Governors' Biofuels Coalition

EMMETSBURG, Iowa — Charlie Kollasch, a farmer supplying raw material to a huge new ethanol factory here, stood inside a big red shed on his property, showing off the V-shaped metal frame studded with prongs that he and his son had installed on top of a flatbed truck.

The contraption — “our little Star Wars deal,” he called it — is meant to grip tightly packed bales of corn cobs, husks and leaves, known as stover, on their journey from field to refinery, one of the many logistical tasks that has proved unexpectedly difficult in transforming agricultural waste into biofuel.

“I hope it works,” he said with a shrug, laughing.

He could have been speaking of the industry as a whole. With three major commercial plants in some stage of opening, the business finally appears poised to take off.

For example, the factory that Mr. Kollasch is helping to supply, a joint venture between the ethanol producer Poet and Royal DSM, the Dutch life and materials sciences company, held its grand opening here this month, drawing the king of the Netherlands to this town of roughly 3,800 set among rolling fields of head-high corn.

But the industry still faces deep uncertainties.

The federal government is considering pulling back from an important mandate, one that producers say is necessary if their large-scale plants are to succeed.

At the same time, the market is struggling to absorb the ethanol already in production.

And many technical hurdles remain, which is where farmers like Mr. Kollasch come in.

It has taken years of expensive bioengineering to figure out how to break down tough natural material meant to give plants enough structure to stand upright and convert it to sugars that can be fermented into fuels.

Ethanol producers have also had to persuade farmers to accommodate the collecting and bundling of the agricultural waste they were generally accustomed to tilling under the field or leaving on top to help enrich the soil or control its erosion.

Feeding a new generation of factories that can consume hundreds of thousands of tons of biomass to produce 20 million to 30 million gallons of ethanol a year has meant new costs in labor and equipment.

“Farmers don’t give it away,” said Wallace E. Tyner, a professor of agricultural economics at Purdue, and transportation and storage have added even more expense.

Early estimates put the cost of the waste material at $30 a ton, Mr. Tyner said, but his department now puts it closer to $80.

As a result, the first wave of plants is relying heavily on subsidies, and the Agriculture Department is helping pay some of the costs of obtaining the feedstock.

There are other supports as well. The recently opened Poet-DSM project, for instance, received roughly $20 million from Iowa and about $100 million in grants from the Energy Department.

Ethanol executives say they are working to reduce the costs to make their fuel economically competitive.

“We have to find efficiencies to get the costs in the area that they need to be,” said John Pieper, who manages feedstock operations at DuPont.

“I believe fully this is the way we’ll farm one day,” he said. “It’s just a question of how quickly will we grab that future and maybe bring it into today.”

Hundreds of farmers have signed up to supply the stover, though Mr. Kollasch said the refinery here might have trouble getting all it needs.

For him, the benefits include new income as well as better management of crop residue, which has been increasing over the years as farmers plant each acre of prized black soil here ever more intensively.

There is some debate over the potential harm or benefit of taking the stover away from the fields, and questions remain about how tilling, taking certain amounts of the material or leaving just the stalks and roots affects soil health and productivity.

Also up in the air is the best shape for bales — square or round — to ease transportation and storage and reduce the risk of fires like one that started at the Poet-DSM plant in July.

“We’re tackling a brand-new collection process, a brand-new feedstock, a brand-new production process, brand-new enzymes, brand-new yeast,” Jeff Broin, Poet’s founder, said at the refinery. “You can see, there’s a lot of learning going on.”

The uncertainties have some producers already looking to what’s next.

DuPont plans to market a cellulosic ethanol byproduct from its factory in Nevada, Iowa, as a solid fuel that could be used in place of coal. And it may move into making other products there as well, said Jan Koninckx, global business director of advanced biofuel.

Most of the companies making biofuel from sugars, including Beta Renewables, which operates a large cellulosic plant in Northern Italy, are involved in or are seeking partnerships to allow them to move into the chemicals market, said Andrew Soare, a senior analyst who leads alternative fuels and bio-based materials and chemicals research at Lux Research.

It is the same approach, he said, that many companies making other kinds of biofuel pursued when they shifted their focuses to chemicals that could fetch higher prices than fuel.

“They could just get much higher value for a gallon or a kilogram of their product,” he said.

And Tom Vilsack, the secretary of the Agriculture Department, recently urged a group of ethanol producers to focus their businesses on exports, the Defense Department and ethanol byproducts.

That shift is being driven partly by the ebbing demand for gasoline from consumers, who are driving more efficient cars, and industry, which is enjoying the benefits of surging domestic oil production. On top of this, the Environmental Protection Agency is considering cutting by more than 40 percent the amount of advanced biofuels that must be blended into vehicle fuel. A decision, which has been delayed, is still pending.

Still, executives like Mr. Broin are pushing ahead with their projects, expressing confidence that the technologies and processes they have developed over the years, at great public and private expense, will prevail.

In addition to Poet-DSM, giants like Abengoa and DuPont expect to start producing significant quantities of cellulosic ethanol, made from the nonfood parts of the corn plant, in the Midwest within months.

In an office at the Poet-DSM refinery in July, when smoke from the fire still shrouded the fields, Mr. Broin talked about the huge investment of money in explaining why, this time, the business would work.

“There’s, right out the window here, $250 million all ready to roll,” he said.

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