Ethanol maker won’t need U.S. loan guarantee
Source: DAN PILLER • Des Moines Register • Posted: Tuesday, January 24, 2012
“In light of its joint venture with DSM, Poet does not plan to utilize the loan guarantee it was awarded by the U.S. Department of Energy,” Poet said in a statement.
“The loan guarantee commitment from the DOE was an important milestone in our quest to commercialize cellulosic ethanol, and we are appreciative of the work they put into the due diligence process,” Poet founder and CEO Jeff Broin said.
“We believe that the joint venture with DSM positions us well to meet our ambitious cellulosic ethanol production goals, and thus the loan guarantee has become unnecessary.”
Poet and Royal DSM said they will produce cellulosic ethanol from corn crop residue through a biological process using enzymatic hydrolysis followed by fermentation at Poet’s existing plant in Emmetsburg.
The process will be licensed and used at the 25 other plants under Poet management, six of them in Iowa in addition to the Emmetsburg facility.
The initial capacity is expected to be 20 million gallons in the first year, growing to about 25 million gallons per year.
Royal DSM produces food and dietary supplements, personal care products, feed, pharmaceuticals, medical devices, automotive products, paints, electronics, alternative energy and bio-based materials.
Broin said in a statement: “This joint venture brings together two companies leading the transition from a fossil-based economy to a bio-based economy. The partnership has set an ambitious goal: to make cellulosic bio-ethanol competitive with corn ethanol, which is the most competitive liquid transportation fuel on the market today.”
Poet’s Emmetsburg plant is one of two ethanol facilities planned for Iowa that would use corn refuse, primarily stalks and leaves as its feedstock. The other is planned by DuPont for near Nevada. Both plants plan to open in 2013.
While corn-fed ethanol now constitutes 10 percent of the nation’s gasoline supply, noncorn ethanol has developed more slowly than the authors of 2007 congressional legislation mandating renewable fuel use envisioned.
The U.S. Environmental Protection Agency said late last year that it projects that cellulosic ethanol production will reach 8.65 million gallons this year, well short of the 500 million-gallon target for 2012 set by Congress in 2007.
The EPA estimates that in the United States as many as 350 to 400 new biorefineries will have to be constructed by 2022 to meet the volume requirement of 16 billion gallons per year of cellulosic bioethanol under the Renewable Fuel Standard.
DSM and Poet will each hold a 50 percent share in the joint venture, which will be headquartered in Sioux Falls, S.D.
The initial capital expenditure by the joint venture in Project Liberty will amount to about $250 million.
The closing of the joint venture is subject to regulatory approvals and other closing conditions.