It’s been “four or five years” until cellulosic ethanol gets to viability for years now.  Commercial production has simply been elusive, but not anymore, the tipping point day might be now.

Right now 300 million annual gallons of planned commercial-scale cellulosic ethanol plants are in various stages of planning and development across the country, according to Nathan Schock, a spokesperson with Sioux Falls-based POET the large independent corn ethanol producer.  The current issue isn’t the technology, financing hurdles may slow or derail some of those projects.

Names big and small are on the list including Coskata Inc., DuPont Danisco Cellulosic Ethanol, Iogen Corporation, Lignol, POET and PureVision Technology.  As of June at the International Fuel Ethanol Workshop and Expo in Denver the group has already cumulatively produced cellulosic ethanol from demonstration plants or will do so within the year.  Most demonstrations are processing about 1 ton of material into ethanol daily. Of that ton of biomass, production is between 70 gallons and 85 gallons of biofuels. Commercial production is expected to follow as soon as 2010 or 2011.

POET is producing cellulosic ethanol from corncobs at a pilot-scale plant in Scotland, SD. A 25 million gallon cellulosic ethanol plant will be added to POET’s existing grain ethanol plant in Emmetsburg, IA, by 2011. The company also plans to add cellulosic ethanol production to its other existing grain-to-ethanol plants and license the technology to other companies. POET, the world’s single largest ethanol producer, is currently working with agricultural equipment manufacturers and farmers to find the best way to harvest cellulosic feedstock.  The Midwest’s run to large commercial fuel production is on.

“POET’s cellulosic ethanol goals depend on a steady supply of a reliable feedstock: corn cobs.” said Scott Weishaar, who is leading POET Biomass, a new division the company announced at the Fuel Ethanol Workshop.

Coskata officials used the workshop to announce the company is so confident in its production system it has decided to start licensing its proprietary technology later this year. Coskata’s process is far more robust than originally estimated because the company can process cellulosic feedstock from agricultural sources, urban land waste, forests and a variety of manufacturing waste materials. Company officials also said once the process is perfected, ethanol from cellulosic sources would become price competitive with gasoline without any federal tax credit.  Here is a likely game changer, early entry will matter, and locking up raw materials critical and locations will have major cost effects.

Earlier this year Joe Skurla, the president and CEO of DuPont Danisco, used a prepared statement to say, “The future of cellulosic ethanol is a realistic route to energy independence.  More importantly, it also shows that our industry will contribute significantly to a low carbon transportation sector and the new green economy.”

Sandia National Laboratory, sponsored by General Motors, released a study earlier this year finding that large volumes of cellulosic biofuels could be produced from already identified biomass sources and resources without displacing crop production (first pdf). The study indicated that even without incentives cellulosic biofuels could potentially compete with gasoline with oil prices of between $70 and $90 per barrel by 2030, given the expected accelerated development of technology and feedstocks.  (Part two looks at the feasibility of 90 billion gallons annual production.)

Those numbers can be either high or low.  Sandia also found that the needed investment in cellulosic biorefineries would be comparable to that needed to expand domestic oil exploration and production to similar levels. It noted that building the needed transportation and distribution infrastructure presented a challenge, but was still possible.

During a panel discussion at the Fuel Ethanol Workshop participants from ethanol-related companies and enzyme businesses were asked to identify the most important constraint holding back the development of cellulosic ethanol.  No one mentioned technology or the national recession as constraints to cellulosic ethanol.

Most offer that consistent U.S. policy was needed, mentioning the lack of a national renewable energy policy in the United States. Programs supporting biofuel production typically have to be reauthorized frequently because of recurring sunset clauses. Many policy provisions, such as management of renewable identification numbers, grants and blend levels, often also have not been defined or are highly variable.

The POET people explain the most important constraint is the blend wall, a limit of 10% ethanol content in regular gasoline. The ethanol industry seeks to be allowed access to another 5 percent of the fuel market through higher ethanol blends like E15. Without that additional market, both the grain-based and cellulosic ethanol industries would face a serious oversupply situation, according to the ethanol experts. Ethanol companies advocate more rapid installation of blender pumps and more progressive federal regulation that permits higher ethanol blend rates in excess of the current 10 percent level.  This issue goes further on to the flex fuel issue for opening up the transport market to alternative fuels.

Many in the ethanol industry realize it cannot survive long term continuing to depend on variable federal subsidies, grants and other favorable policies that mandate increased renewable energy use.  Other point out that the playing field should be leveled, arguing that the oil industry, who ethanol is competing against, is one of the most heavily-subsidized industries in U.S. history.

The ethanol industry’s goal is to develop independent systems that are economical without governmental assistance. A realization has sunk in that ethanol subsidies may actually prove to be detrimental to the industry in the long run and mitigate the support to the industry during its developmental phase.

Here’s a surprise, cellulosic ethanol projects have been able to secure reasonable levels of financial capital even as the crisis in U.S. financial markets unfolded.

With POET building, Coskata licensing and others designing cellulosic ethanol plants it seems the tipping point is right about now.  The question is can the consumers and producers get together with the politicians and regulators to displace more imported oil with the alternatives.  As the U.S. came up with a gross ethanol mandate the politicians left out the allocations so the alternatives can be used.  It’s time to get on with reviewing and updating the allocations and pushing the flex fuel requirements for the car fleet.


2 Comments so far

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