‘Proud and pivotal moment’ for industry as 2nd cellulosic plant opens

Source: Amanda Peterka, E&E reporter • Posted: Monday, October 20, 2014

The Midwest’s second major cellulosic ethanol plant opened today in a small town in southwest Kansas.

The Abengoa Bioenergy facility in Hugoton is capable of producing 25 million gallons of ethanol a year out of agricultural waste collected from primarily corn and wheat farmers within a 50-mile radius of the plant. The plant will process more than 300,000 tons of biomass a year, or about 1,000 tons per day.

Abengoa’s ribbon-cutting ceremony today marks the second opening of a major cellulosic ethanol plant in the last month and a half after several years of criticism aimed at the industry’s slow ramp-up to commercial production. In early September, POET-DSM Advanced Biofuels LLC opened a 25-million-gallon plant in northwest Iowa (Greenwire, Sept. 4).

“This is a proud and pivotal moment for Abengoa and for the larger advanced bioenergy industry — and further demonstrates our longstanding commitment to providing sustainable energy alternatives in the United States,” Abengoa CEO Manuel Sánchez Ortega said in a statement.

Abengoa is Europe’s largest ethanol producer, as well as one of the largest producers of corn ethanol in the United States. This is the company’s first foray into commercial cellulosic ethanol production.

Several high-ranking officials were expected to attend the grand opening today, including Energy Secretary Ernest Moniz, former Interior Secretary Ken Salazar, Kansas Gov. Sam Brownback (R) and Kansas Sen. Pat Roberts (R). Abengoa also expected a big turnout from the local farm community and planned to offer tours of the facility.

When the plant is up and running, specially designed tractor-trailers will arrive many times a day to unload square bales of crop waste. The waste will be fed into an enzymatic process where plant materials will be broken down into their component sugars, which will then be fermented into ethanol. The facility will also produce 21 megawatts of electricity per year, part of which Abengoa plans to sell back to the surrounding Stevens County.

The Department of Energy provided Abengoa with a combined $230 million in grants and loans for the plant.

Chris Standlee, Abengoa’s executive vice president of global affairs, said the company began exploring cellulosic ethanol a decade ago with the goal of doing all steps of the process in-house. Rather than relying on an enzyme company, Abengoa has engineered its own enzymes that are used to break down plant materials. Unlike the plant that opened last month by POET-DSM, Abengoa’s plant is not co-located with an existing corn ethanol plant.

The company sees opportunity to collaborate with corn ethanol plants and make use of their infrastructure in the future, but Abengoa wanted to prove it could stand by itself first, Standlee said.

“We built this with the idea that it was going to be the first of a kind,” Standlee said. “We wanted to overdesign and overengineer it. We wanted to be able to change the plant and improve the plant to improve with multiple feedstocks.”

The Hugoton site was chosen because of the many crops — corn, wheat and sorghum — in the area that could be used as feedstocks during different times of the year.

But Abengoa is also dipping its toes in the production of switch grass, a plant with the potential to become a major input used in cellulosic ethanol production. The site at Hugoton has a 400-acre switch grass plot; the area is being irrigated using some of the treated process water coming out of the back end of the cellulosic plant.

So far, farmers haven’t rushed to convert corn lands to switch grass for cellulosic biofuel production. Abengoa wants to use the plot both to encourage greater adoption of switch grass by farmers and to prove that the feedstock will work in its own process.

“We hope to be able to prove the commercial-scale capability of this facility with multiple types of feedstock,” Standlee said. “Corn stover and wheat straw are our two major feedstocks. The switch grass will be a slightly different animal. We’re anxious to prove it.”

Up to now, the nation has produced minimal amounts of cellulosic biofuel despite a nationwide mandate for refiners to blend biofuels into petroleum gasoline and diesel. Many first attempts by startup companies have been thwarted by high capital costs and difficulties in attracting investors. A facility owned by KiOR Inc., the nation’s first company to commercially produce cellulosic biofuel, is idled and the company has been hovering on the brink of bankruptcy since March. That facility in Mississippi produced drop-in gasoline and diesel rather than ethanol.

Analysts believe big companies like Abengoa, POET-DSM and DuPont Co. — which is building a plant in Iowa — are better situated given that cellulosic ethanol represents just a small portion of their total business operations.

But as with other advanced biofuels companies, Abengoa says it faces an uncertain future in the United States because of a November 2013 proposed rule from U.S. EPA that would roll back the nation’s biofuels blending mandates. EPA has yet to release this year’s final mandates for ethanol and advanced biofuels despite a statutory deadline of Nov. 30, 2013, to finalize the rule.

Abengoa has been sending EPA monthly detailed projections about how much cellulosic ethanol it expects to produce this year and next, but Standlee said he does not know where EPA’s final number for the industry will end up. EPA could wait until after the midterm election to release a final rule.

In the face of policy uncertainty, Abengoa says it’s looking toward Brazil for the construction of its second large-scale cellulosic ethanol plant. The company has identified a site in Brazil for its next project and is working on obtaining financing.

According to Standlee, Abengoa is interested in Brazil not only because sugar cane production leaves waste on the ground but also because the country has mandated that all cars drive on gasoline containing 27.5 percent ethanol — much higher than the 10 percent that’s typically blended into gasoline in the United States.

With the opening of the Abengoa plant, there is still one more commercial-scale cellulosic ethanol plant under construction in the Midwest. DuPont is building a 30-million-gallon plant in central Iowa that will also rely on crop wastes from local farmers as its input. The $200 million facility will use a fermentation process that it has piloted in a project in Tennessee.

At a recent Capitol Hill briefing sponsored by the Environmental and Energy Study Institute, DuPont External Relations Manager Nancy Clark expressed optimism that the plant would be completed before the end of the year.

“We’re very pleased with the progress, and we’re on track to complete that late in 2014,” she said.

DuPont yesterday also announced it has partnered with Ireland-based Ethanol Europe Renewables Inc. to develop a 26-million-gallon cellulosic ethanol plant in Macedonia. Construction of the plant is expected to start in 2016 and be completed in two years.

The plant will use the same technology as the Iowa facility. Macedonia Minister for Foreign Investments Bill Pavleski said yesterday the project is expected to cost €250 million ($320 million).