Not quite yet or for a good few years. . . at least that's the conclusion I've drawn from this must-read interview - as published by Ethanol Statistics today - a tour de force of the state of cellulosic bioethanol - with Emmanuel Petiot of Denmark's Novozymes, pretty much the investor's only cellulosic biofuel play available on world markets today.

For those of you who aren't familiar with the argument for cellulosic ethanol, it goes like this;

First generation ethanol is all about growing starch or sugar-based food crops like corn and sugarcane and converting a small fraction of the plant into ethanol. This is very wasteful, from an input, output perspective, but still the lowest cost method. With genetically engineered enzymes, potentially all plant biomass, not just parts of food crops but even wood residues, could be converted into bioethanol. At a stroke, second generation cellulosic bioethanol could overcome the food v. fuel crisis stoking inflation today, by massively increasing the amount of useful biomass that could be converted into fuel. That's the promise of second generation biofuel technology and Novozymes is leading the charge.

I don't think Ethanol Statistics (a very good site) will mind if I summarize some of what I think are the key points from the interview;

The falling cost of enzymes: Mr. Petiot says. “Between 2000 and 2004 we have reduced the cost of enzymes in lab scale by 30 fold, including a 6 fold reduction directly derived from the specific activity of our enzymes".

How far cost have to fall: " . . . currently, total production costs are between 3 and 4 dollar per gallon" and to match first generation ethanol, that will have to fall to about $1 per gallon

When we will see cellulosic bioethanol: " . . . I don’t think there will be a clear winner in cellulosic technology in four years time. However, I do think that, within this time line, several plants will produce ethanol from ligno-cellulosic feedstock, from agricultural residues, wood residues and probably a few from industrial waste".

So there you go. The big picture is that progress is continuing apace, but no miracle discovery will be commercially available in the coming years. But if anyone can do it, my view is that Novozymes , with a 50% market share in the enzymes currently used in ethanol production - will be first.