Qteros claims 15-fold improvements in cellulosic ethanol yield

Hadley, Mass.-based Qteros, known until this week as SunEthanol, said it has improved its cellulosic ethanol yield by a factor of 15 since hiring Sarad Parekh as vice president of R&D in January.

Qteros Executive Vice President Jef Sharp told the Cleantech Group that the progress is the most significant since the two-year-old company first announced its microbe-based system that uses a fermentation method to digest and ferment cellulosic feedstocks to ethanol in a single-step process.

"We will be continuously seeing improvement, as opposed to fossil fuels, which are going to cost more and more to get out of the ground," Sharp said.

Qteros announced the name change in conjunction with a $25 million funding round, from previous investors Venrock, BP, Soros Fund Management, Battery Ventures, Long River Ventures and Camros Capital (see Cleantech funds worth $1.9B lead the week and VeraSun takes stake in SunEthanol).The company had previously said the round would be smaller (see Manufacturing microbes).

Sharp told the Cleantech Group that the funding will build a lab in Massachusetts, expected to be functional next year. The company hasn't chosen a location yet. Qteros also plans to roughly double its scientific staff from 20 to about 40, he said.

By 2010, the company plans to have a demonstration facility, and by 2011 Qteros plans to begin selling its product commercially in the U.S. market, he said.

It's unclear what the market will be like then, but indications are that the U.S. will continue to require higher blends of ethanol, and specifically cellulosic ethanol, in gasoline, Sharp said.

Earlier this week, the U.S. Environmental Protection Agency said that starting in 2009 gasoline must contain a 10.21 percent blend of ethanol, creating a market for 11.1 billion gallons of ethanol next year (see Ethanol blend increases while oil reaches new low). Congress has mandated that, by 2022, 36 billion gallons of biofuel be blended into the fuel supply, including 16 billion of cellulosic ethanol and no more than 15 billion of corn ethanol.

"The government is squarely behind us on this," Sharp said. However, Sharp said cellulosic ethanol developers like Qteros need the government to fund pipelines to deliver the biofuel in a more efficient, cheaper and less environmentally harmful way than the current method of delivering 9 billion gallons of corn ethanol by rail annually in the U.S.

Missing from the funding round was previous investor Brookings, S.D.-based corn ethanol maker VeraSun Energy (NYSE: VSE), which recently filed for bankruptcy protection (see VeraSun reportedly near bankruptcy). 

Sharp said he doesn't anticipate that Qteros will need to raise more capital. 

"We have the best prospects for having the most economic system on the planet," he said.

Qteros can use woody biomass and fast-growing grasses as feedstocks. The company says its patented Q Microbe technology is naturally able to convert different forms of plant material directly into ethanol in a period of about four days.

Qteros, founded in the fall of 2006 in Amherst, Mass., is partnered with the University of Massachusetts.

In June, Qteros announced a partnership with Harvard University's Office of Technology Development to improve ethanol yields from biomass (see Harvard, SunEthanol to collaborate on biofuels). Under that collaboration, Harvard Medical School researchers plan to develop new genetic strains of a proprietary natural bacterium.

Qteros has plenty of microbe-producing competitors, such as Iogen, Poet, DuPont Danisco Cellulosic Ethanol (see Another cellulosic powerhouse formed), BlueFire Ethanol, Broin Companies, and ALICO.

Qteros has applied for approximately $3.5 million in grants. Earlier this year, the company was one of four biorefinery projects funded by a U.S. Department of Energy $114 million grant that aims to fund small-scale projects with the goal of making ethanol cost competitive to oil in five years.