POET promises cellulosic ethanol by 2012 – if right policies enacted

By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

Washington, April 21 – Jeff Broin, CEO of South Dakota based POET, the world’s largest ethanol producer, said here Wednesday that bright prospects for cellulosic ethanol have been dimmed by “the twin storms of global economic crisis and government indecision.” But he said has developed technology capable of delivering 3.5 billion gallons of cellulosic ethanol by 2022. As that’s needed now is the consistent government policies needed to attract the investment capital needed for full commercialization.

Broin outlined POET’s plan to co-locate cellulosic production facilities alongside its 26 existing grain-based ethanol plants. Once these new facilities are operating and once POET has licensed its technology to other biorefineries, the 3.5 billion gallons of cellulosic by 2022 would come from three primary sources:

  • “One billion gallons of production capacity will come from adding the technology to POET’s existing network of 26 corn-based ethanol plants.
  • “Licensing that technology to other corn-based ethanol producers will lead to another 1.4 billion gallons of production capacity.
  • “Another 1.1 billion gallons of production capacity will come from a wide variety of other feedstocks from across the U.S. [such as wheat straw, switchgrass and municipal waste]. These gallons will be produced by POET or through joint ventures and opportunities where POET Biomass provides logistics support to other producers.”
Broin announced Wednesday, that to move toward this goal, POET “filed an application with the DOE yesterday” for a federal loan guarantee to cover construction of its first commercial-scale cellulosic facility alongside its grain ethanol plant in Emmetsburg, Iowa. He said if DOE approves the loan guarantee this year, “we will start construction by the end of this year, which puts us on track to start up the facility in early 2012.”

Broin noted that POET already produces some 20,000 gallons of cellulosic per year at its pilot plant in Scotland, South Dakota. This is in addition to POET’s overall annual capacity of 1.6 billion gallons of grain-based ethanol, produced thanks to:

  • Over 10,000 farmers invested in POET’s 26 plants,
  • Some 30,000 farmers who deliver grain to these plants, and
  • Over 1,500 people in green collar jobs in POET’s operations.

Looking ahead, Broin said that with continuing improvements in POET’s proprietary process technology, “we’ve been able to cut costs from over $4 per gallon to $2.35 per gallon. Our goal will be to have the cost at $2 per gallon when we start up, which will make us competitive with gasoline but more expensive than grain-based ethanol.” He explained that “Within four to six years, our goal is to make this process competitive with grain-based ethanol so it can make significant contributions to our nation’s fuel supply.”

Broin pointed out that co-locating grain-based and cellulosic production allows biorefineries to create more energy from the same corn fields, increasing efficiency. He said that “With dramatically expanding corn yields predicted by the USDA and seed biotech companies, in the near future this country will be awash in corn just as it has been for most of my lifetime. Those rising yields will lead to additional surplus corn that will enable expansion of cornbased ethanol production and more cellulose as well.”

To make it all happen, Broin said, “policy makers must provide access to the market and the stability needed to attract the large amount of capital that will be required to finance its construction..

First, he explained, “government policy must allow ethanol more access to the market if cellulosic ethanol is to achieve the large quantities that are required by law. Today, the U.S. effectively has a 90 percent mandate for oil in the gasoline supply. With regular gasoline limited to a ten percent blend and a lack of higher blend infrastructure, there is no market for cellulosic ethanol. Good policy can ensure that market access by approving E15 and supporting the construction of dedicated pipelines and the proliferation of flex fuel vehicles and ethanol blender pumps, which allow drivers to choose their blend of ethanol: E0, E10, E20, E30 or E85.”

Broin’s second point is that “it will take a lot of capital to get this industry off the ground. In addition to financially supporting the first few plants, there must be longterm, stable policy so that the cellulosic ethanol industry can attract that needed capital. To achieve the goals set by Congress, there must be long term extensions of the tax credit and the secondary tariff while this industry emerges. In addition, there needs to be a longterm extension of the cellulosic ethanol production credit, which is set to expire in 2012, or these first cellulosic plants will never get off the ground. This credit also needs to be made refundable.”

To read more about POET, go to: www.poet.com/

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