EMMETSBURG, Iowa -- The cellulosic ethanol industry arrived in the Midwest yesterday with a lot of pomp and a touch of royalty.
Here in northwest Iowa, Poet-DSM Advanced Biofuels officially cut the ribbon on the nation's largest cellulosic ethanol facility, an operation that will convert 570 million pounds of crop waste into 25 million gallons of ethanol each year.
Poet-DSM -- a joint venture between Poet LLC, the largest U.S. ethanol producer, and a Dutch enzyme maker -- began building the plant in March 2012 adjacent to an existing corn ethanol plant. Named "Project LIBERTY," it is the first of three big cellulosic ethanol plants scheduled to open in the Midwest within the next few months; the next, Abengoa Bioenergy's plant in Hugoton, Kan., is scheduled to open in mid-October.
"This is just the very tip of the iceberg. This is only the start," Poet founder Jeff Broin told the audience from a stage flanked by straw bales at the grand opening ceremony yesterday. "We are witnessing what I believe is the foundation of what will be a complete transformation of our energy supply and our economy."
The plant's construction was prompted by the renewable fuel standard, a policy enacted in 2007 that called for the nation to move beyond corn ethanol.
Poet-DSM's cellulosic ethanol has identical properties compared to corn-based ethanol. But it is made from the stalks, husks and leaves that are left on the ground after the corn harvest and releases less life-cycle greenhouse gas emissions than conventional ethanol production. The plant will avoid about 210,000 tons of carbon dioxide annually compared with a petroleum base line, according to the Department of Energy.
Over the past seven years, DOE has contributed about $100 million in cost-shared support for the $275 million plant. Poet-DSM also received $20 million from the state of Iowa for capital costs and $2.6 million from the Department of Agriculture toward establishing a feedstock network with local farmers.
Biofuels advocates hope the facility's launch will quell criticism brought on by setbacks for the broader cellulosic industry, which includes both ethanol and drop-in biofuels that can be used directly in existing fuel infrastructure. Financial woes due to the recession have stymied some companies, including KiOR Inc., which produced a small amount of cellulosic gasoline and diesel last year before it reached the brink of bankruptcy (Greenwire, Aug. 12).
The renewable fuel standard is also facing pressure in Congress. Opponents in the refining industry have tagged cellulosic biofuels "phantom fuels" and criticized federal regulators for forcing them to blend fuel that has not yet existed in the marketplace on a large scale.
In a jab at critics, Poet-DSM officials played off the fantasy theme throughout yesterday. "Welcome to fantasy," for example, read a brochure detailing the steps of the biofuels process.
Hundreds of people filled the massive concrete "biomass building" on the site to support the plant at its grand opening. Many of them were farmers from Emmetsburg, a small town of about 4,000 people with a decaying Main Street and a lake area with a small beach. The event was jubilant, feeling at times like a carnival, with people milling about outside waiting for public tours of the facility and biofuel-powered show planes flying overhead. It ended with a lunch of burgers on long tables draped in red, white and blue tablecloths.
The king of the Netherlands was also in attendance, arriving in a motorcade that drove along an American-flag-lined entranceway. He joined Poet-DSM officials, Iowa Gov. Terry Branstad (R), and officials from the departments of Agriculture and Energy at the dais.
"I'd like to congratulate Emmetsburg, Iowa, and the United States to have this premiere on their soil," King Willem-Alexander said before touring the plant.
Plant operations are set to launch
After the party tents are taken down, the biomass building and surrounding area is set to become a hive of activity, said Steve Hartig, Poet-DSM's general manager for licensing. During the upcoming weekdays, three trucks an hour will drop off loads of bales to be unwrapped and fed into an acid pretreatment process that will begin breaking down the biomass.
The company plans to spend $20 million a year harvesting 285,000 tons of agricultural waste from 400 to 500 nearby farmers, who have agreed to work with the company through contracts.
After pretreatment, enzymes will be added to complete the conversion of the cellulose into sugar. Yeast will then ferment the sugars into ethanol, carbon dioxide and heat. The ethanol will be removed and concentrated; residual sugars and acids will be converted to biomass on site in what will be North America's largest anaerobic digester. Water from the process will be recycled, while steam will provide power for the facility and for the adjacent conventional ethanol plant.
Much of the process is the same used in conventional ethanol facilities; the facility will use the corn ethanol plant's existing storage and transportation infrastructure once the ethanol is made.
It takes about eight days to go from a netted bale of crop residue to ethanol that's ready to be blended into gasoline. Within the next few days, Poet-DSM employees will run the first few batches of biomass through the entire process. The plant will produce at a capacity of 20 million gallons per year at first and then ramp up to its full capacity of 25 million gallons as soon as possible, company officials said.
The plant has already produced a couple of thousand gallons, according to Hartig. The plant had a few minor problems, but those were fixed while production was stopped for the grand opening, he said.
"What you expect with a plant like this is lots of small problems and you hope there are no huge, major ones. So far, we're meeting expectations. Lots of little problems we've been working through," Hartig said. "So far there's no, 'Oh, my God, we designed the plant wrong,' which is encouraging."
What's in store for the future
In a news conference after the opening, DSM CEO Feike Sijbesma and Poet CEO Broin said their joint venture has not yet decided whether to build a second large-scale plant. They said the company's immediate goals were to refine the process at the Emmetsburg plant, then start licensing the technology out to other ethanol plants.
The company is looking for growth opportunities both in the United States and elsewhere in the world. The future of other cellulosic projects and where they will be located will depend on policy stability, Broin said.
"One of the things that's critical right now is that the United States stand behind its current policy," he said.
The call for policy stability comes during a time of uncertainty for the nascent U.S. advanced biofuels industry. The cellulosic industry's tax credit expired at the end of 2013, and U.S. EPA last year proposed scaling back the nation's mandates for both corn ethanol and advanced biofuels. The agency proposed a 16 percent reduction for this year compared with the total renewable fuel level laid out by Congress in the standard, drawing ire from farmers and biofuels producers.
EPA based the lower numbers on the blend wall, the term for the limit to the amount of ethanol that can be blended in gasoline, and on lower-than-expected amounts of advanced biofuels. The agency last month sent the final version of the rule to the White House for review.
At an investors conference in New York City earlier this week, EPA Administrator Gina McCarthy suggested the proposed volumes would be higher in the final rule because gasoline demand had risen, creating room for more ethanol to be blended into gasoline. But the agency has not given any indication of by how much it will raise the targets.
EPA was not represented at yesterday's grand opening. Officials from USDA and DOE who were present did not acknowledge the RFS proposal during public speeches, but they said that the Obama administration strongly supports biofuels and that the plant opens the door for a domestic cellulosic industry.
"This facility, the importance of it is it shows what can actually happen," said Agriculture Secretary Tom Vilsack. "I can't underscore the significance of it because there were a lot of skeptics about whether or not we would ever see this day."
Aside from Poet and KiOR, a couple of companies are producing smaller amounts of cellulosic biofuel. INEOS Bio began producing cellulosic ethanol last year at an 8-million-gallon facility in Florida. An ethanol plant in Iowa, Quad County Corn Processors, is also producing a small amount of cellulosic fuel out of leftovers from the corn ethanol process.
Besides Poet-DSM, both Abengoa and DuPont Co. also plan to open big cellulosic biofuels facilities in the Midwest. Abengoa plans to start initial production this month at its 25-million-gallon plant in Kansas and host its grand opening Oct. 17, a company spokesman said yesterday. DuPont has not released details about the opening of its 30-million-gallon plant in Nevada, Iowa.
Michael Knotek, DOE deputy undersecretary for science and energy, called Poet-DSM's first plant "a big deal" and said cellulosic biofuel plants would help increase the nation's energy independence.
"As long as we are relying on oil, our economy is stuck to the global marketplace. Biofuel will break that circle," he said. "So we need more of these. We need a thousand of these."
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