ZeaChem forms strategic partnership with Chrysler Group

By Kris Bevill | August 15, 2011

ZeaChem Inc. announced it has signed a memorandum of understanding with Chrysler Group LLC to accelerate the commercialization of its cellulosic ethanol process and to assist in establishing a strong consumer market for the fuel. According to ZeaChem, the primary goals of the partnership are to strengthen cellulosic ethanol’s credibility among regulators and consumers, build awareness of the environmental advantages of cellulosic ethanol produced from non-food feedstocks, and provide leadership in bringing cellulosic ethanol to the consumer market. Cellulosic ethanol has yet to become commercially available and Chrysler is focused on assisting in the establishment of commercial-scale facilities, according to ZeaChem CEO Jim Imbler. Assistance could come in the form of capital investments, off-take agreements, and/or communicating with federal and state agencies to help establish plants, he said. “There are a number of ways that they can be very helpful and we look forward to building some major plants near facilities in a way that makes sense for them and the market,” he said.

ZeaChem’s ability to produce biochemicals as well as fuel played a role in attracting Chrysler to form a partnership with the company, according to Imbler. The auto industry is obviously a huge consumer of fuel, but biochemicals produced using ZeaChem’s process can serve to replace petrochemicals, such as polypropylene, currently being used in the auto-manufacturing process. ZeaChem wants to locate its commercial production facilities near auto-manufacturing plants throughout North America to serve as a chemical provider for those plants as well as to provide fuel for the final product. Imbler said Chrysler views ZeaChem as a logical partner for fuel production because its process produces high yields of second-generation ethanol from renewable feedstocks, primarily hybrid poplar trees. “ZeaChem is at the forefront of advanced cellulosic ethanol production,” he said. “Our process delivers a 40 percent higher yield in ethanol from non-food cellulosic feedstocks. Through strategic alliances we can fast-track the large-scale production of cellulosic ethanol. We look forward to collaborating with Chrysler Group to achieve our mutual goals and bring sustainable advanced cellulosic ethanol to consumers’ vehicles.”

ZeaChem’s first commercial-scale plant, a 25 MMgy facility in Boardman, Ore., is tentatively set to begin construction late next year. The company is currently building a 250,000 gallon per year demonstration facility in Boardman which could begin producing biochemicals by the end of the year. Cellulosic ethanol production at the demo-plant is not expected to commence until early next year.

The partnership deal between Chrysler and ZeaChem is non-exclusive, but Imbler said ZeaChem is not planning to partner with any other auto manufacturer at this time and is not aware of Chrysler partnering with other cellulosic ethanol producers. Chrysler is not the first auto manufacturer to enter into development agreements with ethanol producers. In 2008, General Motors Corp. provided an undisclosed investment to both Coskata Inc. and Mascoma Corp. and made agreements to increase the number of flex-fuel vehicles it manufactures as well as to support the necessary infrastructure build-out for higher blends of ethanol. While it started out strong, GM’s aggressive stance toward biofuels has yet to really prove itself, as evidenced by the continued need for E85 and blender pump infrastructure throughout the country and the yet to be commercialized cellulosic technologies. While some of the blame for this can be placed on the treacherous economic climate of the past three years, Imbler said he believes the earlier auto manufacturer-ethanol producer partnerships may have come out a little prematurely. “The timing of this announcement matches more of the market reality,” he said. “I think the timing is right now for people to really start getting behind the new generations of technologies.”