For years the stock answer to
when cellulosic ethanol produced from plant materials or wood will
arrive has been the same. When asked, industry officials and insiders
have consistently said it will be four to five years before commercial
production becomes viable.
Not anymore. The future is now for cellulosic ethanol.
Roughly 300 million 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, although financing hurdles may slow or derail some of
those projects.
Several companies, including Coskata
Inc., DuPont Danisco Cellulosic Ethanol, Iogen Corporation, Lignol,
POET and PureVision Technology, announced in June at the International
Fuel Ethanol Workshop and Expo in Denver that they have already
produced cellulosic ethanol from demonstration plants or will do so
within the year. Most are processing about 1 ton of material into
ethanol daily. From that ton of biomass, they are producing between 70
gallons and 85 gallons of biofuels. Commercial production is expected
to follow by 2010 or 2011.
Coskata officials said at the
workshop that 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.
POET is already
producing cellulosic ethanol from corn cobs 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
other existing grain-to-ethanol plants and license the technology to
other companies. POET, the world’s largest ethanol producer, is
currently working with agricultural equipment manufacturers and farmers
to find the best way to harvest cellulosic feedstock.
“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 of the company that was announced at the
Fuel Ethanol Workshop.
STUDY FINDS LARGE-SCALE CELLULOSIC PRODUCTION POSSIBLE
A study released earlier this year by the U.S. Department of Energy’s
Sandia National Laboratory found that large volumes of cellulosic
biofuels could be produced from already identified biomass sources and
resources without displacing crop production. The study, which was
sponsored by General Motors, 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.
The
report 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.
“The future of
cellulosic ethanol is a realistic route to energy independence,” Joe
Skurla, the president and CEO of DuPont Danisco, said in a prepared
statement earlier this year. “More importantly, it also shows that our
industry will contribute significantly to a low carbon transportation
sector and the new green economy.”
ECONOMY, TECHNOLOGY NOT HOLDING BACK PRODUCTION
Representatives from ethanol-related companies and enzyme businesses
were asked to identify the most important constraint holding back the
development of cellulosic ethanol during a panel discussion at the Fuel
Ethanol Workshop. Interestingly, no one mentioned technology or the
national recession as constraints to cellulosic ethanol.
Several responded that consistent federal policy was needed, mentioning
the lack of a national renewable energy policy in the United States.
Federal programs supporting biofuels production typically have to be
reauthorized frequently because of pending 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.
POET officials said the most important
constraint is the blend wall, abdicating for the ethanol industry 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
pending oversupply situation, according to 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.
Some
ethanol-related companies also say that current economic conditions are
constraining the commercialization of their processes.
LONG-TERM SURVIVAL WILL REQUIRE SELF SUFFICIENCY
For the industry to survive long term, some industry insiders believe
it cannot continue to depend on variable federal subsidies, grants and
other favorable policies that mandate increased renewable energy use.
Others argue that the playing field should be leveled, pointing out
that the oil industry, which ethanol is competing against, is one of
the most heavily-subsidized industry in U.S. history.
While providing important support to the industry during its
developmental phase, others argue that ethanol subsidies may actually
prove to be detrimental to the industry in the long run. The industry’s
goal is to develop independent systems that are economical without
governmental assistance.
Last year as the crisis in U.S.
financial markets unfolded, businesses across the country complained
that debt capital had dried up and was virtually unattainable.
Surprisingly, cellulosic ethanol projects have been able to secure
reasonable levels of financial capital. Most panel members at the
workshop mentioned new investments and the growth of their firms in the
last year.
The long-term future of cellulosic ethanol is
not yet clear, but the moving target of when large-scale production and
commercialization will occur at least appears to be on the horizon.
Gustafson
is a professor and biofuels economist in North Dakota State
University’s Department of Agribusiness and Applied Economics and is
co-director of NDSU’s Bioenergy and Product Innovation Center. He can
be reached at cole.gustafson@ndsu.edu.
