Volkswagen AG is working with two companies to determine whether ethanol can be produced economically from plant fibers for use as a gasoline additive.
VW's partners are Iogen Corp., a Canadian biotechnology company, and energy giant Shell Group, of the Netherlands.
This biofuel could cut carbon dioxide emissions by 90 percent compared with conventional fuels, says Wolfgang Bernhard, head of the VW brand. If the project gets a green light after a three-month feasibility study, a plant could be built in Germany by year end.
But that's just the first step. Engines could be designed specifically for this fuel "because it runs so clean," Bernhard said.
"We can make completely new engines that have a perfect combustion process - the thing every combustion engineer dreams about," Bernhard said in an interview at the Detroit auto show. "You can make these engines highly fuel-efficient, get another step in fuel efficiency, and you can get rid of all the chemical factories you have."
The ethanol would be made from agricultural waste.
"We are talking about an efficiency rate that is pretty spectacular. That means you can use all kinds of cellulose material - grass and all kinds of wood, shrubs - everything that is waste," says Bernhard. "You can convert it into fuel."
VW estimates that using U.S. agricultural waste, 50 billion gallons of ethanol could be created annually. About 140 billion gallons of gasoline are used in this country every year.
Bernhard says Iogen has invented a technology "where specially designed enzymes crank up the efficiency of converting cellulose biomaterial into fuel with an efficiency rate of 90 percent."
Shell would add the ethanol to its fuel, eliminating any concerns about distribution, says Adrian Hallmark, executive vice president of Volkswagen of America. "Any efforts to reduce emissions only apply to the few cars we add to the vehicle park each year. But if you have this going on an industrial scale, you can apply it to every car in the vehicle park overnight."
VW entered into the partnership because automakers simply "can't do it alone anymore," says Bernhard. "You have to consider the whole story from well to wheel. That is where we need the cooperation with the mineral and oil guys. The next big step is to get the whole system done, rather than everyone optimizing their own piece.
"Engines that can be designed on an optimized fuel can result in cost reductions for the whole economy."