As the renewable fuel standard faces continued regulatory and legislative uncertainty, DuPont Biofuels is set to open the world's largest cellulosic ethanol biorefinery in Iowa at the end of the month. How will the uncertainty impact production and international partnerships? During today's OnPoint, Jan Koninckx, global business director of biofuels at DuPont, discusses his company's plans to continue expanding its business internationally in response to an uncertain landscape in the United States.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. With me today is Jan Koninckx, global business director of biofuels at DuPont. Jan, it's good to have you back on the show.
Jan Koninckx: It's a pleasure.
Monica Trauzzi: DuPont is expected to open its state-of-the-art cellulosic ethanol biorefinery in Iowa at the end of this month. What are your expectations for how it will impact the overall market once it's opened?
Jan Koninckx: We're really excited about this opening. It's a great opportunity to recognize our team, the people that have put this together. The diversity of skills that we brought together. It's also great to recognize the opportunity that this opening opens up. The opportunity for a truly renewable, sustainable fuel supply in the U.S. and in the world that is more distributed rather than concentrated in single, large fossil facilities. Very excited about this.
Monica Trauzzi: So this facility has faced delays. It's been delayed for about a year. The market dynamics though really don't seem any better than they were a year ago. What are your primary market concerns going into the opening?
Jan Koninckx: Of course we have an uncertainty in the regulatory environment. As we have worked on this, we have reduced uncertainty in so many fields. We've reduced it in technology. We've built a great supply chain in collaboration with growers. We've built this project, but we have uncertainty in policy. That's something that concerns us. At least we have that in the U.S.
Monica Trauzzi: We're going to dig into policy in a moment, but I want to get to how this facility is different from others and what the innovative approaches are that you used in terms of the process.
Jan Koninckx: We've worked very closely with growers here. We've brought to bear our competency in agriculture. We work with about 400 growers and we've built a supply chain that's truly sustainable in collaboration with USDA that allows growers to use this collection of corn stover of the agriculture residue to their benefit.
We have a process that's innovative. Uses some of the best technology we have and that will continue to benefit from improvements in the biotech. It's like bringing new versions of software to the hardware. It's exciting. It's an exciting facility and it's large. It's going to be the largest cellulosic ethanol plant in the world once we start it up.
Monica Trauzzi: How much will you be producing?
Jan Koninckx: Thirty million gallons per year is the capacity of the plant. We'll bring it online and ramp it up. It'll take a while before it produces that as we take it through its paces.
Monica Trauzzi: So what are your initial projections for this year moving into next year?
Jan Koninckx: We'll be in operation full time next year, and this year we'll go through commissioning and bring it up. The supply chain is fully operational. We're bringing in the feedstock. So we're ready to go.
Monica Trauzzi: This opening comes as EPA's inspector general is launching an investigation into the agency's implementation of the RFS. The IG will also be looking specifically at the life-cycle analysis numbers. There are also continued calls in Congress to do away with the current RFS because it's simply not working. So how much of a risk is the opening of this facility as the future of the RFS is so much in flux?
Jan Koninckx: The RFS is a great piece of legislation. I was here with you earlier and I talked to that point. The RFS goals have been met or exceeded in everything except cellulosic ethanol where the goal was aspirational as it was foreseen.
The progress that we have been made is nothing but astonishing and has gone very fast. We started out in 2007 in the laboratory with things in glassware. So they're the size of the coffee cup here. We're now at a commercial scale. We've piloted these things. We've built a supply chain because it's really gone very quickly.
I think the calls to change or to repeal the RFS are really based on the fact that people can see now that this will work and that this will change the energy landscape and that may threaten some people.
Monica Trauzzi: But EPA in its 2014-2016 volume obligations, there's some controversy there. Do you think that EPA has favored corn ethanol in those volume numbers, and if it becomes final, what would the impact be on your operations?
Jan Koninckx: We're very interested, of course, in what EPA will finally propose as their rule or set forth as their rule. The main concern we have around EPA's action there is the methodology they use to set the numbers more so than the numbers. We want to make sure that they're within their authority. With that we mean that they don't misrepresent or misunderstand, misinterpret supply to include what oil companies may be willing to distribute.
Monica Trauzzi: So you're not just sitting back and letting EPA and Congress go on their path. You're taking steps to create licensing agreements internationally including with China to ship your technology across the globe. Will you continue to move investments abroad?
Jan Koninckx: Definitely. We will continue to move investments and we've always done this. We developed this technology for global rollout, and that's exactly what we're doing.
We would have liked to see more of that opportunity realized in the U.S. and that's certainly possible with a clear signal from the administration through EPA as it pertains to the implementation of the RFS.
But in the meantime, as you say, we go to the four corners of the world. We've licensed in China, and we're active in many other places.
Monica Trauzzi: So if those numbers aren't what you want them to be, you'll continue to look abroad.
Jan Koninckx: Absolutely we will. Yes.
Monica Trauzzi: Talk a bit about the partnership you've initiated with Procter & Gamble to take cellulosic technology beyond just fuel.
Jan Koninckx: As you state, this technology can serve purposes beyond fuel. Procter & Gamble is a company with whom we work a lot on introducing real sustainability innovations. Here we will work with them to use this very sustainable ethanol as an ingredient in their laundry detergent.
Monica Trauzzi: Very interesting. We'll end it there. Thank you. A pleasure to have you on the show as always.
Jan Koninckx: Thank you very much.
Monica Trauzzi: Thanks for watching. We'll see you back here tomorrow.
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