We could be on the verge of a major breakthrough with cellulosic ethanol, with fuel produced from corn cobs or wood chips at a cost that’s competitive not only with inefficient corn ethanol, but with gasoline, too. The goal is fuel for under $2 a gallon by 2011.

Even if you don't like corn ethanol — and there are many reasons why it is unsustainable — the cellulosic variety may change your tune. It is made from a renewable resource that doesn't compete with food, and is created in a vastly more efficient manner from waste and crops that can be grown on abandoned land. Greenhouse gas emissions can be reduced by more than 85 percent over reformulated gasoline. Cellulosic advocates think the industry could create 1.2 million new green jobs in the U.S. alone by 2022, when the U.S. is mandating the use of large quantities of biofuels.

Adam Monroe is president of Novozymes North America, and he told me his company has found an enzyme that can turn corn cobs, chips or sawdust (known as “feedstocks”) into the sugar that is easily converted to biofuels. It could also be made into base chemicals or bio-plastics. “Once you have sugar, you can do a lot,” Monroe said. “It’s using nature’s technology to speed up the same process that created oil over millions of years.”

The enzyme, called Cellic Ctec2, costs about 50 cents per gallon of ethanol, which represents about a 50 percent cost reduction in a year. Three years ago, the enzyme cost was $3 a gallon. Monroe describes it as a “cocktail” of enzymes that produces a stable and repeatable result — a major challenge for nature-based cellulosic processes.

The first commercial-scale cellulosic ethanol plants will open next year. Industry leader Novozymes has $1.5 billion in sales annually, and biofuels are 17 to 18 percent of its business. Its customers include biofuel giant Poet LLC, which is opening a cellulosic plant in Iowa next year that can produce 25 million gallons of the fuel (from corn husks and cobs) annually.

The Obama administration has set a renewable fuel mandate to produce 16 billion gallons of cellulosic ethanol by 2022, and a cost breakthrough could help make that happen. Enzymes are a very expensive part of making cellulosic ethanol — half of a producer’s costs just a year ago, but now only 25 percent. Further cost reductions will come with full-scale production.

Novozymes has received about $30 million in Department of Energy funding to bring its product to market. Monroe said that his process works with any feedstock, including fast-growing switchgrass, miscanthus and wheat straw. He said that, despite naysayers, there is plenty of available arable land to grow energy crops. “In 20 years, we will be out-competing gasoline without any fuel credits,” he said.

Both Novozyme and its main competitor, Genencor, have Danish parent companies. Genencor also says it can produce enzymes (Accellerase Duet, they have a way with enzyme names, don't they?) for cellulosic ethanol at 50 cents a gallon. “The technology is almost there,” Phillippe Lavielle of Genencor told ClimateWire in a story that also appeared in the New York Times. “It needs to be assembled and demonstrated at the large scale. The bottlenecks are somewhere else.”

Related on MNN: Chuck Leavell learns about biofuel so you don't have to.

Jim Motavalli ( @jmotavalli ) writes about cars, technology and the environmental world to anyone curious enough to ask.

Cellulosic ethanol fuel breakthrough: 85% cleaner and only $2 a gallon
Two companies, both with ties to Denmark, produce low-cost enzymes that can greatly reduce the cost of environmentally friendly biofuels made from agricultural