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30|03|2011 - 17h25Ethanol Industry Hoping for Surge

Crédito: NYT.

Leaves and corn cobs on their way to becoming ethanol at the Poet plant in Scotland, S.D.

 

(legenda da foto peq. A sample of fermenting cellulosic ethanol. )
By The New York Times
David Eggen and Kate Galbraith

TRANSFORMATION

CELLULOSIC ethanol could be poised for a surge — finally.

Energy

More fuel-efficient gasoline engines, electric cars, energy sources in North and South America and other means of breaking the nation’s dependency on Mideast oil.
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PRODUCT

Around the country 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 e-mail. “Companies are ready to go.”

Mr. 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. Mr. 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 250 million gallons of cellulosic ethanol be produced in the United States 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 6.6 million gallons 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 55 million gallons of ethanol a year from wood debris. Poet, an ethanol maker based in South Dakota, hopes to have a 25 million-gallon-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, 40 million-gallon-a-year cellulosic plant in Michigan, and construction is expected to start this year, according to its chief executive, Bill Brady. Mascoma already operates a smaller demonstration plant in Rome, N.Y. Poet is operating one, too, in South Dakota.

The projected boom is coming at a time when rising oil prices stemming from Middle East unrest make ethanol more appealing. “It just further supports the need” for ethanol, said Mr. Lautt of Poet.

However, Mr. 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 Mr. Lautt of Poet, because these are first-of-their-kind plants. Loans will cover about half the roughly $200 million to $250 million cost of Poet’s plant, he said, and the project is also getting federal and state grants in addition to the equity Poet itself has put in.

But looming budget cuts could affect federal loan guarantees, Mr. Coleman said.

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.

 


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