The general market consensus is isobutanol is a good blendstock for gasoline compared with ethanol, but it has yet to convert end-users so far because questions about scale of production, a confirmed timetable of a production ramp-up, product cost and logistics remain.

"Isobutanol has better blend characteristics for gasoline and better RIN economics compared with ethanol," said a potential user who had several discussions with Gevo.

However, he added that isobutanol would need to competively priced against other existing gasoline blend stocks such as alkylate and ethanol. He also expressed concerns about logistics issues.

Advanced biofuel producer Gevo Inc. is aiming to build the country's first isobutanol plant to be commissioned in January 2011. It is actively looking for commercial buyers, including petroleum marketers, blenders, and refiners, to introduce isobutanol and/or its derivatives to the market.

The size of the plant in the U.S. Midwest will depend on the market demand.

Isobutanol, which could compete with ethanol as a gasoline blendstock in the future, has better tax credits, a higher Renewable Identification Number (RIN) equivalency value, lower Reid Vapor Pressure (RVP) and higher energy content than ethanol. However, logistics and a lack of clear pricing incentives could be issues and it could face opposition from the ethanol lobby.

Isobutanol, already in use in the chemical industry, is aiming to break into the transportation fuels markets, starting with gasoline. Gevo is aiming to convert mothballed ethanol plants to produce isobutanol.

"Isobutanol would work for a lot of folks that have a more complex distribution system," said a second potential end-user.

"We would need an adequate truck/rail capability to get isobutanol into our system," he added.

Ideally, a buyer would have spare storage tanks for isobutanol, and is able to receive the product at the blending location via rail.

Jack Huttner, a Gevo spokesman, said that the isobutanol project "has generated quite a bit of interest" from potential buyers.

Gevo is in early discussions or middle of discussions with buyers, including airlines, on product sales.

The company is addressing questions from buyers about projected volume, timing of production, product cost and logistics, he said.

OPIS reported last week that Gevo "is in preliminary discussions with a number of different ethanol producers" to joint venture with, acquire or make tolling arrangements with facilities that could produce biobutanol.

"Gevo is a new player in the market, bringing a known molecule (butanol) to market but from a different origin and distribution channel...And, we still have to bring our capacity on line, so it is natural that refineries will be cautious at first, but the interest is definitely there and real," Huttner said in response to questions on the challenges Gevo faces.

Buyers want to know the scale of the production and whether the ramping up of production would synchronize with the demand, he added. Also, buyers want to know if the product is economically and environmentally sustainable.

This scenario could be repeating the age-old adage of "whether the chicken or egg comes first."

Gevo is actively shopping for ethanol capacity for retrofit to biobutanol production and buyers would like to see a roadmap to sustainable production of a significant scale before committing to a long-term purchase.

Because of the risk of building a biobutanol business, it is well aligned with the risk reward profile of the venture capital industry, where Gevo has received its funding, Huttner said.

Meanwhile, Gevo has teamed up with ICM Inc. to start up a 1-million gal/yr ethanol pilot plant in St. Joseph, Mo. The demo plant will be used only for product qualification trial.

This article reprinted with permission from Ethanol and Biodiesel Information Service’s daily live news service. For a free trial of this award-winning service call (888) 301-2645 or click here: http://opisnet.com/news/biofuelsalerts.asp.