21 Juli 2011

2011 FEW Review: Cellulosic Ethanol Ready Now

U.S. falling behind other countries in the development of cellulosic biofuels

The commercialization of cellulosic ethanol is one of the most critical issues facing the entire ethanol industry. A panel of speakers representing various cellulosic projects addressed some of their concerns related to cellulosic advancement, following Dinneen’s presentation. Their comments were especially pertinent considering the U.S. EPA just days before had announced a proposal to again drastically reduce the coming year’s cellulosic biofuels volume requirement as part of the renewable fuel standard (RFS).

Panelists said they weren’t surprised by the reduction, but stressed that it shouldn’t deter investors from participating in their industry. “We’re going to miss it again in 2013, 2014, 2015,” said Wes Bolsen, chief marketing officer and vice president of government affairs at Coskata Inc. “We aren’t building plants today. It takes at least two years to build a plant, so we shouldn’t be shocked that the EPA is going to waive it this year and the next year and the year after. This is about: we need to start building now.” Once plants are built, the industry will prove itself, he said, and the fact that the EPA has had to reduce the cellulosic target should in no way indicate that the overall RFS should be lowered.

Bolsen called on corn ethanol producers to assist in getting cellulosic facilities built. “Some of you in this room may want to step up and say, ‘You know what? I think we can tap into some of these USDA funds.’ Agriculture Secretary (Tom) Vilsack has been a fantastic champion for this industry and there’s going to be a farm bill coming up. He’s going to need to hear that the current producers and the future producers of cellulosic ethanol are going to be there.”

John McCarthy, president and CEO of Qteros Inc., which formed a strategic partnership early this year with India-based ethanol engineering firm Praj Industries Ltd. to accelerate the commercialization of cellulosic ethanol, pointed out that the U.S. is quickly falling behind other countries in the development of cellulosic biofuels. The market is growing rapidly outside of the U.S. because it is not as politicized, he said, adding, “These aren’t just bucket-shot projects that are getting built. These are very highly qualified, very sophisticated projects with very sophisticated partners.”

He said the need to continuously reduce the U.S. RFS lies not at the fault of cellulosic technology, but the policy issues surrounding it. “The facilities are getting built, admittedly at a slower pace than any of us would have liked, which is more of a capital markets issue, but the technology is there and ready to go,” he said. “If the requirement is put in place to blend 500 million gallons of advanced biofuels into the fuel stock, yet there’s only 3 or 4 million gallons available, why? It’s not a question of technology; it’s not even a question of balance sheets. The major oil companies, the major ag companies, and others will put their money behind this industry, if they are required to. This ultimately gets into a very straightforward energy policy consideration for the country.”

Panelists unanimously agreed that long-term tax credits will alleviate some of investors’ concerns related to cellulosic ethanol production. Tom Corle, marketing representative for Inbicon A/S, said yearly extensions do not provide the assurance needed to raise capital to fund first-of-a-kind projects. “A short window … we can do maybe a project or two, but Washington should be interested in developing an industry and not just a couple of projects,” he said.

Source: Ethanol Producer Magazine, 2011-07-21.

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