Cellulosic plant prepares to open its doors

Source: Amanda Peterka, E&E reporter • Posted: Thursday, August 14, 2014

The first of the major Midwest cellulosic ethanol plants will open its doors in early September.

POET-DSM Advanced Biofuels LLC, the operator of the plant, announced yesterday that it plans to host a grand opening Sept. 3 that will feature plant tours, music and a formal ceremony.

The 25-million-gallon-a-year plant is located in Emmetsburg, a small town in northwest Iowa, and will convert the cobs, leaves and husks that are left on fields after the corn harvest into ethanol.

POET-DSM, a joint venture between ethanol giant POET LLC and Dutch enzyme manufacturer Royal DSM, began building the $250 million plant in March 2012 adjacent to an existing POET corn ethanol facility.

The plant will first process 770 tons of corn stover a day to produce 20 million gallons a year and then eventually ramp up to its full capacity. The ethanol produced at the plant will be identical to corn ethanol, which is blended into most petroleum gasoline sold in the country.

Workers at the plant are currently pre-treating the corn residue — which is stored in massive piles at the Emmetsburg site — to prepare for the first batch of ethanol.

Two other big ethanol and agriculture companies also plan to open big cellulosic ethanol facilities in the Midwest this year. Abengoa Bioenergy is opening a 25-million-gallon-a-year plant in Hugoton, Kan., and DuPont is building a 30-million-gallon facility in central Iowa.

The long-anticipated opening of the plants, though, comes during a time of uncertainty for the nascent 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, but it has not yet finalized the proposal.

For cellulosic biofuels, a category that includes both ethanol and drop-in fuels that can be added directly into existing fuel infrastructure, EPA proposed to require that refiners use 17 million gallons in 2014. POET and other ethanol companies have said the estimate lowballs the amount that they are capable of producing.

The industry has also seen some high-profile failures over the past several years. Earlier this week, the nation’s first commercial producer of cellulosic gasoline and diesel, KiOR Inc., said it is on the brink of bankruptcy and unable to restart a facility in Columbus, Miss., that’s been idled since the end of last year (Greenwire, Aug. 12).

Analysts covering the biofuels industry, though, say that unlike the cellulosic ventures that have come before, large companies like POET, DuPont and Abengoa are better positioned to succeed and weather policy uncertainty because they’re already big players in the ethanol and agriculture markets.

“They can stomach the volatile news,” said Scott Chabina, an analyst at Carl Marks Advisory Group LLC. “They’re a project within a much larger institution. They’re not dependent on any particular milestone or any particular one lender to continue funding this.”