Their first goal is to supply the $5 billion industrial ethanol market, “half of that in China” said Sterin—where the product is used in coatings, inks and pharmaceuticals.
But the real upside could be in supplying the global ethanol fuel market, expected to reach 20 billion gallons a year by 2012.
Currently, ethanol-as-fuel works well in countries with the right ethanol infrastructure, such as Brazil, where vehicles have been running on domestically-grown, sugar cane-derived ethanol since the country was crippled by high oil prices in the 1970s.
But the U.S.'s corn-derived ethanol fuel is relatively expensive—about $1.55 to $1.74 per gallon compared to 71 cents to 90 cents per gallon in Brazil—and so is heavily subsidized to allow gasoline producers to meet federal renewable fuel standards.
And with 40 percent of the U.S. corn crop now going to ethanol production, a four-fold increase from 2002, the competition for corn from food processors could keep those prices high.
Celanese claims its TCX process can produce a blended gasoline-equivalent fuel at $1.50 a gallon, equal to refining crude oil at $60 a barrel, and well below current levels at the pump.
Although coal-based ethanol would be ineligible for federal mandates that require 8 percent of fuels in the U.S. come from renewable sources by 2011, cheaper ethanol could take some pressure off gasoline prices by displacing some of the expensive corn-based ethanol elsewhere in the market.
Meanwhile, coal’s main market of electricity generation continue to wane, said Chris Huntington, partner at energy-focused hedge fund New Energy Fund Advisors, a trend likely to continue as natural gas pushes coal aside as a fuel source for new power plants.