U.S. DOE to Invest in Cellulose-to-Ethanol Projects

The funding opportunity, announced a year ago, was initially for three biorefineries and $160 million. However, in an effort to expedite the goals of President Bush's Advanced Energy Initiative and help achieve the goals of his "Twenty in Ten Initiative", DOE Secretary Samuel W. Bodman raised the funding cap.

The Initiative, which Bush revealed in his State of the Union Address in January, aims to increase the use of renewable and alternative fuels in the transportation sector to the equivalent of 35 billion gallons of ethanol a year -- and reduce America's gasoline consumption by 20 percent -- by 2017.

"We had a number of very good proposals, but these six were considered 'meritorious' by a merit review panel made up of bioenergy experts. So I thought it would be best to front-end some more funding now, so that we could all reap the benefits of the President's vision sooner," said Secretary Bodman.

One of those six proposals was submitted by the Irvine, California-based company, BlueFire Ethanol Inc., which was awarded up to $40 million to develop a biorefinery plant atop a landfill in Southern California. Set to produce about 19 million gallons of ethanol a year, the plant would use 700 tons per day of sorted green waste and wood waste from landfills when the plant begins operations in 2009.

"This is an important milestone for BlueFire Ethanol and a significant opportunity to demonstrate the use of new energy supplies in our landfills. Our biorefinery will enable us to be located directly in the markets with the highest demand for ethanol while helping cities to manage landfill waste," said Arnold R. Klann, CEO of BlueFire Ethanol.

According to Jetta Wong, an agriculture & energy policy analyst at the Environmental and Energy Study Institute (EESI), federal funding for these U.S. cellulosic-ethanol projects may prevent other companies from relocating to countries with established incentive and rebate programs.

"EESI is very happy to see that the DOE has invested this money in these cellulosic ethanol projects. We believe this shows our country's commitment to the industry," said Wong. "We hope that the DOE will continue its commitment to the biomass industry by moving the loan guarantee program forward with an emphasis on biomass as authorized in Title 15 of the Energy Policy Act of 2005."

Section 1510 of the Energy Policy Act, commonly referred to as Title 15, is the Commercial Byproducts from Municipal Solid Waste and Cellulosic Biomass Loan Guarantee Program. Even with $385 million worth of government allocations over the next four years, several of the companies will need the additional help of the loan guarantee program considering the cost of the projects are anywhere upwards of $200 to $300 million to construct, said Wong.

According to the DOE, combined with the industry cost share, more than $1.2 billion will be invested in these six biorefineries. Although the $385 million has not yet been appropriated by Congress, negotiations between the six companies and the DOE will begin immediately to determine final project plans and funding levels.

Along with BlueFire Ethanol's California biorefinery's $40 million grant, the projects selected to receive federal funding include:

-- Abengoa Bioenergy Biomass of Kansas, LLC of Chesterfield, Missouri: Up to $76 million for a proposed plant in Kansas that will produce 11.4 million gallons of ethanol annually and enough energy to power the facility, with any excess energy being used to power the adjacent corn dry grind mill. The plant will use 700 tons per day of corn stover, wheat straw, milo stubble, switchgrass, and other feedstocks.

-- ALICO, Inc. of LaBelle, Florida: Up to $33 million for a proposed plant in LaBelle, Florida that will produce 13.9 million gallons of ethanol a year and 6,255 kilowatts of electric power, as well as 8.8 tons of hydrogen and 50 tons of ammonia per day. For feedstock, the plant will use 770 tons per day of yard, wood, and vegetative wastes and eventually energycane.

-- Broin Companies of Sioux Falls, South Dakota: Up to $80 million for a plant that is in Emmetsburg (Palo Alto County), Iowa, and after expansion, it expected to produce 125 million gallons of ethanol per year, of which roughly 25 percent will be cellulosic ethanol. For feedstock in the production of cellulosic ethanol, the plant expects to use 842 tons per day of corn fiber, cobs, and stalks.

-- Iogen Biorefinery Partners, LLC, of Arlington, Virginia: Up to $80 million for a proposed plant that will be built in Shelley, Idaho, near Idaho Falls, and will produce 18 million gallons of ethanol annually. The plant will use 700 tons per day of agricultural residues including wheat straw, barley straw, corn stover, switchgrass, and rice straw as feedstocks.

-- Range Fuels (formerly Kergy Inc.) of Broomfield, Colorado: Up to $76 million for a proposed plant that will be constructed in Soperton (Treutlen County), Georgia. The plant will produce about 40 million gallons of ethanol per year and 9 million gallons per year of methanol. As feedstock, the plant will use 1,200 tons per day of wood residues and wood based energy crops.

"These biorefineries will play a critical role in helping to bring cellulosic ethanol to market, and teaching us how we can produce it in a more cost effective manner. Ultimately, success in producing inexpensive cellulosic ethanol could be a key to eliminating our nation's addiction to oil," said Secretary Bodman.