Singapore, Aug 8 - Singapore-based renewable energy firm Pure Power is aiming to be the first to turn wood into products for the petrochemical and food industries.
The rally in oil prices has led to growth in using biomass, such as plantation or waste wood and crops, to make ethanol to blend with motor gasoline, but Pure Power said this process usually loses other compounds that can be sold at higher margins.
"Ethanol is the tip of the iceberg. There's a huge invisible as well -- for us that's the petrochemical industry," said Pure Power Chief Executive Officer David Milroy in an interview on Friday. "We're the first out of the blocks."
The firm is aiming to break down willow trees and other feedstocks to produce lignin, which it says is a direct substitute for fossil-fuel based phenols used by the petrochemical industry to make plastics.
"It's a sustainable resource that is not depleting fossil fuels," Milroy said.
The production cost was on a par with phenols when oil was $70 a barrel, Milroy said. Oil prices are trading at $118 a barrel after reaching nearly $150 earlier this year.
Japanese trading houses have tested the product and it has had interest from major petrochemicals firms, Milroy said. Singapore is home to petrochemical crackers run by Exxon Mobil and Royal Dutch Shell.
The firm has raised capital through private investors and plans an initial public offering in 2010, when it will start its first plant. It will build one or two plants a year near waste wood sources, with Southeast Asia, Brazil and Canada possible venues.
The conversion process produces 50 percent cellulosic ethanol for transport fuel, but the remainder -- split between lignin and xylose that is a sweetener commonly used in foods in Asia -- will provide over 80 percent of the revenues, Milroy said.
Cellulosic ethanol is seen as a promising future alternative fuel if costs can be lowered because its feedstock does not compete with food. Many analysts blame surging world food prices on increased demand for ethanol.
Pure Power bought research firm Biojoule that developed the technology in New Zealand, where it has a willow plantation and is looking to grow more on marginal farmlands.
"The only way to be sustainable is to be vertically integrated," said Milroy, pointing to a string of new biofuel refineries around Southeast Asia that lie unused because of a surge in the cost of feedstock crude palm oil.
Pure Power also owns a stake in another New Zealand research firm that aims to turn algae into biodiesel and aviation fuel.