1998 model year, Chrysler offered FFV minivans.
Ford continues to offer the Taurus and added Windstar and Ranger in 1999. Explorer and Sport
Trac were offered in 2001. General Motors Chevrolet S10 and Sonoma, Isuzu Hombre, and
Mazda B3000 were offered in an FFV version beginning in 2000.

Two specific pieces of federal legislation, the Clean Air Act Amendments of 1990 and the Energy
Policy Act of 1992 mandated the phased-in adoption of cleaner-burning vehicles. These federal
laws required that state, municipal, and private fleets must meet stricter emission guidelines
starting in 1998. One way this was accomplished was by replacing existing vehicles with newer
technology like flexible fuel vehicles. One portion of the law requires 70 percent of all new fleet
vehicle purchases meet these new standards in 2000.

Auto manufacturers were also required to meet the new standards. Beginning in 1996, new model
vehicles were equipped with on-board diagnostic monitoring systems capable of monitoring tailpipe
and evaporative emissions. New computer technology made this possible.

WHY ETHANOL NOW?

Ethanol use and production has increased considerably during the 1980's and 1990's in the U.S..
Growth in use of the E-10 blend has taken place because the fuel performs well in automotive
engines and is competitively priced with "conventional" gasoline. This happening is parallel with the
develop of the new Carbohydrate Economy starting from 1980s.

Proponents of ethanol have identified additional reasons for increased production and use,
especially in the Midwest in U.S.A.:

1. It is in the state and national interest to reduce dependence on oil

imports. Trade deficits are decreased and it allows for a dependable
source of fuel if supplies would be cut off by unfriendly countries.
2. Farmers see an increased demand for corn which helps to stabilize
prices.
3. The quality of the environment improves. Carbon monoxide emissions
are reduced and lead and other carcinogens (cancer causing agents)
have been removed from gasoline.

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 4. Car owners gain from increased octane in gasoline which reduces
engine knock. It also absorbs moisture and cleans the fuel system.

Those who challenge the use of ethanol as a fuel and challenge the incentives for ethanol argue
that :
1. It is more important to use grain for food to reduce world hunger
than to use ethanol as a fuel.
2. The ethanol industry should not receive more favorable incentives
than manufacturers of other fuels.
3. It damages or plugs fuel system components on some vehicles
and causes vapor lock, especially in hot weather.
4. Foreign oil imports are reduced only slightly because of ethanol
use.
5. It does little to reduce emissions and improve the environment.
6. It reduces motor fuel tax for ethanol blends.

WORLDWIDE USE OF ETHANOL

Other countries are either producing and using ethanol in large quantities or are providing
incentives to expand ethanol use. Brazil and Sweden are using large quantities of ethanol as a
fuel. Some Canadian provinces promote ethanol use as a fuel by offering subsidies of up to 45
cents per gallon of ethanol. India is in the beginning stages of initiating the use of ethanol as an
automotive fuel. In France, ethanol is produced from grapes that are of insufficient quality for wine
production.

Prompted by the increase in oil prices in the 1970's, Brazil introduced a program to produce
ethanol for use in automobiles in order to reduce oil imports. Brazilian ethanol is made mainly
from sugar cane. Pure ethanol is used in approximately 40% of the cars in Brazil. The remaining
vehicles use blends of 22% ethanol with 78% gasoline. Brazil consumes nearly 4 billion gallons of
ethanol annually. In addition to consumption, Brazil also exports large quantities of ethanol.

Sweden has used ethanol in chemical production for many years. Crude oil consumption has
been cut in half since 1980. During the same time period, the use of gasoline and diesel for
transportation has increased. Emissions have been reduced through the use of catalytic
converters being placed in vehicle exhaust systems. Converters decrease carbon monoxide,
hydrocarbon, and oxide of nitrogen emissions. The amount of carbon dioxide produced cannot
be further increased while burning fossil fuels. Ethanol blended gasoline and diesel are being
considered as a viable choice to lower emission levels.

There has been a move by distilleries in India to use surplus alcohol as a blending agent or an
oxygenate in gasoline. Based on experiments by the Indian Institute of Petroleum, a 10 percent
ethanol blend with gasoline and a 15 percent ethanol blend with diesel is being considered for use
as road fuel in at least one state.

THE FUTURE OF ETHANOL

Vehicle manufacturers will continue to develop and apply new technologies. Changes in traditional
internal combustion engines along with the development of non-traditional power plants and
alternative fuels will improve fuel efficiency and reduce emissions.

According to the Manufacturers of Emission Controls Association in U.S.A., total vehicle emissions
have been reduced by more than 1.5 billion tons since 1970. Adjustable compression, direct fuel
injection, lighter but stronger materials, and electronic integration of vehicle systems will further
enhance the internal combustion engine fuel economy, performance, and emission control in the
future.

Ethanol use will increase because of its biodegradable, renewable, and performance qualities.
Ethanol blends are approved for use during wintertime oxygenated fuel programs as mandated by

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the Environmental Protection Agency (EPA) in the U.S.A.. Ethanol blends lower vehicle carbon
monoxide emissions. Additional offerings of flexible fuel vehicles to auto manufacturers product
lines will cause increased use of E-85.

Emission levels will improve due to updated engine technology in mass transit city buses and over-
the-road trucks. Some will convert diesel engines to burn 100% ethanol. Others will burn E-diesel,
a blend of ethanol and diesel fuel.

1.- INTRODUCTION ON ETHANOL INDUSTRIAL PROJECT

Energy experts agree that world’s source of petroleum is finite and that there is no new petroleum
in production today. They disagree on the amounts still available in the world’s reserve. With
estimates ranging from 1,000 billion to over 1,5000 billion barrels still in the ground, the experts do
agree however, that as theses reserves decline, stores of remaining petroleum become more
costly to extract. The World demand for gasoline is still growing due to the numbers of
transportation units which consume 60% of world’s demand but petroleum derived fuels are now
coming to an end in the next 30 years. That is why ethanol is developing into a strategic fuel
energy source world wide for more than one reason. In fact, biomass and bio-ethanol now touted
and recognized as the universal renewable, chemical source, serving multiple industries such as
transportation fuel blending, power electricity generation and renewable organic chemical
industries. Further, biomass and ethanol are also considered to play important roles en energy-
sufficiency and sustainable development of developing countries like Ecuador and replaced fossil
fuels – gasoline and diesel fuels – as sources of nonsustainable energy. Biomass-derived bio-
ethanol is largely, if not entirely, greenhouse gas (GHG)- neutral and emissions emanating from its
burning do not contribute to global warming.

Numerous studies have been completed on the economic feasibility of producing ethanol using
available biomass as a source of energy needs that could correct the imbalance relative to it
impact by the activities of humankind, the following is contained in a research on sustainable
energy referring as energy produced and used in ways that support human development over the
long-term to affect all its social, economic and environmental dimensions.

According to international recognition and encouragement for fundamental changes in energy

pathways - Agenda 21, Clean Development Mechanism of Kyoto Protocol Agreement, start
up funding for rural energy development project becomes the only constrain for initiation if
sustainable investment in human capital and infrastructure - which are designed to address the
needs of the majority of poor countries and marginalized groups, especial rural populations, while
changes in fuel use will clearly benefit global environment by reducing global warming trends. In
this manner, the sustainable renewable energy option converges into equitable sustainable
development by supporting growth and distributing social equity.

Besides, there are several reasons for current public and private interest and support for the
production of ethanol in Ecuador. For example:

• Through this project It might be possible to establish a local industry to substitute the gasoline
additives that Ecuador currently import each year to meet our energy needs by use of ethanol
in a 10% blend with gasoline to be used nation-wide in any modern automobile engine with no
appreciable change in power, efficiency and economy.
• If the economics were favorable in this project, producing ethanol might provide a basis for
establishing alternative uses for agricultural lands (250,000 hectares) that are coming out of
production and will generate new sources of employment for more than 50,000 jobs in the
agriculture sector.
• Besides, ethanol production will be a viable co-product with other agricultural-based such as
sugar, fiberboard, and diversified agriculture.
• Ethanol production from local feedstocks will offer an opportunity to develop new businesses
and provide some economic diversification in rural areas.

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• There is no production of bio-ethanol to be used to blend gasoline and it will constitute a new
product both for local and international consumption with a captive market.

2.- EXECUTIVE SUMMARY

The objective of this study is to provide technical information and analysis to assist our investors in
evaluating the potential for the near-term production of ethanol in Ecuador. This is a “pre-feasibility
study” designed to provide guidance as to weather or not a full-scale feasibility study is warranted ,
based in the following interests:

.- Interest in establishing a new industry in Ecuador according with the Carbohydrate Economy.
.- Interest in development and use of locally-produced, renewable fuels, and reducing of demand
for imported fuels and additives and export ethanol mainly to North America.
.- Interest in the use of locally-available-plenty agricultural materials, thereby providing additional
markets for agricultural products and benefiting local farmers in Ecuador.
.- Interest in reducing negative impacts on the environment.
.- Interest in the attraction of private-sector and international investment in biomass energy projects
in Ecuador; and
.- Interest in developing our particular advantageous position due to the high photosynthetic activity
mainly on our currently crops such as sugarcane, banana, passion fruit, corn, soybean, giant reed,
grasses and ample variety of trees species densely populating the coastal region with yields that
can be 5 to 10 times of those achievable in the temperate regions of the North.

3.- TECHNICAL BACKGROUND

There are a good number of world wide companies interested in establishing ethanol production
facilities in Ecuador due its tropical weather conditions and because over the past ten years,
efficiencies have improved and costs have decreased to the point that an ethanol plant build today
may cost as little as third as much (in constant dollars) as a comparably sized ethanol plant built
ten or fifteen years ago. Parallel to this, during the last two to three years there as been more
progress in the technology for conversion of lignocellulosic materials to ethanol than in the
previous twenty years. This technical progress has been also accompanied by commensurate
economic improvement as it is point out in this project.

All the benefits resumed above are included in the selected ACOS process to guarantee the
success in this important project and further describe it.

Biomass Feedstock Composition and Properties Database.-

We are going to consider on chemical composition and physical properties of various biomass
resources available world wide to feed as raw materials for biorefinery.

Biomass for Energy

Biomass is a very heterogeneous and chemically complex renewable resource. Understanding
this natural variability and range of chemical composition is essential for scientists and engineers
conducting an ethanol refinery project using biomass resources. The term biomass means any
plant-derived organic matter. Biomass available for energy on a sustainable basis includes
herbaceous and woody energy crops, agricultural food and feed crops, agricultural crop wastes
and residues, wood wastes and residues, aquatic plants, and other waste materials including some
municipal wastes. As the United States is the biggest consumer of all kind of energy in the world
the Department of Energy sponsor research, development, and demostration efforts aimed at
using renewable biomass resources as a feedstocks to produce an array of energy-related
products, including liquid, solid, and gaseous fuels; electricity; heat; chemicals, and other
materials.

4.- SELECTION OF BIOMASS FEEDSTOCKS AND PROCESS

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Historically, production of ethanol was limited to using sources of sugar that were available in
soluble forms such as sucrose, molasses from sugar cane, or fructose from the corn plant. Since
these soluble sugars are edible, their relative value tends to be higher for the rest of plant (leaves,
stalks, etc.) considered to be waste materials. For this project we have selected the best
conversion technology such as the ACOS process that allows for the production of ethanol from
agricultural by products such as corn stover, baggase, yard and wood waste, grasses, banana
crop residues, etc. This is very significant: for example, where an acre of sugarcane produces
about ten tons of edible sugar and three tons of molasses. It is also possible to produce, in the
form of leaves and stalks, and additional twenty to twenty-five tons of non-edible materials, it is
also possible to produce ethanol from energy grasses or trees crops in Ecuador such as
sugarcane, banana, passion fruits, corn, sweet potatoes, yucca, eucalyptus trees and a wide
variety of tropical trees, giant grass, and general green waste as potentially promising feedstocks
for ethanol production in Ecuador.

Ecuador is a clearly highest and least expensive biomass producer. This in turn, will make forests
in Ecuador attractive sites for carbon trading while agricultural crops will allow production of low
cost-bio-ethanol to be exported and used in propelling automobiles and generate low cost
electricity by solid oxide fuel cells (SOFT).

Currently, in Ecuador, wood waste and agricultural crop residues are disposed by incineration,
stockpiling, and field burning. These methods of disposal are considered costly, wasteful and dirty,
causing considerable public objection and out-cry due to proven health hazards of small particles
(PM10, PM5) on the public. Accordingly, conversion of wood waste to ethanol provides double
benefits to human, viz. first eliminating serious air pollution effects due to field burning and second
improving urban air quality due to reduced (30 to 50%) air pollutants resulting from the use of
ethanol blended gasoline in automobiles. In additions, this important project’s technology will
generate the biggest investment in agriculture ever been; labor and economic development and
the potential of providing energy-self-sufficiency, required for sustainable development in
developing countries like Ecuador.

Understanding Biomass as a Source of Sugars and Energy.-

The degree of complexity and feasibility of biomass conversion technology depends on the nature
of the feedstocks from which start.

Monomeric Sugars
The least complicated approach to fuel ethanol production is to use biomass that contains
monomeric sugars, which can be fermented directly to ethanol. Sugarcane and sugar beets are
examples of biomass that contains substantial amount of monomeric sugar. Up until the 9130s,
industrial grade ethanol was produced in the United States via fermentation of molasses derived
from such sugar crops. The high cost of sugar from these crops has made these sources
prohibitively expensive in the United States.

Starch
Sugars are more commonly found in the form of biopolymers that must be chemically processed to
yield simple sugar. In the United States, today’s fuel ethanol is derived almost entirely from the
starch (a biopolymer of glucose) contained in corn, due to the highly efficient cultivation and growth
of maize. Starch consist of glucose molecules strung together by a-glycosidic linkages. These
linkages occur in chains of a-1,4 linkages with branches formed as a result of a-1,6, linkages.

A not-so-obvious consequence of the a linkages in starch is that this polymer is highly amorphous,
making it more readily attacked by human and animal enzyme systems. The ability to commercially
produce sugars from starch is the result of one of the earliest examples of modern industrial
enzymes technology – the production and use of a-amylase, glucoamylase and glucose isomerase
in starch processing (The terms a and b are used to describe different stereoisomers of glucose).
Researches, like Dr. L. Paszner, have long hope to emulate the success of this industry in the
conversion of cellulosic biomass to sugar.

11
Cellulose
Cellulose, the most common form of carbon in biomass, is also a biopolymer of glucose. In this
case, the glucose are strung together by b-glycosidic linkages (terms a and b are used to describe
different stereoisomers of glucose). The b-linkages in cellulose form linear chains that are highly
stable and much more resistant to chemical attack because of the high degree of hydrogen
bonding that can occur between chains of cellulose. Hydrogen bonding between cellulose chains
makes the polymer more rigid, inhibiting the flexing of the molecules that must occur in the
hydrolytic breaking of the glycosidic linkages.

Hemicellulose
Yet a fourth form of sugar polymers found in biomass is hemicellulose. Hemicellulose consists of a
short, highly branched, chain of sugars. It contains five-carbon sugars (usually D-Xylose and L-
arabinose) and six-carbon sugars (D-galactose, D-glucose and D-mannose) and uronic acid. The
sugars are highly substituted with acetic acid. Its branched nature renders hemicellulose
amorphous and relatively easy to hydrolyze to its constituent sugars. When hydrolyzed, the
hemicellulose from hardwoods releases products high in Xylose (a five-carbon sugar). The
hemicellulose contained in softwoods, by contrast, yields more six-carbon sugars.

The four forms of sugar in biomass represents a range of accessibility that is reflected in the
history of ethanol production. Simple sugars are the oldest and easiest-to-use feedstocks for
fermentation to ethanol. Next comes starch, now the preferred choice of feedstock for fuel ethanol.
Starch-containing grain crops, like sugar crops, have higher value for food and feed applications.
Because many animals (including humans) can digest starch, but not cellulose, starch will likely
continue to serve a unique and important role in agriculture. The remaining two forms-cellulose
and hemicellulose- are the most prevalent forms of carbon in nature, and yet they are also the
most difficult to utilize. Cellulose’s crystalline structure renders it highly insoluble and resistant to
attack, while hemicellulose contains some sugars that have not, until recently, been re4adily
fermentable to alcohol

Biomass for Energy

In order to expand the available resource base for sugars and to identify lower cost sources, we
have focused on the use of non-starch, non-food related biomass such as trees, grasses, and
waste materials. The three largest components of these biomass sources are cellulose,
hemicellulose, and lignin. Lignin is a biopolymer rich in phenolic components, which provides
structural integrity to plants. Ranges of cellulose, hemicellulose, and lignin contents in biomass are
represented in the Table 1 below. Ranges for five-and six-carbon sugar content in hardwoods,
softwoods, and agricultural residues are provided in Table 2. The combination of hemicellulose and
lignin provide a protective sheath around the cellulose, which must be modified or removed before
efficient hydrolysis of cellulose can occur. Lignin is often referred to as “clean” (i.e., sulfur-free) coal
because it is the lignin portion of plants that is the ancestor of coal (which is, after all, fossilized
biomass). Lignin remains as residual material after the sugars in biomass have been fermented to
ethanol. Economic use of this byproducts is critical to the financial feasibility of biomass-to-ethanol
technology.

Table 1: Typical level of cellulose, hemicellulose and lignin in biomass

Component Percent Dry Weight

Cellulose 40-60%
Hemicellulose 20-40%
Lignin 10-25%

Table 2: Sugar and Ash Composition of Various Biomass Feedstocks (Weight Percent)

Material Six-Carbon Five-carbon Lignin Ash

Hardwoods 39-50% 18-28% 15-28% 0.3-1.0%

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Softwoods 41-57% 8-12% 24-27% 0.1-0.4%
Agricultural
Residues 30-42% 12-39% 11-29% 2-18%

5.- THE “ACOS” PROCESS

The ACOS-Acid Catalyzed Organosolv Saccharification process is a patented proprietary wood

hydrolysis technology by Dr. Laszlo Paszner. Graduated from British Columbia University in
Canada. The process combines the low cost hydrolysis potentials of dilute acid hydrolysis of wood
with the high delignification efficiency of organosolv pulping. The net result of the combination of
dilute acid and an organic solvent is the capability, for the first time in history, to simultaneously
and completely hydrolyse and dissolve both the carbohydrate, cellulose and hemicellulose,
aromatics, lignin and extractives in wood. The cellulose and hemicellulose components of wood
are essentially long, molecular chain of sugars. They are protected by lignin, which is the glue that
holds all of this material together.

Besides, for achieving theoretically sugar yields with all woody lignocellulose feedstocks, including
agricultural crops residues can also be hydrolysed with dilute or concentrated acids to produce
fermentable sugars. No wood quality requirements and all crop residues are suitable feedstocks to
produce bio-ethanol using ACOS process. Lumber manufacturing, timber harvesting, and thinning
of forests to prevent wildfires generate a large quantity of softwood residues that makes an
attractive feedstock for fuel ethanol production. Softwood residues are an important near-ter-
biomass feedstock because there is a need for environmentally sound and cost-effective methods
for disposing these residues.

The product recovery steps involved basically known technology. The fermentability work is
successful and also involved the carbon filtration steps that are not normally practiced in the
ethanol industry, revolutionazing alternative ways to improve the sugar to ethanol conversion rates
without the additional process steps.
.
6.- TECHNOLOGY EVALUATION

There are several steps in the process of converting biomass to ethanol, and many option
available at each steps. ACOS process needs the feedstocks to contain moisture and be hammer-
milled and follows the chemical nature of the process and the physical processing scheme, the
following consideration describes very precisely this innovative process:

The process works on all types of lingnocellulosic materials and recovers better than 98% of the
original wood material from the solution. The solvent to substrate ratio is closely monitored and
maintained in the plant using a continuous counter flow reactor. Upon leaving the reactor this
solution is flashed to recover a portion of the acetone and lower the temperature. A secondary
hydrolysos is performed at about 100C for 20 minutes that drives off and recovers the remainder of
the acetone. The lignin precipitates and is cooled, filtered and recovered. The sugar solution is
charcoal filtered and the acid neutralized prior fermentation. The quantitative sugar recovery
capability of the ACOS process has been confirmed by a third-party verification. Recovery and
separation of the dissolved wood components happens by removal of the low boiling organic
solvent, without dilution of the hydrolysate, whereby the wood sugars are actually concentrated
four times in the water phase, up to 42% sugar solid, and the lignin precipitated as a fine powder.
Each of the separated components is then further processed to a variety of valued added co-
products.

The ACOS Biomass Ethanol Refinery (ABER) process defines the secondary steps to be applied
in converting the dissolved wood components: sugar, lignins and extractives to value-added
products. As a basic principle, the products are so selected (the composition of co-products in
addition to bio-ethanol can be varied according to access to markets and industries) that they feed
into chemical, food, pharmaceutical, or cosmetic markets – the increasing value chains – rather
than recovering merely the caloric (heat) value of the residues, as proposed by nearly all the other

13
competing wood hydrolysis technologies. While the natural gas equivalent calorific value of woods
is merely $36/T, the chemical value exceeds $750/T and can be as high as $1,500/T. In this
manner, value recovery by the ABER technology – US$750 –1,200/T – is the highest among
any primary wood processing option (lumber, panel, pulp and paper) or the other
competing wood hydrolysis technologies.

The high wood component recovery rates are feasible only with the selected solvent: acetone,
which sets up very specific hydrolysis reaction chemistries that lead to faster hydrolysis rates – up
to 700 times feasible in dilute aqueous acid – and protection of the wood sugars from degradation
or dehydration to furfurals , as hereto experienced in dilute acid solutions and the steam explosion
pre-treatment step of the enzyme hydrolysis process. The ACOS process further facilitates clean
separation of the dissolved wood components based on their solubility on the solvent (aqueous
acetone) and water. The dissolved sugars are separated from the lignin and extractives which are
precipitated on removal of the solvent by distillation (99.95% solvent recovery). Each of the
separated components is then converted to value added co-products such as for example xylose
sugar (C5) to xylitol (83% yield) a value increase of ten times, vanillin (23% yield) from lignin – a
value increase of 25 times, and lignosulphonates or ammoniated lignin. Most of the remaining
water is recycled back to the primary reactor.

Ethanol Fermentation
Processing the dissolved sugar solution, containing between 25 to 42% sugar solids, is by
fermentation of the 6-carbon sugar by bakers’ yeast (Saccharomyces cerevisiae) to ethanol. The
alcohol yield from softwood is 380 L/T od (Oven Dry) from hardwoods and agricultural crop
residues and up to 530 L/Tod from clean office waste paper. The ABER process has no air, water
or solids pollutants and is designed as a closed water-cycle (MACT) mill.

The overall energy consumption of ABER plants is low due to the high solvent to water ratio
(80:20) and favorably low heat capacity of the solvent. The process recycles up to 70% of the
waste heat from the products. The ABER process out-perform all other wood hydrolysis
technologies (dilute and concentrated acid and steam explosion-enzyme hydrolysis, both in terms
economic and minimum plant size. The yeast was adapted to the inhibitor in the softwood
hydrolysastes. The mutant yeast gives >95% ethanol yield from all available hexose in hydrolysate
liquor obtained from whole-tree forest thinnings.

It is also vitally important that the feedstocks for the ACOS hydrolysis process comes from
cellulosic waste steams such as wood waste, sawdust, logging slash, bark, hog fuel, agricultural
crop residues (straw, bagasse, reeds and grasses, etc.), old newspaper and municipal solid waste,
pulping chips of varying size and natural moisture content (15-200%). Thus the ACOS process is
insensitive to wood species, lignocellulose composition, form, and moisture content of its
feedstocks. No other technology can use such a “mixed bag” as feedstocks.

This single stage hydrolysis process has the potential to lower capital and operating costs of the
plant compared to the two-stages that are required for all the other processes. There is only one
solids filtering step unlike the acid processes and the reaction times are short unlike the enzymatic
process.

Due to following conditions: high efficiency, quantitative, total recovery of the biomass components
high rates of return and facile adaptability of ABER technology to local rural conditions through its
energy self-sufficient. The ABER technology is expected to play a major role in supplying energy
and contributes reduction of GHH emissions in Ecuador and consequently global warming trends
world-wide. As such, the ABER technology in Ecuador can become easily a major tool for
sustainable development, reduction of poverty through job creation, to produce 60 million gallon/yr
per plant. This means to improve significantly the import/export trade balance world-wide by
reduction of imports of gasoline and fuel additives and exports of ethanol, and provide power in
rural areas whereby, urbanization trends is Ecuador can be naturally reversed and complemented
by a well-planned house construction

14
7.- THE IMPORTANCE OF “FEEDSTOCKS”

The cost of ethanol production are highly sensitive to the cost of feedstocks delivered to the
processing site and the volume and composition of the material. Thus the crucial importance of
Ecuador’s tropical climate and high levels of solar incidence that offer unique potential to grow
biomass as an alternative method of helping, through this project, the world demand of ethanol.
The success for 5 plants are based on a big 250,000 hectares plan to grow crops to assure
successfully for ethanol production such as sugarcane, banana, pinapple, corn, sweet potato,
yucca and soybeans, following the best production methods and locations. This will permit to
establish the lowest cost starting materials and fully integrated them to “squeeze out” the greatest
economic outputs by utilizing all of the co-products in the ACOS process for the best opportunity
for economic success. In addition, the yields obtained from softwood and hardwood conversion
technology using woody residues and whole-tree forest thinnings.

8.- BIOMASS DESCRIBED

A.- CHEMISTRY & SHY: THE SUGAR CONTENT OF MATERIALS

The primary components of most plant materials are commonly described as lignocellulosic
biomass. The biomass is principally composed of the compounds cellulose, and lignin. Cellulose,
a primary component of most plant cell walls, is made up of long chains of the 6-carbon sugar,
glucose, arrange in bundles (Often described as crystalline bundles). Cellulose is a primary
component of paper. In the plant cell wall, the cellulose molecules are interlinked by another
molecule, hemicellulose. The hemicellulose is primary composed of the 5-carbon sugar (pentose),
xylose. Another molecule called lignin is also present in significant amounts and gives the plant its
structural strength. Improvement in technology in the ACOS process is a proven method of
extracting and dissolving the cellulose and hemicellulose to produce the component sugar in a
forma that can be converted to ethanol. ACOS process pre-treat the feedstcoks with heated
solvent to free the cellulose and hemicellulose from the plant material. Further treatment using
chemical and microorganisms are used to liberate simple sugar from cellulose and hemicellulose
making them available to microorganisms for fermentation to ethanol.

B.- CHEMISTRY & SHY: CONVERSION OF SUGARS TO ETHANOL

The first step involves hydrolysis: splitting the bonds in the cellulose to produce sugar glucose.
Figure II below:

Once the large molecules are extracted they can be broken down into their component sugars
using 72% sulphuric and 40-42% hydrochloric dilute or concentrated acids . The sugar then can be
converted into ethanol using appropriately selected microorganisms in a process called
fermentation. Fermentation of glucose and also mannose in woods are carried out with baker’s
yeast (Saccharomynes cerevisiae) or bacteria such Zymomonas mobilis. Glucose will yield two
parts of ethanol and two parts of carbon dioxide (CO2), thus the theoretical ethanol yield is 51% or
402 L/T for softwood and 366 L/T for hardwoods based on the 6-carbon fermentable sugar only.
The ABER ethanol yield is 94.5% of theoretical possible for softwoods (spruce) and 95.55% for
hardwoods (aspen). The formation of ethanol from 6-carbon sugar is illustrated in figure III

One molecule of glucose produces 2 molecule of ethanol and 2 molecules of carbon dioxide. An
examination of the molecular weights of the molecules reveals that the weight of ethanol produced
is equal to about half the weight of the starting material (glucose)

Glucose C6H12O6 Molecular Weight= 180

Ethanol C2H5OH Molecular Weight = 46 x 2 = 92
Carbon Dioxide CO2 Molecular Weight = 44 x 2 = 88

The maximum weight % ethanol from traditional process would 92/180 = 51%. Almost half the
weight of the glucose 88/180 (49%) is converted to carbon dioxide. Hemicellulose is made up of
the 5 carbon sugar Xylose arranged in chains with other minor 5 carbon sugars interspersed as

15
side chains. Just as with cellulose, the hemicellulose can be extracted from the plant material and
treated to release Xylose which, in turn, can be fermented to produce ethanol. Fermentation of
Xylose fermentation depends on the microorganisms and conditions used in the ACOS process to
ferment Xylose.

9.- AVAILABILITY AND COSTS OF BIOMASS MATERIALS

A.- Selection of Feedstocks for Further Analysis

The first challenge considering this project is to determine what can be grown or what may be
available that produce – in Ecuador – the greatest amount of fermentable sugars at the least cost.
Each ethanol refinery will counts at least with 50,000 hectares per plant of the best fertile land
available in the coastal region of the country. “ Mathilde Esther” Project Refinery has a location
near 40,000 hectares of sugarcane plantations and 70,000 hectares of tropical rainforest with a
wide variety of three species.

The coastal region of Ecuador meet the best environmental climate conditions to produce
feedstock all year around maintaining two or three short-cycle cultivations like sugar cane, corn,
rice, soybean, passion fruit, bananas, sweet potato, yucca, pineapple etc. The technical feasibility,
costs associated with the use of various feedstocks, and the potential of any feedstocks to be used
for ethanol production in this project depend on:

.- The high yield of biomass per harvest of the crops due to the high photosynthetic activity in
Ecuador as a typical tropical country, located right in the middle of the Equator, with yields that
can be 5 to 10 times of those achievable in the temperature regions of the North.
.- Ecuador is among the first producer of banana, passion fruit, flowers in the world, and
traditionally cultivates corn, soybean, rice, and sugarcane in substantial acreage currently
producing crops. This means a huge amount of crop residues and grade off products available to
produce ethanol at low costs.
.- High content of sugars and sugar containing molecules in the above mentioned harvested
biomass
.- Based on the fact that the Ethanol Refinery will be located in the middle and surrounding by all
above mentioned crops the delivery cost of the biomass to the plant is relatively very low at
transportation and collection costs only.
.- The low cost for achieving sugar yields with all woody lignocellulose feedstock and agricultural
crops residues at a single stage hydrolysis process as is ACOS which has the potential to lower
capital and operating costs of the technology required to process the biomass material to ethanol.

The ethanol production ACOS process is portioned as follows, in order to understands the
operating costs:

1.- Biomass Supply or Production

2.- Biomass Harvesting or Collection
3.- Biomass Transportation
4.- Biomass Processing
5.- Biomass Conversion to Ethanol

ACOS process works at a very low cost of feedstocks, because employs all types of woody
lignocellulose and all kind of crop residues putting any constrains by its patented technology for
the manufacture of ethanol and has the potential for low-cost improvement of ethanol yields. This
process permits to employ and justified a more expensive conversion technology. Though ACOS
not required an increased capital investment on the ABER final refinery.

B.- Feedstock Selection: Criteria

The materials selected for evaluation are:

16
• Sugarcane, banana residues, bagasse, sweet potato, yucca, passion fruit, and pineapple with
good ratio productivity and amply been demonstrated in Ecuador
• All these products are well-known by farmers and there is a vast production experience and
there are currently huge acreages under cultivation.
• The yields and production cost of the above mentioned crops are consistent with our
objectives, totaling about US$50.00 per metric ton delivered to the plant.

Data on crops were obtained from the 2,000 small farmers that will transfer the dominion of their
properties to the Agricultural Trust and thus becoming part of this important project. They will
assure to sell at a total cost of US$50.00 per metric ton of the cultivated products and residues to
the ABER plant. Consequently, this provides the basis for development a short list of promising
feedstock materials that are under cultivation and will be available as soon as the ABER plant will
be ready to go.

Under the aforementioned consideration biomass crops are becoming important feedstock for
power, liquid fuels and chemical production and it is very competitive with fossil fuels fro a broad
range of use. This project intent to expand biomass crop production beyond 250,000 hectares, at a
rate for 50,000 hectares per each Bioethanol Refinery, being the biggest investment in the
agricultural field, ever made in Ecuador’s history, through the interaction of such biomass with
traditional agricultural crops in Ecuador, thus the importance of this project. Such development
would benefit farmer by adding energy crops to traditional food and fiber production. Rural
communities – around 50,000 people – would benefit from new jobs created by biomass
production and utilization.

C.- Feestock Selection: Results

The short list of materials, and corresponding contents of sugar, cellulose, hemicellulose, and
lignin (based on dry weight), is shown below. As can be seen in Figure 4 non-crop materials also
shown promised Municipal solid waste (MSW) and newspaper are exceptionally fine sources of
cellulose and hemicellulose

Figure 4
COMPOSITION OF BIOMASS
(% BY WEITH, DRY BASIS)

Biomass Source Sugar Cellulose Hemicellulose Lignin

Other
Bagasse 3 38 27 20
Molasses 61 -- -- -- --
Sugarcane (prepared) 43 22 15 11
Sugarcane leaves -- 36 21 16
Sugarcane (whole plant)33 25 17 12
Sugarcane hybrids 28 37 14 15
Eucalyptus grandis -- 38 13 37
Municipal Solid Waste -- 33 9 17
Newspaper -- 62 16 21

10.- AGRICULTURAL CROPS

a.- Sugarcane terminology

The following are definitions of common terms:

Field Cane.- Cane as it comes from field after burning; usually collected by push-raking; contains
mud and rocks- This is the usually cane that actually arrives at the local mills.
Prepared Cane.- Cane after washing off mud and rocks; still has some leaves and water. This
processed to sucrose (sugar), molasses and bagasse.
Net Cane.- A calculated value, representing the cane stalk without leaves.

17
b. Sugarcane yields

Sugarcane production in Ecuador has fluctuated with changes in weather and other factors. Please
in Figure 5, it is presented in the most recent years.

Table 5
Production of Sugarcane

Year Averaging Hectares Ton/Hectare Total Production Cost/Ton

1990-2002 60,000 75 4.5 million Tons $25.00

c.- Sugarcane components and products

1) Stalks
“Prepared cane” is primarily the stalk of the sugarcane plant, with some leaves and some water
remaining from the washing process. Sugar (sucrose), the primary commercial product of the
sugar industry, is contained in the stalk. The sugarcane stalks are processed to sugar, bagasse,
and molasses. Most of the raw sugar is sent to the 4 mills that are located in the Pacific Coastal
Region, near from where the ABER first pilot plant part of this project; most of the bagasse is
burned in boiler to producer process steam, and most of the molasses is primary processed in
two distillaries owned by Empresa Agrícola Industrial San Carlos and Canobana, and a part is sold
for cattle feed.

2) Leafy trash
Prior to harvesting the sugarcane, the fields are usually burned (weather and other conditions
permitting) to reduce the harvesting, transporting, and processing costs associated with hauling in
excess material (primary leafy trash). Most reported amounts of “field cane” and “prepared cane”
do not include the total amount of biomass that was available before the field were burned. In order
to calculate the results between burned and unburned cane, it is necessary to hand-cut prior field
burning to determine total biomass available in un-burned cane, there is a thirty-five per cent of the
total fiber is consumed in open field burning, and remaining only sixty-five percent of the original
fiber.

Sugarcane (other varieties)

One possible approach in the development of sugarcane as a feedstock for energy and fuels is the
development and improvement of varieties of sugarcane optimized for the production of all
components of the biomass % SHY; including sucrose, cellulose, hemicellulose, and lignin $ SHY;
rather than optimized for the production of sucrose alone- Several varieties of sugarcane,
including varieties for energy production have been grown and evaluated in Hawaii and Cuba.

a.- Energy Cane Theory

On various aspects of sugarcane grown and production. In the 1970s, sponsored by the United
State Department of Energy, growth trials on hydrids of sugarcane and energy grasses were
conducted. Alexander’s 1965 book entitle The Energy Cane Alternative discusses a variety of
sugar cane wich he calls “Energy Cane”.

“Energy Cane” is managed as a total crop. In contrast to current practice in Hawaii, this crops is
grown for only one year and harvested as the total plant for its sucrose, cellulose, hemicellulose
and lignin content described by Alexander,

“Conceptually, the “energy cane” approach to the management of sugarcane and allied tropical
grasses is based on simple but solid promises.

First, sugarcane is botanically more effective as a producer of biomass (lignocellulose) than of

fermentable solid (sugars). Second, the biomass producing attributes are underutilized when the
cane plant is managed strictly as a sugar commodity. Putting this another way, the cane plant falls
short in its “quantitative” potential when its agriculture is directed toward its “qualitative” potentials,

18
i.e. toward sucrose accumulation. Third, sugar cane grown as a sugar crop is a “monolithic”
commodity, for which the bagasse is a residue of much less importance. Fourth, cane managed as
a total biomass crop is a “multiple-products” commodity, for which sucrose (although a by-product)
remain one of a family of important products.

A fifth premise is the decline of quality (sugar content) of the energy cane on a per-plant basis,
while sugar yield increases on a per-acre basis. >In brief, sugar retains a significant impact en
energy cane agriculture by virtue of vastly-higher tonnage of cane harvested per acre. Sixth, the
upscaled importance of lignocellulose, both qualitatively and quantitatively, opens the field of cane
planting to new industrial technologies and their attendant supporters never before associated with
the cane sugar industry.

In addition to a field management oriented to higher numbers of larger plants per acre, energy
cane conceptually encompasses the whole cane plant, that is, the harvest of the entire above
ground fraction. This is often a point of concern for sugar mill engineers. As illustrated in the figure
below, four discrete components of energy cane are harvested (green top, attched trash,
detrached trash, and millable stem), whereas only the millable stem figured prominently in the
traditional harvests of sugarcane. By this means the annual dry matter yield is increased materially
quite aside from growth management considerations. Moreover, the concern over the milling of
added tonnages of fiber is not really valid when the engineer understand that the energy cane mill
is a dewatering plant for lignocellulose, rather than a sugar-recovery facility as he had known in the
past.

Figure 6 is a modification of an example, provided by Alexander, of common harvesting practices

which result in the harvest of only 60% of the total biomass.

Table 6
SUGAR CROP COMPOSITION

Of the four components illustrated in Table 6, all of the attached trash and part of the green top will
accompany the mature stalk to the mill. The proportion of lingocellulose to total fermentation solids
in delivered material shifts roughty from 60/40 in sugar cane to 70/30 for energy cane. It should be
noted that the “detached trash” fraction, already essentially dehydrated and lying on the field
surface, does not go to the mill, but rather is raked and baled.

b.- A word of caution in developing this project

Generalization about yields are not descriptive of specific locations in Ecuador and/or management
methods. The above example provides a means of describing the opportunity. However, this
opportunity is very location specific. The feasibility of harvesting the entire sugar plants in Ecuador
as any other part of the world, depends on rainfall, terrain (slope of land), soil composition,
plantation layout and other factors specific to each location.

THE US ETHANOL EXPERIENCE ( Information provided by the State of Hawaii, Energy,

Resources and Technology Div., Ethanol Report 1994)

The US has much more experience with the widespread use of ethanol gasoline blends in urban
airsheds than Canada. The US experience has been with two programs, the first is known as the
Oxyfuel Program and has been used in winter months in areas that have chronic carbon monoxide
non attainment problems, and the second is the Reformulated Gasoline Program (RFG) which has
been implemented in areas with ozone non attainment problems. Two recent reports have been
released which detail the findings of studies investigating both programs.

There has been a substantial interest in the impact of the Oxyfuel Program on ambient
concentrations of CO. A study cofunded by the Oxygenated Fuels Association (OFA) and the
Renewable Fuels Association reports a substantial (14 percent reduction) and statistically

19
significant (± 4 percent with 95% confidence) association between the use of oxyfuels and
monitored CO concentrations. The requirements of the oxyfuel program can be met with the use of
either ethanol or MTBE. Since the program is also a winter only program the effects of ethanol’s
higher vapour pressure is not an issue since temperatures are generally below the level where
ethanol’s impact is significant. The study started with the available EPA database of hourly
observations of CO concentrations. Regression modeling techniques were used to investigate the
relationship between the winter use of oxyfuels and winter ambient CO concentrations at over 300
monitoring sites which were designated as oxyfuel or non-oxyfuel sites by the Environmental
Protection Agency (EPA) and also met appropriate data completeness criteria.

The models, which include a universal downward trend augmented by oxyfuels at appropriate sites
and include a local starting concentration specific to each site, tend to best explain the database.
Such models can explain 70-90 percent of the variability in the observed CO concentrations. These
models consistently show a statistically significant relationship such that, when wintertime oxyfuel
is used, the corresponding ambient CO concentrations are reduced by approximately 14 percent
on average, with a 95 percent confidence interval of ±4 percent. Considering that the EPA recently
estimates that onroad vehicles contribute only 62 percent of total CO emissions, this new analysis
indicates that oxyfuels may be reducing mobile CO emissions by as much as 20 percent, a value
consistent with recent tunnel data and emissions tests.

Ethanol’s role in RFG is playing a key role in reducing air pollution in Chicago, according to a new
study by the American Lung Association of Metropolitan Chicago. Reformulated gasoline in
Chicago, of which more than 95% contains ethanol, tops the list of effective pollution control
strategies in the metro area. The report, "Clearing the Air: 1990-1998, Air Pollution Strategies That
Have Worked," notes that emissions of smog-forming volatile organic compounds (VOCs) have
declined approximately 60 percent since 1970, from 2000 tons per day in 1970 to 800 tons per day
today. RFG has accounted for 25 percent, or 112.8 tons per day, of the reduction since 1990.
According to the report, "more than any other air pollution control strategy, RFG has helped to
reduce air pollution, including ground-level ozone, in the Chicago region."

Table 1: Top Six Strategies for Reducing VOC Emissions in Metropolitan Chicago
Strategy Tons/Day
Reformulated Gasoline 112.8
Limiting Emissions from Painting, Coating and Printing Processes 33.1
Plant/Factory Shut-Downs 31.6
Improved Compliance with Air Pollution Permits 26.3
Pump Handle Vapor Recovery at Gas Stations 23.7
Vehicle Emissions Testing 8.4

"RFG is estimated to have reduced VOC emissions from gasoline powered cars, trucks and lawn
and garden equipment by nearly 20 percent in 1995, resulting in over 112 tons per day of VOC
reductions".
"Total VOC emissions in metropolitan Chicago dropped from approximately 1136 tons per day in
late 1994 to 1024 tons per day in early 1995, nearly a 10 percent reduction over the span of just a
few months time. RFG’s 112 tons per day reduction represents approximately 27 percent of the
total VOC emissions reductions in the Chicago region between 1990 and 1996 (415 tons per day)."
The gasoline supplied under this RFG program would likely have its vapour pressure adjusted so
that, with the ethanol addition, it met the required levels.

Given the environmental and health risks associated with fossil fuel derived gasoline blending
agents such as MMT or MTBE, ethanol is well placed to replace these additives. David Cory,
spokesman for Tosco Corporation, California’s third largest refiner, stated on April 16, 1998, that:
"Ethanol quickly biodegrades in groundwater. Trace amounts would have a negligible
environmental impact. Gasoline with ethanol will perform the same in a car as gasoline with
MTBE."

20
IV. ETHANOL PRODUCTION TECHNOLOGIES
...A. STEPS IN THE ETHANOL PRODUCTION PROCESS

...B. PROCESS OPTIONS

...C. APPROACH TO EVALUATION OF SYSTEMS

...D. ASSUMPTIONS USED IN EVALUATIONS

...E. TECHNOLOGY REVIEW

........1. Simultaneous saccharification and fermentation

........2. Concentrated acid hydrolysis, neutralization and fermentation

........3. Ammonia disruption, hydrolysis and fermentation

........4. Steam disruption, hydrolysis and fermentation

........5. Acid disruption and transgenic microorganism fermentation

........6. Concentrated acid hydrolysis, acid recycle and fermentation

........7. Acidified acetone extraction, hydrolysis and fermentation

........8. Traditional fermentation of sugars to ethanol

...F. SUMMARY OF TECHNOLOGY COMPARISONS

...G. CONCLUSIONS REGARDING ETHANOL PRODUCTION TECHNOLOGIES

A. STEPS IN THE ETHANOL PRODUCTION PROCESS

Figure IV-1 - Biomass Conversion Products shows the various steps in a lignocellulosic biomass-
to-ethanol conversion process. The starting material, "organic biomass," is in the top row on the
left. This material is processed by treatments such as "crushing" and "grinding," with the resulting
product being "prepared biomass." Then, the prepared biomass (shown in the second row) is
subjected to a hydrolysis process, with the resultant products being cellulose, hemicellulose, and
lignin. Cellulose and hemicellulose are shown in the third and fourth row, with their semi-
hydrolyzed counterparts, hexosans and pentosans, and so forth.

Intermediate products and process by-products (such as lignin, stillage, carbon dioxide, methane,
algae, pharmaceuticals, feed ingredients, etc.) will be discussed in the section of this report which
deals with markets and by-products.

B. PROCESS OPTIONS

There are many options available at each of the steps shown in Figure IV-1. Several government
laboratories, academic institutions and private sector companies have devised various techniques
to accomplish each of the steps required to process the biomass to ethanol. In many instances,
organizations select a particular combination of steps and consider the sequence to be "their"
system. Many of these entities are now seeking to build, license, or develop their technology in
some fashion. Because of the relatively high cost of gasoline, opportunities to produce biomass
year around, and the potential of land becoming available due to the decline of the sugar industry,
Ecuador is gaining the attention of several international organizations and investors.

21
This section of the report is devoted to the evaluation of a range of various approaches. Caution is
recommended in interpreting the information in this section. Because only limited information was
provided by the developers of technologies, the evaluations are only approximations of the costs
and yields from processes that appear to be ready for commercial scale development. The
evaluations are only as good as the process information available. In no case was there sufficient
information to conduct a rigorous comparison of the technologies.

Material presented in this section indicates that a variety of approaches have potential to produce
ethanol from biomass in Ecuador, although an assessment of the time frames to commercialization
was beyond the scope of this report. The options at each step of the biomass-to-ethanol processes
are illustrated in Figure IV-2 - Potential Products at Each Step in the Biomass-to-Ethanol Process.

"Systems" described in this section deal with various combinations of these options.

C. APPROACH TO EVALUATION OF SYSTEMS

The first step in system and technology comparisons was the development of a questionnaire. This
questionnaire was forwarded to a comprehensive list of experts and technology owners in the
United States. Quantitative, factual information was requested for each step of each of the
systems. The success of this approach was limited for four primary reasons:

1. The slow response to questions from technology developers;

2. A reluctance to provide details that are considered proprietary;
3. The processes are at different stages of development, making extrapolations to commercial
scale inconsistent across all processes; and
4. Different information sources and assumptions are used by the developers, providing no
common base for comparison.

In no case were the questionnaire responses sufficient to conduct a detailed comparative analysis
of the processes or even to compare the approaches to each step outlined in Figure IV-2. In the
process of trying to obtain the specific details of each system it became clear that many of the
technologies had not yet been demonstrated on a commercial scale and that much of the design
information provided previously was based on laboratory or limited pilot data. The limited success
with the first questionnaire led to the development of a second survey requesting non- proprietary
numbers. The results provided additional information; however, as there was still insufficient
information on key points to complete the detailed comparisons, it was necessary to fill in missing
pieces. Due to the nature of this study, it was also necessary to rely on claims made by those most
familiar with the various technologies. In most cases, these individuals were the developers of the
technologies and the owners of the patent rights, and therefore may have been somewhat biased
in their claims; it should be expected that some individuals may have been more conservative in
their projections, and others may have been more optimistic.

D. ASSUMPTIONS USED IN EVALUATIONS

Dr. Hans Grethlein, at the Michigan Biotechnology Institute (MBI), has developed an approach
using data from the more complete systems to fill in missing parts from less complete technologies.
This method was of great help in these evaluations, and in some cases this information was used
directly. Grethlein compared performance of systems producing 25 million gallons per year using
corn stover as the source of biomass substrate.

A similar approach was used in this study. Information provided by the questionnaire respondents
was for plants of many different sizes and capacities. Scaling factors of 0.7 and 0.9 were used for
the plant and personnel, respectively. For the purposes of the comparison, prepared cane was
identified as the baseline feedstock. Other assumptions common to the evaluations are shown in
Table IV-1.

Table IV-1

22
EVALUATION ASSUMPTIONS
Process cost only (biomass
Power Law Scaling Factor 0.7 $0
$0)
Contingency 10 % Biomass cost 1 $50
Start-up factor 5 % Biomass cost 2 $108
Working Capital 7.5% Denaturant Cost, $/gal $0.87
Operating Days per Year 330 Denaturant Use 5%
Personnel Scaling Factor 0.9 Fringe Benefits 25 %
Property Tax & Insurance 1.5 % Capital Charge, %/yr. 16 %

E. TECHNOLOGY REVIEW

The material below is presented primarily as a comparative review of technology. Although most of
the technologies described below are associated with a specific company, additional information
from the technical literature and projections on capital and operating costs in Hawaii were used to
complete the comparative evaluations. Because much of the information provided was incomplete,
the extrapolations below cannot be used to reach final conclusions regarding economic
performance of a specific technology world wide. The results should not be considered to be
representative of the current status of this technology.

The information below is for comparative purposes only, and may not represent the actual
performance of any specific proprietary technology..

1. Simultaneous saccharification and fermentation

This technology is largely associated with the research and development program of the National
Renewable Energy Laboratory (NREL) in Golden, Colorado. This institution has had a long history
of involvement in developing technology for producing ethanol from lignocellulosic biomass. In a
succession of development steps, they have settled on the process of Simultaneous
Saccharification and Fermentation (SSF). A 1988 paper by Wright, Wyman and Grohman provides
a useful overview. Quoting selectively from this publication,
"...All enzymatic processes consist of four major steps that may be combined in a variety of ways -
pre treatment, enzyme production, hydrolysis and fermentation. · · · The key to increasing the
digestibility of lignocellulose lies in increasing the cellulose surface area that is accessible to
enzymes · · · by carrying out a pre hydrolysis (dilute 1.1% sulfuric acid at 160° C for 10 minutes)
the hemicellulose fraction is removed (93% of the xylan is hydrolyzed resulting in fully digestible
cellulose pulp) enlarging pore size and thus opening the structure to attack by enzymes · · · the
degree of digestibility is almost directly proportional to the fraction of xylan removed. Cellulose is
then broken down by enzymes. In the SSF process enzymes that break down cellulose are
produced separately by the fungus T. reesei. Yeast and the enzymes are added to the remaining
material where the enzymes digest the cellulose to produce glucose. Glucose is then fermented by
yeast or other microorganisms to produce ethanol."

Essential elements of the SSF approach are presented in Figure IV-3.

23
As presented, this is not a complete system; however, it describes an approach to pre-treating and
processing biomass that distinguishes this process from the others evaluated. The unique aspect
of the NREL approach is that the microorganisms and the enzymes are present in the same
system. By converting the sugars to ethanol as they are formed, this reduces the inhibitory effect of
sugar build up on enzyme performance. Wright et al comment (28):
"...simultaneous saccharification and fermentation systems offer large advantages over separate
saccharification and fermentation systems for the production of ethanol from lignocellulosic
materials because of their great reduction of the cellulase enzyme complex."

A very important issue is identified by the statement:

"The performance of SSF appears to be limited by the performance (combined temperature and
ethanol tolerance) of the yeast rather than by the performance of the enzyme."

A solution to this problem will be discussed under the section "Technology for Hawaii."
Information provided and available was for a facility producing about 58 million gallons per year, as
shown in the Appendix. Cost savings may be possible on the basis of scale and financing
mechanisms. Scaling factors for facilities and personnel were used to generate the performance
estimates for systems producing 5 and 25 million gallons per year; results are presented in Tables
IV-2 and IV-3.

2. Concentrated acid hydrolysis, neutralization and fermentation

The Tennessee Valley Authority (TVA) began developing technology for conversion of cellulosic
feedstock to fuel ethanol in the 1950s. TVA focused on developing dilute and concentrated acid
hydrolysis technology. Much of the work at TVA focused on processing biomass feedstocks and
effluent to multiple products. The TVA programs have developed and evaluated many of the
technical options for converting cellulose bound in biomass to sugars, bioconversion of those
sugars to ethanol and other chemicals, and waste utilization for conversion of co-products from
waste effluent. A summary of the process, shown in Figure IV-4, follows:

24
First, the biomass is collected, dried, and milled to pass through a 4 mesh screen. Then the
material is transferred to a first stage hydrolyser or large vat. Sulfuric acid (7.65% by weight) is
added to the vat which is heated to 100° C for 2 hours. About 75% of the hemicellulose is
hydrolyzed to xylose. The remaining solids (lignin and cellulose) are removed in a screw press and
transferred to a separate vessel where additional acid and much of the acidified xylose are added
back to increase the sugar concentration.

The temperature is again raised which results in the hydrolysis of the remaining cellulose to
glucose. The result is a mixture of 5 carbon (pentose) and 6 carbon (hexose) sugars in acid
solution. Lime is added to neutralize the acid, producing gypsum, which is removed in a rotary
filter. The remaining solution stream contains both glucose (11.6%) and xylose (9.0%)

Fermentation is also conducted in steps. First, glucose is fermented to ethanol by the yeast
Sacromyces cerevisiae. The mixture is then distilled to remove the ethanol leaving the unconverted
xylose behind. A second yeast Pachysolen tannophilus which ferments xylose to ethanol is added
to the remaining solution. Ethanol produced from xylose is then distilled. Lignin and cellular
material remaining is dried and burned in a boiler to provide process energy or produce electricity.

Grethlein et. al. made a number of assumptions in their theoretical cost evaluation of the TVA
process. Further assumptions have been made in this study regarding financing, start up time, and
working capital. Estimated costs for plants producing 5 and 25 million gallons per year using this
process are presented in Tables IV-2 and IV-3.

3. Ammonia disruption, hydrolysis and fermentation

The development of this technology and its application in converting lignocellulosic material to
animal feed was described in the technical literature in the late 1980's. Ammonia is used to pre
treat the lignocellulosic biomass. The biomass is ground and milled to small particles. Ammonia is
then infused at high pressures for about 30 minutes at temperatures ranging from 25-90° C (Figure
IV-5).

25
In this process, ammonia infused at elevated pressure and temperature swells and de crystallizes
the cellulose/hemicellulose complex so the biomass is very accessible to the enzyme cellulase.
When the pressure is released the ammonia virtually explodes or gassifies. It is then recaptured in
a surge tank and recycled. Hydrolysis of cellulose and hemicellulose to sugars is accomplished by
adding enzymes that are produced separately on site to the ammonia treated biomass. This
process does not degrade protein which can be recovered as an animal feed ingredient.
Fermentation is accomplished sequentially as with the concentrated acid hydrolysis process
above.

Information provided by Grethlein, technical publications, and local cost estimates were used to
complete the economic projections in Tables IV-2 and IV-3.

4. Steam disruption, hydrolysis and fermentation

Stake Technology Limited, of Norval, Ontario, Canada has been one of the pioneering firms
involved with processing of lignocellulosic biomass. The company initially was involved with
preparing cattle feed from wood chips using steam to disrupt the crystalline cellulose structure in a
fashion similar to ammonia explosion. The Stake Tech people have been involved in sustaining an
interest in ethanol in Hawaii for decades and have provided a great deal of information. Figure IV-6
summarizes the key elements of the process. In the steam explosion process, biomass is chopped
to an appropriate size and fed into a high pressure reaction cylinder. The solids are moved
continuously through the steam reactor tube with an auger and pushed through an orifice where
the material literally explodes into a flash tank, where the exploded biomass and steam are
recovered. When the pressure is released it causes the deacetylation and auto hydrolysis of the
hemicellulose to xylose. The lignin is also melted in this treatment and the remaining biomass
becomes a viscous slurry of cellulose and polysaccharides that are available for enzyme digestion
to component sugars (primarily glucose).

26
4. Steam disruption, hydrolysis and fermentation

When the biomass exits the recovery tank it can be fermented and distilled to produce ethanol. It
should be noted that volatile organics such as furfural, an inhibitor of microbial fermentation, are
also formed. In order to compare the performance of this approach, information provided by Stake
Tech was combined with estimates of the costs elements not described by the company and
estimates of costs in Hawaii. The projections for a steam disruption, hydrolysis and fermentation
plant producing 5 and 25 million gallons of ethanol per year are presented in Tables IV-2 and IV-3.

5. Acid disruption and transgenic microorganism fermentation (Quadrex process)

BioEnergy International, L.C., is a subsidiary of Quadrex Corporation, a publicly held company. In

1994 they had the exclusive worldwide license for a constructed set of genes that when inserted
into a microorganism has the ability to ferment both pentose (5-carbon ) sugars and hexose (6-
carbon sugars). This genetic construct, developed by Dr. Lonnie Ingram and co-workers at the
University of Florida, was issued U. S. Patent No. 5,000,000 in 1991. This patent outlines the
methodology for constructing a unique portable operon for ethanol production, which consists of
alcohol dehydrogenase II, and pyruvate decarboxylase genes from Zymomonas mobilis, which is
inserted into the genome of a host cell such as E. coli, Erwinia or Klebsiella. This system is
designed to enhance ethanol production by diverting pyruvate to ethanol during growth under
either aerobic or anaerobic conditions. This allows lactose, glucose, xylose, arabanose, galactose
and mannose to be converted to ethanol without producing organic acids.

BioEnergy also had the exclusive worldwide rights to all improvements under an on-going research
agreement. A simplified view of the downstream process is shown in Figure IV-7 (feed preparation
and hydrolysis are not shown).

27
BioEnergy stated that its "...new organisms offer, for the first time, the ability to economically
ferment five- carbon sugars to ethanol as well as offering the opportunity to hydrolyze economically
the cellulose with enzymes." Complete data on the BioEnergy system and associated costs were
not available. Again, Grethlein's approach was used to project performance of a 5- and a 25-million
gallon per year ethanol plant in Hawaii, as shown in Tables IV-2 and IV-3.

6. Concentrated acid hydrolysis, acid recycle and fermentation

Recognizing that the cost of acid, chemicals for neutralizing the acid, and gypsum disposal costs
were constraints to using concentrated acid to hydrolyze lignocellulosic biomass, several
laboratories have been investigating methods for separating and recovering acid from the
hydrolysis mixture. This approach contrasts with those described previously in that it uses
concentrated acid hydrolysis with almost 100% acid recycle. Some of the most notable work in
developing this technology has been the work done at the Tennessee Valley Authority and the
University of Southern Mississippi. Also active in this area is Arkenol Inc., a Nevada corporation,
which was formed in 1992 to develop "thermal host" industrial applications and facilities for the co-
generation electric power industry. Biomass-to-ethanol was selected as one of the complementary
activities for development.

The process is made up of six basic unit operations:

1. Feedstock preparation;
2. Hydrolysis;
3. Separation of the acid and sugars;
4. Acid recovery and recycle;
5. Fermentation of the sugars; and
6. Distillation.

Incoming biomass feedstocks are ground to reduce the particle size for introduction into the
process equipment. The pre-treated material is then dried to a moisture content consistent with the
acid concentration requirements for de crystallization (separation of the cellulose and
hemicellulose from the lignin), then de crystallized and hydrolyzed (degrading the chemical bonds
of the cellulose) to produce hexose and pentose sugars at the high concentrations necessary for
fermentation. Insoluble materials, principally lignin, are separated from the hydrolysate by filtering
and pressing and further processed into fuel or other uses. A schematic of the concentrated acid
hydrolysis, recycle, and fermentation process is provided in Figure IV-8.

28
Commercially available resins are used to separate the acid from the sugar without diluting the
sugar. The separated sulfuric acid is recirculated and re-concentrated to the level required by the
de crystallization step. Any acid left in the sugar solution is neutralized with lime to make hydrated
gypsum, CaSO4, 2H20, an insoluble precipitate that is separated from the sugar solution. In some
cases this material can be sold as an agricultural soil conditioner.

At this point the process yields a stream of mixed sugars (both C-6 and C-5) for fermentation. The
sugars are mixed with nutrients and inoculated with yeast that converts both C-6 and C-5 sugars to
fermentation beer (an ethanol, yeast and water mixture) and carbon dioxide. Yeast is separated
from the fermentation beer by a centrifuge and returned to the fermentation tanks for reuse.
Ethanol is separated from the beer by conventional distillation technology and dehydrated to 200
proof with conventional molecular sieve technology. Tables IV-2 and IV-3 present analyses of the
acid hydrolysis/recycle system producing 5 and 25 million gallons per year. Much of the basic
process and financial information was provided by Arkenol although, as in other analyses, Hawaii-
specific information was included as well.

7. Acidified acetone extraction, hydrolysis and fermentation

Dr. Laszlo Paszner has developed a unique approach to the pre-treatment and hydrolysis of
biomass for ethanol production. The process, known as ACOS (Acid-Catalyzed Organosolv
Saccharification), involves pre- treatment and grinding of biomass to make the material available
for processing. The Organosolv process is shown in Figure IV-9. The lignin in the biomass is
extracted by subjecting the material to acidified acetone at elevated temperature and pressure.
Acetone is distilled from the lignin acetone mixture, leaving the lignin available for generation of
electricity or process heat. The remaining residue consists of cellulose and hemicellulose that are
now easily hydrolyzed to produce sugars for fermentation. The process has been designed to allow
continuous extraction of the lignin, hydrolysis of the cellulosic material and fermentation of the
sugars to ethanol. Based on information provided by Paszner, and estimates for system capital
and operating costs in Hawaii, projections for an ACOS type facility producing 5 and 25 million
gallons of ethanol per year are shown in Tables IV-2 and IV-3.

29
8. Traditional fermentation of sugars to ethanol

Fermentation of sugars to ethanol, using commercially-available fermentation technology, provides

a fairly simple, straightforward means of producing ethanol with little technological risk. The system
modeled assumes the molasses is clarified, then fermented via cascade fermentation with yeast
recycle. The stillage is concentrated by multi-effect evaporation and a molecular sieve is used to
dehydrate the ethanol.

F. SUMMARY OF TECHNOLOGY COMPARISONS

1. Developmental status of technology options

Although some of the steps in each process have been demonstrated at the pilot-scale or even
commercial-scale level (e.g. grinding, screening, pre-hydrolysis, fermentation, distillation, etc.), the
integrated systems described in subsections 1 through 7 of the previous section have not yet been
demonstrated at a commercial scale. The newly developed steps in the technologies evaluated are
generally at the early or late pilot scale stage of development.

The information below is for comparative purposes only, and may not represent the actual
performance of any specific proprietary technology in Hawaii. As described earlier in this chapter,
data from more complete systems was used to fill in missing parts from less completely described
technologies. Due to uncertainties associated with pilot-scale results, and subsequent efforts to
evaluate the technologies on a comparative basis, the extrapolations below should not be taken as
final conclusions regarding performance of specific technologies in Hawaii.

2. Ethanol production costs and sensitivity analysis

As stated above, the purpose of these evaluations is to estimate the relative economic
performance and appropriateness of the various technologies and to develop a rough estimate of
the costs of production of ethanol from biomass sources in Hawaii. Tables IV-2 and IV-3 and
Figure IV-10 - Ethanol Production Cost Summary for 7 Technologies provide summaries of the
evaluation results and indicate the relative sensitivities of the processes to facility size and
feedstock cost. Since the costs used in these comparisons are best estimates and may not be
consistent for all technologies and processes, these estimates cannot be taken as an endorsement
of one process over another. A more detailed site- and technology- specific analysis would be
required for detailed comparisons of the processes.

Table IV-2

ETHANOL PLANT CAPITAL AND PROCESS COSTS (biomass costs not included)
PROCESS COST ONLY (biomass = $0 /ton)
25 MILLION GALLONS PER5 MILLION GALLONS PER

30
 YEAR YEAR
CAPITAL $/gallon Biomass CAPITAL $/gallon Biomass
PROCESS
(million $) ethanol tons/day (million $) ethanol tons/day
1. Simultaneous saccharification
$81 $0.94 820 $26 $1.34 164
and fermentation
2. Concentrated acid hydrolysis,
$99 $1.66 952 $32 $2.13 190
neutralization and fermentation
3. Ammonia disruption hydrolysis
$124 $1.25 863 $40 $1.83 173
and fermentation
4. Steam disruption, hydrolysis
$110 $1.09 814 $36 $1.61 163
and fermentation
5. Acid disruption and transgenic
$127 $1.30 838 $41 $1.90 168
microorganism fermentation
6. Concentrated acid hydrolysis,
$72 $1.31 833 $23 $1.64 167
acid recycle and fermentation
7. Acidified acetone extraction,
$88 $1.19 779 $29 $1.61 156
hydrolysis and fermentation

Table IV-3

ETHANOL PLANT PERFORMANCE SUMMARY, BIOMASS COST INCLUDED

Biomass cost: $50 / tonBiomass cost: $108 / ton
(dry matter) (dry matter)
Ethanol Ethanol
Ethanol Ethanol
$/gallon, $/gallon,
$/gallon, $/gallon,
PROCESS 25 million 25 million
5 million gallon 5 million gallon
gallon per year gallon per year
per year plant per year plant
plant plant
1. Simultaneous saccharification and
$1.48 $1.88 $2.11 $2.51
fermentation
2. Concentrated acid hydrolysis,
$2.28 $2.76 $3.01 $3.49
neutralization and fermentation
3. Ammonia disruption hydrolysis and
$1.81 $2.40 $2.48 $3.06
fermentation
4. Steam disruption, hydrolysis and
$1.63 $2.15 $2.25 $2.77
fermentation
5. Acid disruption and transgenic
$1.86 $2.45 $2.50 $3.10
microorganism fermentation
6. Concentrated acid hydrolysis, acid
$1.86 $2.19 $2.50 $2.83
recycle and fermentation
7. Acidified acetone extraction,
$1.70 $2.13 $2.30 $2.72
hydrolysis and fermentation

Note that these ethanol production cost estimates do not take into account any potential revenues
from by-products. By-products and markets for those products are discussed in Chapter V.

G. CONCLUSIONS REGARDING ETHANOL PRODUCTION TECHNOLOGIES

As described in the previous sections, there are several approaches to the production of ethanol
from lignocellulosic biomass. However, since the level of uncertainty associated with the analyses
may be greater than the apparent differences between the technologies, it is not clear from this
analysis what process is the "best." In spite of the previously-described uncertainties, variations in
levels of optimism, etc., the analyses resulted in similar cost projections. This similarity lends a

31
degree of confidence that, as the technologies mature, ethanol production costs in Ecuador will fall
within this range.

TRUE COST OF A PETROLEUM BARREL IN THE U.S.A.

The national security costs of petroleum continue to accrue and escalate as the United States
protects supplies around the world. Estimates of costs for defense are difficult to render because
the U.S. military budget is not broken down by mission. Nevertheless, over the past 10 years
numerous organizations and individual analysts, including the U.S. Government Accounting
Office, have attempted to determine these costs. These estimates range from 15% to 23% of the
entire budget, or from US$49 billion to US$57 billion per year, dedicated to the protection of our
Persian Gulf and Southwestern Asia interest. If these national security costs were added to the
cost of imported oil, the result would be an immediate increase of over US$9.00 per barrel.

Another significant consideration on petroleum implicit barrel costs it is to consider the

environmental costs of petroleum are incredible when one considers the impact of fossil fuels on
global warming issues (N2O, CO2, CH4) and on emissions of regulated air pollutants (SOx, NOx,
CO, PM-10, VOC). Air externality costs, the costs of clean-up technology for production,
transportation, storage and use of fossil fuels, have been examined by the Tellus Institute, the
California Energy Commission, the Swedish Environmental Protection Agency and others. Their
conclusion is that the cost to society of this protection on petroleum barrel is US$45. Thus, with a
current world “price” of oil ranging about US$20 per barrel, we see that the “true” cost of oil is
closer to US$20 + $9 + $45 = $74 per barrel.

It is of great importance to consider the commodity markets with its current capital and operations
cost structure, including engineering of the ethanol biorefinery have resulted in significant reduction
in the overall cost of a facility, especially if it is located on tropical countries like Ecuador due the
huge amount of feedstocks from tropical crops such as banana, sugar cane, sweet potato, yucca,
passion fruits, and ample variety of tropical trees.

32