“It’s really comparable to gasoline,” said Mark Bunger, a biofuels analyst at Lux Research, a Boston consulting firm specializing in emerging technologies. “The issue has been that ethanol is easier to make, it’s just not easier to use. Butanol doesn’t have those same restrictions.”
“For a lot of chemical reasons, it’s a good alternative. If you’re a venture capital company and you said you are going to be making ethanol, I would say: ‘Do you have another idea?’ But if they are really focusing on butanol, that is a smart move,” he said.
He cautioned, however, that it remains unclear if bio-butanol can compete on cost with oil or substitutes like ethanol without government subsidies.
“A lot more research and technical development is needed to make it cost competitive,” he said.
Other companies are trying, such as startups Tetravitae Bioscience in Chicago and Cobalt Biofuels in Mountain View, California. But Old Town is the first to do so with a fully functioning timber mill that already generates cash flow by selling traditional pulp to paper companies. Bio-butanol will be derived from wood that would have gone to waste in pulp production, or have been left on the forest floor as unusable by loggers.
“I wouldn’t go deep into a hole without the ability to generate cash flow on what we do now,” Tilton said. “That is the beauty of this. We are not building a startup facility to create ethanol where you are out US$300 million before you start creating any kind of cash flow.”
Already the plant has put in place a system for extracting sugars from the wood and expect by the end of the year to start construction of a biorefinery to turn it into butanol. Tilton says the mill will need US$75 million to meet its target of producing butanol in two years.
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