Ethanol industry boom

Cellulosic ethanol could be poised for a surge – finally.

Around America and especially in the Midwest, a number of proposed plants that would turn corn cobs, wheat straw and other plant-based feedstocks into fuel and sell it on the market are working to secure the last stages of financing, and some could become operational in the next few years. A smattering of smaller pilot plants are already operating, helping companies to hone the technology and economics of their product.

“With the right policies, we could unleash literally dozens of projects,” Brooke Coleman, executive director of the recently formed Advanced Ethanol Council, a coalition that includes cellulosic companies, said in an email. “Companies are ready to go.”

Coleman said roughly a dozen advanced ethanol projects had all or nearly all of the pieces in place, including location, partners and financing. These are either already producing ethanol or moving ahead with plans to do so.

Another dozen or so companies also have plans, albeit somewhat less advanced. Coleman said those included large and small operations and companies that make ethanol from trash or algae, as well as from plant-based materials.

Of course, the cellulosic ethanol industry has had high hopes before. Four years ago, Congress ordered that 946 million litres of cellulosic ethanol be produced in the U.S. in 2011. That would have equaled roughly 0.2 percent of the nation’s annual gasoline use, a small but measurable amount.

Instead, after companies struggled to find capital during the economic downturn, federal regulators ratcheted down the expectations. Now, only 25 million litres of cellulosic ethanol must be produced this year.

New plants would push the numbers up. In January, Coskata, an Illinois-based biofuel company, announced that the Agriculture Department would award it a $250-million loan guarantee to build a plant in Alabama capable of producing 208 million litres of ethanol a year from wood debris. POET, an ethanol maker based in South Dakota, hopes to have a 95-million-litre-a-year cellulosic plant under construction in Iowa by the end of this year, according to Jeff Lautt, the company’s president.

Another biofuels company, Mascoma, plans a $350-million, 151-million-litre-a-year cellulosic plant in Michigan, and construction is expected to start this year.

However, Coleman of the industry group noted that high oil prices might also make agricultural commodities more costly, and he said that the overall volatility of oil meant that “a short-term oil price spike is not going to suddenly result in biorefineries popping up all over the place,” so government policies are vital.

Federal help is crucial to all these plants. Both Mascoma and POET are awaiting loan guarantees from the federal government – an essential measure, says Lautt of POET, because these are first-of-their-kind plants.

The federal government’s support for the ethanol industry has come under sharp questioning in recent years, as opposition has grown against corn ethanol – the “first generation” type of ethanol produced in this country. Environmentalists argue that growing corn to make ethanol produces too many greenhouse gases, partly relating to land-use change it causes, and also cuts into food supplies.

However, the industry rebuffs such arguments and complains that corn ethanol has been unfairly singled out for such analysis. Ethanol makers say the integration of ethanol in the nation’s gas pumps helped reduce reliance on foreign oil. It has also created infrastructure that will benefit later and more efficient types of ethanol, like cellulosic.

Federal officials have used a variety of tools over the years to promote ethanol, including mandated production goals. But many of these are increasingly controversial; the latest example was an EPA decision in January to allow a 15 percent blend of ethanol into vehicles at least as new as the 2001 model. Ethanol makers sought this as a way to expand their market, but automakers resisted – and whether gasoline retailers will actually carry higher blends anytime soon remains to be seen.

Partly as a result of the controversy over corn ethanol, environmentalists are approaching cellulosic companies with a sceptical eye.

Oil companies, meanwhile, are showing an interest in the new fuel. In January, the refinery giant Valero announced plans to invest up to $50 million in Mascoma’s Michigan plant. Shell has created a joint venture with Iogen, a Canadian enzyme maker; the two companies have an Ottawa demonstration plant that produces fuel from wheat straw. In June, during the oil-spill cleanup in the Gulf of Mexico, BP spent $98 million to acquire the cellulosic business of its biofuel partner, Verenium, including plants in Louisiana and San Diego.

When the first commercial-scale operations arrive in the coming years, prospects for cellulosic ethanol should brighten, Brady of Mascoma said.

“Once we all show the world that these plants can work and these plants can be commercially viable,” he said, “then things will really take off.”

0
0

NO COMMENTS