Region called biofuels gateway

Source: By Steve Jordon, WORLD-HERALD STAFF WRITER • Posted: Thursday, May 31, 2012

BLAIR, Neb. — The Midwest will lead the way in the next generation of biofuels, business and government officials said here Wednesday.

What’s needed now is for technology, government policy, consumer demand and economics to converge and open the door to fuel made from the cellulose in fibers such as cornstalks, wood chips and grasses.

“We’re at a critical period in the birth of this industry,” said Adam Monroe, president of Novozymes North America. “I think the U.S. is going to hit a tipping point,” creating a burst of demand for ethanol to replace petroleum-based fuel. “That’s going to happen sooner rather than later, and you’re going to see rapid adoption.”

When that happens, Monroe said, Americans may see dozens if not hundreds of new ethanol production plants and related facilities, with the Midwest being the major source of the plant material destined to become fuel.

“It’s going to change the way we fuel cars and trucks in America,” he said.

Novozymes is a Danish company that on Wednesday officially opened a $200 million enzyme plant next door to Cargill Inc.’s massive corn processing plant just east of Blair.

Monroe and other business and government officials portrayed the enzyme plant as a gateway to the next generation of fuel made from plant material, building upon the 14.2 billion gallons of ethanol produced each year in the United States from corn.

Ethanol companies such as Cargill use enzymes from Novozymes and other suppliers to make ethanol from the starch in corn. New enzymes developed by Novozymes can convert the cellulose in cornstalks and other biomass material into ethanol as well. But that industry is new, with the first commercial-volume production plants just starting to appear.

“This is only the first step,” said Peder Holk Nielsen, executive vice president of Novozymes. Demand for the company’s enzymes will grow because it takes about 10 times as much enzyme to produce a gallon of cellulosic ethanol as from corn. With the new Blair plant, he said, “we’re a little bit ahead of the game.”

The Blair plant is designed to expand its capacity by five or six times as demand for the second-generation biofuel grows, he said. If federal Renewable Fuels Standards remain in place, he said, the plant could expand to its capacity by 2017 and boost employment from its initial 100 people to as many as 400.

“It’s not that far off,” Nielsen said.

The nation’s energy policy can be a political issue, and two representatives of the Obama administration attended Wednesday’s event.

Maxine Moul, former lieutenant governor of Nebraska and now state director of rural development for the U.S. Department of Agriculture, said the administration’s policies encourage development of energy sources of all sorts.

Novozymes received $28 million in tax credits toward the cost of building the Blair plant, Moul said.

Jason Walsh, a senior adviser to the Department of Energy in Washington, D.C., said the Advanced Manufacturing Tax Credit was part of a federal economic stimulus bill that expired at the end of 2010. President Barack Obama has called on Congress to renew the tax credit for similar projects.

Federal support for research into cellulosic ethanol goes back more than a decade, Walsh said, with the goal of increasing production of renewable domestic energy.

“We see this as part of a broader strategy of trying to win one of the most important economic development races in the 21st century,” he said.

Alan Willits, president of North American corn milling for Cargill, said that as demand for cellulosic ethanol grows, the Minneapolis-based company could install equipment to make it in Blair and other locations. Cargill has seven other wet-corn milling plants in the United States, including Iowa plants in Eddyville, Cedar Rapids and Fort Dodge.

Another sign of growing interest in biofuels was an announcement by Iowa State University this week that it would hire more than 200 faculty members in the next few years and work with private industry to turn central Iowa into a biotech research and manufacturing region.

Iowa State President Steven Leath said he wants to create a “capital corridor” from Ames to Des Moines that would focus on proteins, enzymes, genetics, biofuels, food products and pharmaceuticals.

Monroe, the Novozymes executive, said the Midwest has millions of tons of agricultural residue on farm fields after harvest. Some of that can be collected economically for converting into ethanol.

One study estimated that if you turned 16 percent of the wheat straw and corn stover into fuel, leaving the rest to return to the soil, you could generate 19 billion gallons of fuel a year. Monroe said that would amount to 16 percent of U.S. domestic fuel production.