Challenges of corn ethanol make sugar more attractive

BATON ROUGE – The corn-based ethanol industry has gone from the prince of renewable energy to the pauper of alternative fuels in a short period of time, thanks to an ailing economy.

Stepping up in its place is another form of ethanol that relies on agricultural waste, most notably sugar-cane byproducts. Local researchers are on the cutting edge of this trend and farmers in Terrebonne and Lafourche parishes could stand to benefit.

Although the ethanol industry appears to be in turmoil, the challenges allow the opportunity for state and private investors to transfer into advanced biofuels, which still have challenges, but seem to be progressing more easily.

At this moment, cellulosic ethanol is sitting in the hot seat. It is ethanol produced from forestry or agricultural waste. Not only does it eliminate the fuel-or-food debate — the fuel is produced from byproducts and has little or no impact on the food supply or land use — but Louisiana is uniquely positioned to benefit for the new technology being employed.

Louisiana Agriculture Commissioner Mike Strain said, for its part, the Bayou State is ready to leap at the opportunity.

“All of the technology is moving that way,” he said. “With our sugar cane and our timber, Louisiana is at a competitive advantage.”

But it’s just the tip of the iceberg for advanced biofuels in Louisiana.

The $126 million Tyson-Syntroleum Biofuels Plant in Ascension Parish is turning chicken fat into jet fuel. Louisiana Green Fuels also opened an ethanol plant in Lacassine last January that is harvesting sweet sorghum, a species of grass. The company is hoping farmers embrace it as an alternative crop that could even supplement sugar cane.

The decline of corn-based ethanol operations is easily explained.

Prices for raw materials have all but killed commercial applications for the time being and the oil market, which was making corn-based ethanol look economically viable, is leveling out, going from $147 per barrel in July to less than $40 today.

Private investors have gone cold and federal lawmakers –- who now realize their production mandates of 100 million gallons of advanced biofuels in 2010 and 250 million gallons in 2011 won’t be reached on time -– are more hesitant than ever.

According to a report last month by The New York Times, at least one ethanol manufacturer in the U.S. has closed every seven days or so this year.

In Louisiana, there are not many large ethanol manufacturers for a pinch to be felt.

But operations rooted in sugar and its by-products are getting attention.

The Cambridge, Mass.-based firm Verenium opened up its first demonstration-scale cellulosic ethanol plant using sugar in Jennings last year and a full-scale model is being built in Florida. If you want to find the hype in Louisiana, look no farther than this project.

Verenium also plans to open other full-scale models in the U.S., but locations have not yet been announced.

“The facility will serve as a blueprint for how we develop future projects,” said Carlos A. Riva, Verenium’s president. “This milestone is just the beginning.”

Additionally, researchers from the LSU AgCenter’s Sugar Research Station in St. Gabriel and the U.S. Department of Agriculture’s research station in Houma have developed several varieties of energy cane that can be used as feedstock for producing ethanol.

So, how big of a shift could this be for Louisiana?

According to a joint study released earlier this month by Sandia National Laboratories and General Motors, America could replace one-third of its yearly gas use with ethanol by 2030. Out of the 90 billion gallons needed to make this happen annually, 75 billion gallons could potentially be cellulosic ethanol, based on the study’s calculations.

Another recent study published by the University of Minnesota found that cellulosic ethanol could help reduce air pollution.

The validations are coming more quickly than thought, along with the technological advances, but there’s still a bit of road to travel until people start pumping agricultural debris into their vehicles.

“There’s a lot of emphasis being placed on cellulosic ethanol, but it’s not quite up to a fully commercial scale yet,” said Michael E. Salassi, an LSU agribusiness professor. “But they’re very close and Louisiana is poised to be competitive. We have the acres through forestry and the crops through our farmers and the capability and experience to make it all happen.”

Cambridge Energy Research Associates, an advisory firm in Massachusetts, suggests the watermark will be seen in about five years.

The Louisiana Legislature is expected to take up a slew of ethanol-related bill in the upcoming regular session that convenes in late April, Strain said.

“We’re looking at incentives on feedstock and incentives for cellulosic ethanol and a few other things,” he said. “I also think you’re going to see some breaks for manufacturers. It’s going to be a really interesting session.”

In the end, though, it all comes down to economics.

Advanced biofuels may not be competitive in the long run if gasoline prices fall below what it costs to produce agricultural fuel. There is speculation that President Barack Obama loaded up his $787 billion stimulus bills with loan guarantees and deployment plans for advanced biofuels.

For Louisiana, it could mean more jobs in the future.

“The future of ethanol is here, in Louisiana, now,” Strain says. “It’s a great opportunity.”
source:dailycomet