DuPont (NYSE:DD) is a chemicals giant, but it's also getting ready to become a green fuel giant. That puts it up there with specialized companies like Solazyme (NASDAQ:SZYM), but with the heft of a $60 billion market cap Dow 30 Component. Green fuels could be a nice niche for DuPont to dominate, if it gets its technology right.

What's DuPont up to, anyway?
DuPont is working on a plant that makes ethanol. That in and of itself is nothing new, in fact the United States mandates that ethanol be added to gasoline already. So ethanol is a big business and DuPont won't change that one bit—unless it changes the feedstock.

Right now most ethanol uses corn. DuPont is working on technology that will allow ethanol to be made from corn stover. Corn stover is essentially what's left of a corn plant after the corn has been harvested. That means that farmers can stop diverting eatable corn to the ethanol market and start using it to feed people, and still make ethanol.

(Source: Royalbroil, via Wikimedia Commons)

Such technology could upend the ethanol market, but that wouldn't be such a bad thing with a growing world population. More people means more mouths to feed, and the United States could more easily live up to the historical nickname "the breadbasket of the world."

DuPont's efforts are vastly different from Solazyme, which uses microalgae to produce oil from plant based sugars like sugarcane and corn. That's a fascinating technology that uses "indirect photosynthesis" to create marketable products, but it still means growing food crops specifically for fuel use. In a country like the United States where food and arable land is abundant, it may not matter too much what crops are being used for. But in less developed countries or those with inhospitable climates, using farm waste is much more desirable than wasting food.

It's the tech that matters
And that brings up another difference between what Solazyme and DuPont are doing with their high tech bio-fuels businesses. Solazyme has some big name partners, including the U.S. Navy, which uses fuel Solazyme creates in its ships. However, green pioneer Solazyme is more like an oil company than a technology company. It simply wants to make and sell oil. That's why it's spending heavily on building new facilities and why it's bled red ink since its IPO.

Once Solazyme has built its infrastructure and acquired a core group of customers, it should finally be able to not only turn a profit but a consistent profit. That said, there's no guarantee that this will come to pass, especially if the market for algae created bio-fuels stays a niche business.

DuPont, meanwhile, isn't really looking to become an ethanol maker. It wants to prove its technology works and then sell the technology to others, earning licensing fees along the way. According to Ken Hill, business development and licensing leader with DuPont Industrial Biosciences Global, "Our approach is to take DuPont's 'know how' to potential ethanol producers. It is a big part of what we can do as a fully innovated licensing company."

(Source: Lukáš Mižoch, via Wikimedia Commons)

DuPont's plant should start producing ethanol by the end of the year. "We provide basically a turn key solution on the engineering for someone who wants to build a cellulosic ethanol plant," noted DuPont's Hill. So having the Iowa plant up and running will be a key milestone and sales tool. If you are a green enthusiast, keep an eye on DuPont's progress.

Needle moving?
Clearly, cellulosic ethanol won't be a huge needle mover for DuPont. At least not like a big new customer would be for Solazyme. However, that's exactly why you should find DuPont's green venture of interest. Solazyme could take off just as easily as it could flame out. DuPont, on the other hand, isn't going anywhere. It has plenty of time to build its green businesses and take you along for the ride.

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Reuben Brewer has no position in any stocks mentioned. The Motley Fool owns shares of Solazyme. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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