State dreams big on biofuels

A species of bacteria discovered 22 years ago as it gobbled marsh grass along the Chesapeake Bay has become the secret weapon in a Maryland startup's bid to produce ethanol fuels from waste paper.

Dubbed Saccharophagus degradans, for "sugar eater," the bacterium produces at least 70 different enzymes to digest the hard cellulose in plant matter and turn it into simple sugars.


Add a little yeast, and those sugars ferment to make ethanol, a biofuel that the federal government hopes will reduce the United States' dependence on petroleum imports and cut greenhouse gas emissions.

The discovery has Maryland officials - among them Gov. Martin O'Malley, who will tour the startup company this morning - dreaming of a big-time biotechnology breakthrough for the state.


"This is very exciting ... one of those extraordinary examples of how research in Maryland may actually be used to change the world," said O'Malley spokesman Rick Abbruzzese. "It shows great promise for helping our country and our state secure our energy future by producing ethanol with very little waste product."

The discovery of S. degradans was pure serendipity, and more than a dozen attempts to retrieve more of it from the bay marshes have failed.

But University of Maryland microbiologist Steven Hutcheson acquired, preserved and bred the descendants of the original batch. And now he's developed a process for putting their cellulose-eating enzymes to work producing ethanol on a commercial scale.

Hutcheson is the founder and CEO of Zymetis Inc., a startup born in 2006 in a University of Maryland business incubator. Together with Fiberight, a company in Lawrenceville, Va., that extracts cellulose from nonrecylable municipal waste, Hutcheson hopes to launch a full-scale waste-to-ethanol demonstration plant by early next year - possibly in Baltimore's Curtis Bay area.

Production could reach 3.5 million gallons a year - a tiny part of the region's needs, he said, but a start.

"We believe we have the most economical way to make the novel, efficient enzymes needed to produce biofuels from cellulosic materials," Hutcheson said.

The 53-year-old Columbia resident took a leave of absence from teaching to get his new company on its feet, with a boost from the university's MTECH Venture Accelerator Program.

O'Malley was scheduled to tour Zymetis' lab this morning to highlight the university's latest spinoff company and the College Park business incubator program.


"It speaks to the strength of the research institutions we have in our state, particularly with the [business] incubators within the university system," Abbruzzese said.

The Bush administration's goal is to make cellulosic ethanol cost-competitive with gasoline by 2012 and to produce 3 billion gallons a year by 2015.

Most ethanol today is used as a gasoline additive and is made from sugars found in corn. Increased demand for corn, combined with government subsidies for ethanol, have pushed up corn prices and food prices generally around the world.

Ethanol made from cellulose would not impact food prices because it relies on cellulose from municipal waste, from nonedible plants such as switchgrass, or from the inedible portions of food plants that now go to waste.

Cellulosic ethanol can be produced with only 10 percent of the energy demanded by corn-based production. And ethanol has the potential to reduce automotive greenhouse gas emissions by 86 percent compared with gasoline, according to the U.S. Department of Energy.

Ethanol produced from corn currently offers only a 19 percent emissions reduction.


The problem: devising efficient, industrial-scale processes for getting ethanol from cellulose.

The challenge and the potential payoff have spurred entrepreneurs, academics and government laboratories around the world to look for the right combination of enzymes with the lowest cost per gallon of ethanol produced.

"We have done research and development in this area for more than 20 years, with enzyme development one of the high-priority, critical areas worked on," said Valerie Sarisky-Reed, team leader in the Biomass Programs office at the Department of Energy.

Two weeks ago, the Energy Department announced that it would invest $33.8 million in a 50/50 split with four companies in California and New Jersey that are working on improved enzyme systems derived from bacteria and fungi.

"There are a lot of organisms out there that break down cellulose," said Sarisky-Reed. "We need to find out how to take that activity and ... scale it up."

So far, she said, Zymetis' competitors say they can produce enzymes that cost 30 cents for each gallon of ethanol produced - about the same as Hutcheson claims for his process.


This price point might already be cost-competitive, given today's record oil prices - more than $100 a barrel, Sarisky-Reed said.

But the Energy Department has set a much more conservative, "stable-market" target of $55 a barrel for 2012. To be cost competitive with gasoline from oil at that price level, she said, "We need these enzyme systems to cost around 10 cents a gallon. So we're not there yet."

S. degradans was discovered in 1986 in the marshes of Mathews County, Va., near the mouth of the Rappahannock River. A large tract of marsh grass was dying, and scientists were called to determine whether some sort of pollution was responsible.

A biologist from George Mason University isolated a curious new bacterium from the decaying grass and eventually gave a sample to Ron Weiner, a UM colleague of Hutcheson's.

Thanks to its native microorganisms, the bay marsh has "a very high productivity, yet very little material accumulates," Hutcheson said.

S. degradans appears to have been be a particularly competent member of that native waste disposal community, he said. "It's pretty nondescript, a common variety of bacterium. It's in the same family as E. coli."


That species is commonly found in mammalian digestive tracts. But it is still not clear where S. degradans came from or where it has gone since then.

Hutcheson has squirreled away frozen repositories of the organism to ensure a resupply in the event his working batches are swept by a virus or somehow contaminated.

What makes the stuff remarkable is its ferocious appetite for cellulose. The 70 enzymes that it manufactures are tools for unraveling the complex sugars that form the tough cellulose in plant cell walls. It's the largest diversity of such enzymes Hutcheson has ever encountered in one organism.

By the summer of 2006, Hutcheson had found that S. degradans was easy and inexpensive to grow in the large quantities and high densities that industrial enzyme production requires.

The bacteria don't need any genetic engineering and can't escape the processing plant alive because it dies quickly in rain or fresh water.

His team also found that the enzyme mix they extracted - patented as Ethazyme - could happily digest a tasty batch of processed waste paper.


In 2006, Hutcheson raised a small amount of capital from friends and family, and from his own pocket, and incorporated as Zymetis Inc.

Through the university's MTECH Venture Accelerator, he got help developing a financial model and business plan. He established contact with other ethanol producers and potential business partners, and found guidance with his initial hiring.

"I'm a research scientist," he said. "I knew at the very beginning I needed help in this regard. ... The Venture Accelerator played a critical role."

MTECH's Bioprocess Scale-Up Facility also provided expertise in figuring out how to mass produce the bacteria.

Zymetis has hired Steven Davey, 49, of Ellicott City as his chief operating officer. He's a chemical engineer with a degree in business finance and a background with chemical giant W.R. Grace.

Davey said he wanted to work in alternative energy, because it is "a great way for our country to be self-sufficient from the energy standpoint."


Now, he said, "My job is to do everything I can to get Steve [Hutcheson] back to the lab."