Japan to back third farm waste ethanol project

Friday, Nov 21, 2008

Japan has approved a third test project to make ethanol from farm waste with subsidies to pay for building and running of plants totalling about $32 million over 5 years, the agriculture ministry said on Tuesday.

Several countries including resource-poor Japan are working on enzymes and other processing technologies to unlock more energy from the waste products of farming, such as rice straw, and forestry.The advantage of the resulting cellulosic ethanol is that it does not use food crops such as corn as raw materials.

The latest project Japan was a joint venture by a unit of Kawasaki Heavy Industries Ltd (7012.T: Quote, Profile, Research, Stock Buzz) and an agricultural public corporation led by the prefectural government of Akita in northern Japan, a ministry official said on Tuesday.

The ministry set aside 3.2 billion yen ($33 million) for the year to next March to support projects to run a small test plant with daily output of up to 1,000 litres (1 kilolitre) at costs possibly low enough for commercial production.

The ministry has said it would shoulder 50 percent of estimated costs to build a cellulosic ethanol plant and 100 percent of a plants running costs during a research and development period.

For the next fiscal year, the ministry has requested a budget of 3.7 billion yen to keep supporting similar projects in the cellulosic ethanol field.

The construction cost of the plant in Akita, with projected annual ethanol output of up to 22.5 kilolitres, is estimated at 1.03 billion yen and its running cost for the five-year project at 900 million yen, the ministry official said.

In July, the ministry approved two smaller plants by two joint ventures -- one in the northern island of Hokkaido by general contractor Taisei Corp and beer company Sapporo Holdings and another one in Hyogo prefecture, western Japan, by Mitsubishi Heavy Industries Ltd and a group led by the Hyogo prefectural government.