Celelulosic Ethanol Industry Will Expand with Strong Policy

Farm Futures  • Posted: Wednesday, January 4, 2012

Ethanol interests are lobbying Washington to extend a $1.01 per gallon tax credit for cellulosic ethanol as the industry struggles to get off the ground.

EPA has called for 8.65 million gallons of cellulosic to be produced in 2012, up from 6.6-million this past year, but far below the 500 million envisioned by Congress two years ago.

Jeff Broin, chairman and CEO of POET, the world’s biggest producer of grain-based ethanol, says holding onto the cellulosic tax credit is a must.

“Although innovators like POET have made much progress over the past few years and the potential of this industry is more than 80 billion gallons a year no one is yet producing at a commercial scale,” Broin said. “Policy support for cellulosic ethanol has played a significant role in industry progress. If we are going to see it through to the finish and realize this great potential policy makers must continue to support the development of the cellulosic ethanol industry.”

The original target for cellulosic ethanol output in 2013 was one billion gallons. EPA now says that amount of production is unlikely before 2018. POET hopes to open a 25 million gallon a year biorefinery in 2013 that Broin predicts will be the first of many for the company in a relatively short timeframe.

“multiple facilities.”

In addition to POET’s initial cellulosic facility in Iowa, Abengoa Bioenergy has started construction on a 23 million gallon plant in Kansas. A handful of other renewable energy companies aim to break ground on comparable facilities within the next year.

Renewable Fuels Association President and CEO Bob Dinneen remains optimistic that significant quantities of cellulosic ethanol are right around the corner.

“You know it’s never been a question of will this technology work, will we be able to produce ethanol from new feedstocks,” Dinneen said. “It’s always been a question of where is the financing going to come from. You’re beginning to see investment dollars flow to that sector and I do think you’re going to see commercial production of cellulosic ethanol soon, but don’t ask me to define soon.”

Per the Energy Independence and Security Act of 2009, cellulosic ethanol is supposed to account for 16 billion of the 36 billion gallons of total renewable fuels production in the U.S. by 2022.