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Cellulosic Ethanol, Once the Way of the Future, Is Off to a Delayed, Boisterous Start

Submitted by on November 13, 2013 – 4:54 pmNo Comment

by Steven Mufson (The Washington Post)  The “now hiring” sign is up online for Emmetsburg, Iowa, where the nation’s largest maker of ethanol used for motor fuel is putting the final touches on a manufacturing plant that will rely not on corn, but on the stalks and cobs left behind.

The company, Poet, is looking for an accountant, electricians, lab technicians, a supervisor for starch and cellulose operations, and more. Large flatbed trucks have already dropped off 2,600 tons of big bales at the distillery’s 22-acre stack yard. Equipment is visible from miles away across the flat, open prairie. The process is a bit like making moonshine on an industrial scale, helped along by some high-tech, bioengineered enzymes.

Poet and its joint venture partner, the Dutch industrial giant and enzyme maker DSM, have received $100 million in Energy Department grants and $20 million in financial incentives from the state of Iowa. They say they expect to begin production of ethanol at the Emmetsburg plant in early 2014, at a rate of about 20 million gallons a year.

The Poet plant is just what Congress envisioned, a Middle America biofuel displacing Middle East crude — with some possible climate benefits to boot.

So lawmakers capped the total production of corn-based ethanol and set a schedule for ramping up the use of “advanced” biofuels made from corn husks, switch grass, wood chips and other stuff known as “cellulosic” material to 16 billion gallons by 2022.

There’s one problem, though: So far, no company has produced cellulosic ethanol at commercial volumes.

More than a dozen companies have tried and failed to find a profitable formula combining sophisticated enzymes and the mundane but costly and labor-intensive job of collecting biomass.

Congress had the foresight to provide a safety valve. The Environmental Protection Agency, using its authority under the 2007 law, slashed the cellulosic ethanol quota this year, first to a paltry 14 million gallons and then again to 6 million, equal to about 0.004 percent of the fuel consumed by U.S. automobiles. It also extended the deadline for compliance. The EPA is widely expected to announce minimal quotas for next year soon, too. Oil industry lobbyists believe the EPA will also, for the first time, trim the minimum quotas for corn-based ethanol, angering farm interests and big corn-ethanol producers.

The American Petroleum Institute, a trade group for the nation’s oil and gas industry, says that petroleum refiners shouldn’t have to wait for the EPA to amend the targets every year. It wants the mandates — known as the Renewable Fuel Standard — abolished so that refiners don’t pay penalties for failing to comply.

The ethanol industry has fired back that the oil companies’s real agenda is to prevent a new industry from competing for space in American fuel tanks.

The fight is coming to a head just as the first well-financed, truly commercial-size cellulosic ethanol plants are poised to come onstream. These ventures, while behind schedule, aren’t start-ups, and the companies behind them have the financial muscle to push ahead. Dupont is close to completing a plant in the town of Nevada, Iowa, that will produce 30 million gallons a year. Abengoa, the Spanish multinational energy, engineering and construction firm with more than 22,000 employees worldwide, says its Kansas plant will start up by early next year and produce 25 million gallons a year. It has been signing 10-year contracts with farmers within a 50-mile radius to buy biomass.

Even with the opening of those three plants, U.S. cellulosic ethanol output will be minuscule compared with the ocean of gasoline American cars use. Altogether, they would produce about 4,900 barrels a day — or less than 0.06 percent of U.S. consumption. But the companies building those facilities say that they could replicate them and ultimately capture about 10 percent of the U.S. motor fuel market.

Boosting the use of ethanol in motor fuel faces another obstacle: the “blend wall.”

Moreover, oil companies don’t want to pay for new pumps at gas stations, most of which are independently owned.

Oil industry lobbyists say they still hope for legislative change, if not repeal. One outcome the lobbyists have explored: keep the 10 percent limit on ethanol, trim the corn’s share and increase the cellulosic quota. Because cellulosic ethanol’s level of greenhouse gas emissions is lower than corn ethanol’s, the oil lobbyists hope they can make common cause with some liberal lawmakers concerned about the climate.  READ MORE and MORE (Ethanol Producer Magazine) and MORE (Kansas City Star)

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