Celluosic ethanol estimates revised downward

The future of renewable fuels is supposed to be largely about breaking down the stubborn cellulose fiber in such cheap materials as wheat straw, cornstalks, switch grass and wood chips, converting them to energy and putting the results in your fuel tank.

The future didn't seem to get much closer on Monday. That's when the Environmental Protection Agency lowered its 2011 expectations for cellulosic output from 250 million gallons to 6.5 million gallons.

The EPA retreat raises questions about reaching the lofty federal goal of 16 billion gallons of cellulose-based fuel by 2022. But Chris Standlee is not ready to hit the panic button.

“Twelve years is a long time,” Standlee said Tuesday, looking ahead as executive vice president for a company that already has converted wheat straw to ethanol at its York, Neb. pilot plant.

“And look at what the starch-based industry has done in the last five years,” said the St. Louis-based spokesman for Abengoa Bioenergy, which also expects to break ground in Kansas early next year on a $400 million to $500 million cellulosic plant of commercial scale.

Jim Sturdevant said the 2011 EPA report was not a surprise to those who follow the emerging industry. Some refineries that were originally slated to come on line next year have been delayed due to such factors as financing and uncertainity about federal tax incentives.

“They just took a realistic look at where those projects are at,” said Sturdevant, director of Poet's Project Liberty, a 25 million gallon-per-year plant planned for Emmetsburg, Iowa, that would turn corn cobs into cellulosic ethanol. “Many, many more gallons will be available in 2012.”

“We have to make sure that people don't see a reduction in that target as a sign of reduction in interest,” he said. “The need for cellulosic is greater than ever.”

Sioux Falls-based Poet's pilot-scale plant in Scotland, S.D. is currently producing cellulosic ethanol at a rate of about 20,000 gallons per year.

Standlee said the rapid ratcheting up of ethanol made from corn from 2 billion gallons five years ago to more than 13 billion gallons now supports his point about big transitions happening in short periods of time.

At the same time, he conceded that progress has been pretty limited so far toward the next generation of renewable fuels.

“It's due to several reasons,” he said, “one of them being, perhaps, that loan guarantees and other government support programs have not developed as quickly as anticipated.”

Poet is still working to secure a guarantee from the U.S. Department of Agriculture for its $200 million Project Liberty plant, which would be built next to its corn ethanol plant in the Northwest Iowa city of Emmetsburg. “We've said from Day 1 we need a federal loan guarantee,” he said.

Critics of the effects that corn for ethanol use can have on water quantity and quality, the cost of livestock feeding and other parts of everyday life have been eager to see how quickly renewable fuels production might evolve away from corn.

Reaction from prominent people in ethanol circles to the latest EPA news ranged from concerns about the shortage of private financing to a professing of faith in the ability of corn farmers to rise to a new production challenge.

Loran Schmit, executive director of the Association of Nebraska Ethanol Producers, sounded almost like Clint Eastwood playing the part of San Francisco Police Detective Dirty Harry and saying, “Go ahead, make my day.”

Schmit, a former state senator and crafter of state incentives for corn ethanol, said corn farmers have much more potential to double their output than champions of cellulosic ethanol have for reaching their goal.

“I just hope that, if we need more ethanol, that we recognize that corn producers can do it,” Schmit said.

Ken Vogel, a federal researcher of switch-grass potential at the University of Nebraska-Lincoln, offered a more cautious view of the contribution from a perennial that typically grows 8 to 10 feet tall.

“I think it's still a viable crop for use on marginal lands if the conversion technology can be developed and implemented,” Vogel said.

Until processing plants for switch grass and other cellulosic prospects are up and running, the result will be hard to assess, he said.

Todd Sneller of the Nebraska Ethanol Board said much of the early trouble with cellulosic production has to do with inconsistent follow-through on loan guarantees and other federal incentives.

“As a result,” Sneller said, “I think we continue to see a real concern on the part of financiers who are willing to take some risk but would like to have that risk and the public policy risk shared by the federal government.”

source: siouxcityjournal