WASHINGTON, July 9, 2014 – Last week’s announcement that Quad County Corn Processors had become Iowa's first commercial-scale cellulosic biofuel producer is giving renewable fuel interests a much needed boost and marks the long-awaited march toward fulfilling cellulosic's broader potential.

A bipartisan Congress saw that potential back in 2007 when it overwhelmingly adopted an updated Renewable Fuel Standard (RFS) that calls for 16 billion gallons of cellulosic ethanol to make up the largest share of a 36-billion-gallon biofuel target in 2022. Underscoring that optimism was the decision by Congress to cap corn ethanol's annual contribution at 15 billion gallons in 2015 and beyond.

But the word “potential” often turns into a harsh reminder for advocates who have had to deal with the economic and technological reality: cellulosic ethanol production over the past six years has been measured in the tens of thousands of gallons, rather than the billions of gallons foreseen by a Congress made optimistic by a confident, if nascent, advanced biofuels industry.

The dramatic reduction in carbon emissions offered by fuel from corn stalks or agricultural residues when compared to gasoline, and the availability as an almost limitless source of feedstock, led Congress to establish an upward progression of cellulosic ethanol targets under the RFS. The proposed targets moved from 100 million gallons in 2010, to 250 million gallons in 2011, to 500 million gallons in 2012, to 1 billion gallons in 2013, to 1.75 billion this year, and to 3 billion in 2015, eventually making their way to 16 billion in 2022.

But those targets have long faded away. EPA first revised the target down in 2010 to 6.5 million gallons, then 6 million gallons in 2011. For 2012, the agency revised the half-billion-gallon mandate down to 10.45 million gallons. But in January 2013, the U.S. Court of Appeals for the District of Columbia  - responding to an oil industry lawsuit claiming blenders should not pay compliance costs for failing to blend fuels that do not exist -  vacated EPA's cellulosic mandate for 2012 as unrealistic and ordered the agency to replace it with a revised mandate. The next month EPA dropped it to zero.

This year, EPA proposed to revise the cellulosic mandate to 17 million gallons, not even a tenth of a percent of the 1.75 billion gallons originally called for by the RFS. But it's still an amount deemed excessive by blenders obligated to meet the mandate, given that EPA shows that as of early June, less than 30,000 gallons of cellulosic ethanol had been produced this year.

Despite what most would see as a disheartening trend, the cellulosic biofuel industry has long insisted that the sector is on the verge of a breakthrough. However, the pronouncements repeated over recent years of a fully viable and affordable cellulosic biofuel market coming to the fore have struck many a policy maker as empty promises.

But the announcement this week in Iowa, while hardly earth-moving in terms of volume – Quad County spent last week producing small amounts of cellulosic biofuel, ramping up to a production level this week that should reach two million gallons per year – could be the first of much larger production breakouts this year.

Officials with Poet-DSM's Project Liberty, a $250-million plant going up near Emmetsburg, Iowa, say that facility is on the verge of cranking up a rate of 25 million gallons a year. And a $225-million DuPont Danisco cellulosic ethanol plant is nearing completion in nearby Nevada, Iowa, where officials say commercial-scale production – some 30 million gallons annually   will begin towards the end of this year. In Hugoton, Kansas, Abengoa is nearing production at its 25-million-gallon-per-year cellulosic ethanol plant, which has drawn some $500 million in investment, but is also expected to produce more than 20 megawatts of renewable electricity. All plants will use corn stover from local farmers as a feedstock.

The volumes expected from the new facilities come nowhere to approaching the targets for cellulosic ethanol envisioned in 2007. But they suggest the beginning of something bigger, especially given that all four plants use proprietary processes and technology the companies will market and license to other ethanol producers in the United States and around the world.

“Cellulosic ethanol is no longer the fuel of the future,” said Aaron Whitesel, senior manager for government affairs at DuPont, at a recent National Press Club presentation in Washington. “It's a fuel that will be produced at commercial scale this year – a fuel that will be increasingly important to meeting our transportation needs.” And, he says, it will provide farmers who can produce the feedstocks with a new line of revenue.

But as positive as the on-the-ground developments may seem, there is a foreboding in the industry brought on by an EPA proposal to significantly reduce the biofuel blending requirements for this year under the RFS. Industry leaders say that while the market certainty originally provided by the RFS has resulted in the commercial-scale deployment of cellulosic ethanol this year, they fear EPA's RFS proposal will unnecessarily dampen future potential.

Chris Standlee, executive vice president for global affairs at Abengoa Bioenergy, said EPA's proposal to lower the amount of renewable fuel in gasoline creates an uncertainty that “will make it far harder for companies to invest in the next phases of cellulosic ethanol production and leave us more dependent on imported oil.”


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