China-based Shengquan Group and the Danish company Novozymes are partnering to make enough cellulosic ethanol for commercialization. Shengquen and Novozymes have reached an agreement in which Shengquen will invest $100 million and Novozymes will provide the "enabling enzyme technology" for production of cellulosic ethanol, a "second-generation" biofuel because it's made from plant waste.

Shengquan makes resin for the foundry industry and produces cellulose from corncobs as a byproduct. With Novozymes technology, the byproduct will be turned into sugars that can be fermented into ethanol. What's interesting is that this biofuel isn't destined for fuel pumps. Novozymes said it will be sold as an industrial solvent, but the company is certainly interested in cellulosic ethanol for vehicles, as we have seen.
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Novozymes' partner Shengquan invests $100 million to market cellulosic ethanol

During the visit to Denmark of Hu Jintao, President of the People's Republic of China, Shengquan and Novozymes finalized an enzyme supply deal to market cellulosic ethanol. This deal reflects China's leading position towards the bioeconomy.

15. June 2012 When China's Shengquan Group starts producing cellulosic ethanol next month, it will be the first in the world to do so on a commercial scale. More than that, the production will also be cost-competitive with conventional ethanol, as the feedstock is a waste product from Shengquan's current production.

Shengquan has invested $100 million in the new groundbreaking facility. Danish company Novozymes, the world leader in bioinnovation, will supply the enabling enzyme technology. The two companies first announced their plans in April this year and will sign the final agreement today during Hu Jintao's visit to Denmark.

"When Shengquan opens its facility next month, it will be a milestone on the road away from the current oil-dependent economy toward a bioeconomy based on biological materials such as biomass and household and industrial waste," explains Steen Riisgaard, President and CEO of Novozymes.

Shengquan is a leading producer of furfural for resin production in the foundry industry. Furfural is produced from corncob xylose, with the cellulose from the corncob left behind as a waste product. Using Novozymes' enzymes, Shengquan will now be able to convert the cellulose into higher-value sugars that can be fermented to ethanol. Shengquan will market the ethanol as an industrial solvent.

"To continue to grow our country's economy while at the same time lessen our dependency on natural resources and minimizing the environmental impact, we need to start thinking of waste as a valuable resource," comments Yi Lin Tang, Chairman and President of Shengquan Group. "Basically, we want and need to nurture a green and circular bioeconomy which is less dependent on fossil resources."

Green ambitions in China
The two companies signed the deal during Hu Jintao's visit to Denmark, in the presence of His Royal Highness Crown Prince Frederik of Denmark, Wang Qishan, Vice-Premier of the People's Republic of China, and Margrethe Vestager, Minister for Economic Affairs and the Interior, Denmark.

"As a company working in the clean tech space, we are thrilled by this important visit," adds Steen Riisgaard. "China leads the world when it comes to investments in green energy and biochemicals, and the country's long-term goals to improve its energy efficiency by 20% are among the most ambitious. This is a perfect match for Novozymes, because our biotechnology solutions make it possible to produce more with fewer resources and with less impact on the environment."

Made in Shandong
Shengquan Group is based in the city of Jinan in Shandong province, where Novozymes opened its new innovation and business center only last week. Novozymes is one of the largest Danish investors in China, with a total investment of more than $500 million since 1994. In 1997, Novozymes became the first company globally to initiate biotech R&D in China. Today, the company has four production facilities in China, more than 1,100 employees and plans to invest further in the country in the coming years.

In China, Novozymes has also entered into partnerships with companies including COFCO and Sinopec to develop advanced biofuels and with Dacheng to develop bioglycol. According to Bloomberg New Energy Finance, China could easily replace almost 40% of its annual gasoline consumption with advanced biofuels by 2030. This would cut CO2 emissions significantly and create almost 3 million jobs in rural areas. With a domestic engineering, construction and feedstock market worth $118 billion, Chinese players would be the major beneficiaries.