The arrival of ethanol produced from cellulosic feedstock sources has almost been a standing joke within the ethanol industry. Each year it has always been “four to five years down the road” before commercial production would become viable. That’s changed: the “four to five years” is now.
At a recent ethanol workshop, several companies, including Coskata, DuPont Danisco, Iogen, Lignol, Poet and PureVision, announced that they already have production from their demonstration plants or will within the year. Most are processing about a ton of material into ethanol daily. From that ton of biomass, they are producing between 70 and 85 gallons of biofuels. Commercial production is expected to follow in a year or two.
Coskata said it is so confident of the production system that the company has decided to start licensing its proprietary technology later this year. Coskata’s process is far more robust than it originally had estimated because the company can process feedstock from agricultural sources, urban land waste, forests and even a wide variety of manufacturing wastes. Once its process is perfected, the company said, ethanol from cellulosic sources would be price competitive with gasoline even without a federal tax credit.
Representatives of these and several enzyme companies on a panel were asked to identify the most important constraint holding back development of cellulosic ethanol. None said technology or the recession were slowing them down. Instead, several said, consistent federal policy was needed. In particular, they said, the U. S. does not have a national policy with respect to renewable energy. Typically, federal programs that support biofuels production have to be reauthorized frequently because they have sunset clauses. Provisions such as management of renewable identification numbers, grants and blend levels haven’t been defined or are highly variable.
Poet said the most important constraint is the “blend wall.” Unless consumer use of renewable energy is mandated to increase, they feel the cellulosic industry and the traditional corn ethanol industry will face a serious oversupply situation. They advocate more rapid installation of blender pumps and more progressive federal regulation to allow ethanol blend rates above the current 10 per cent level.
Coskata’s views seemed to run counter to the earlier constraints being voiced and took a more free-market approach. Other companies said the most important constraint facing commercialization of their processes was economics. For the industry to survive long term, they feel it cannot be dependent on variable federal subsidies, grants or other favourable policies that mandate increased use of renewable energy and so on. While providing important support to the industry during its development phase, these policies actually could be detrimental in the longer term. Coskata’s goal is to develop a system that is independently resilient in the long run.
During the past year, businesses across the country have complained that debt capital had dried up and was virtually unattainable. Surprisingly, cellulosic ethanol firms have been able to secure reasonable levels of financial capital for expansion. Most panel members talked about new investments and growth of their firms during the past year. DuPont Danisco actually was a new venture formed during the past year, with $140 million of new investment capital.
– Cole Gustafson is a biofuels economist and bioproducts
specialist with North Dakota State University’s extension
service in Fargo, N. D.