Nathan's Comments

Fred, thanks for the question. Project LIBERTY will generate methane from the lignin after we extract the cellulose and hemi-cellulose to process into ethanol. The methane will be used to power the entire cellulosic facility and the adjacent 2x grain ethanol plant. That's a big piece of how we get cellulosic ethanol to economic viability.

@Rojelio,
If you're looking for THE answer to transportation fuel challenges, it might never come in the form of a single solution. The reason corn ethanol is widely used is because it's the only economical renewable fuel currently available.

This ruling helps cellulosic ethanol because without it, there is no room in the fuel market for the product. Ethanol is the same regardless of what it is made from and the market has already produced enough to fill 10%. The move to 15% allows room in the market for future ethanol production.

Great points, Mike. The ethanol industry is doing something to address this issue, but we could always be doing more. Take a look at this article from our corporate publication on the engine being developed at Ricardo: http://www.poet.com/vital/2010/1/maximizing-efficiency-minimizing-impact.asp

"Is it true that BP and Shell now own Poet?"

No.

Ron,
What I'm saying is that if the government is in favor of using more renewable fuels, you shouldn't be surprised if they take steps to give more Americans have access to them. Your argument was that the government shouldn't back an ethanol pipeline because it will make it more difficult to end support for bioufels. Again, if you don't support biofuels (like you), you won't support a pipeline. If you do (like the government) it's possible that you might.

Ron,

Increasing the use of renewable fuels is the stated policy of this country. Congress and the President made that clear in the Energy Independence & Security Act of 2007 that included the Renewable Fuel Standard. If our country is going to use the 36 billion gallons of renewable biofuel mandated by that law, you need things like pipelines, blender pumps and FFVs.

I think the real nub of the matter is that you don't like the country's policy on biofuels. That's fine and I respect your opinion. My company is one of hundreds that are busy trying to implement it and we believe a pipeline is a necessary component. We believe in it enough to risk our own capital but debt financing is another issue and that's where we need the government loan guarantee. I understand that it's not cost or risk free for the government, but it isn't for us either.

I can't possibly respond to all the comments on this post, but there was one I have to address that ran throughout the section. Here's a representative sentence from Ron:

"POET and is [SIC] partners are perfectly free to build such a pipeline with their own money."

The plan is for the partners to spend their own money. The venture is seeking to have the pipeline qualify for an existing federal loan guarantee program (not federal dollars) because lenders are unlikely to fund something this large and unique. It's no different than the federal loan guarantee that was given to the Alaskan natural gas pipeline.

Tom,
The ethanol yield per acre you used is not "pretty much a consensus." The average corn yield per acre in this country is 155 bushels per acre and the average ethanol yield per bushel is 2.81. That's 435 gallons per acre, but that's only the average.

When you're talking about yield, I think you are comparing the current average for ethanol in the existing fleet with the potential best case scenario for mass-produced electric vehicles. Most of our ethanol plants are built in places of high corn supply, more than 200 bpa and we get closer to 3 gallons per bushel. That puts our AVERAGE near 600 gallons per acre. We're also working on producing cellulosic ethanol from the corn cobs, which can give us another 50-75 gallons per acre. With increasing yields and efficiency, we'll be 1,000 gallons per acre in the near future.

Additionally, I'm not sure what you mean by "cook it with fossil fuel" but companies like ours have eliminated the cook step for ethanol fermentation. Also, I couldn't help but notice your use of the term "fossil fuel" here when the vast majority of ethanol plants use natural gas as their energy source which you go on to say how fortunate the country is to have a glut of natural gas.

Finally, three of our corn ethanol plants use CHP as a power source.

Russ,
A post from Gristmill is the final answer to the question? Like they were unbiased on the subject until they just happened upon that report? The Mitchell report is incredibly biased against biofuels. He says things like "biofuel use of grain increased 36 percent while the feed industry increased their use 1.5 percent (I can't recall the exact numbers, but that's close)." He tries to use percentages to cloud the argument. What he doesn't tell you is that biofuels increased its use to FOUR percent of the world grain market. How can something that increases its use of a market from three to four percent be responsible for tripling the value? The answer: it can't.

Even the World Bank said that the Mitchell report was on the high side of every other estimate they've seen. Studies from Purdue University, the University of Wisconsin and Texas A&M (not exactly corn country) have all found that the impact of ethanol (or corn for that matter) on food prices has been small.

I'm obviously not going to change your position, because you find one study on food prices and one study on the environment that reinforce what you already believe to be true. I encourage others to look at multiple sources of info before reaching a conclusion.

Ronald, If ethanol is primarily responsible for food prices going up, then why has the price corn decreased $3 per bushel over the past 2 months? Did the ethanol industry shut down? Also, with the 35 percent decrease in corn prices, has your price of food declined? Mine hasn't.

The oil and gas industry gets $21 billion in subsidies? Based on the amount of press coverage, you'd think ethanol was the only energy source that was subsidized.

Samson,

What the chairman of Nestle didn't tell you is that 86 percent of that water is rainfall on the crops used to produce ethanol. The production of ethanol uses a small amount of water in comparison to other energy manufacturing industries.

Carol,

It's helpful to read the study that led to this article: http://www3.interscience.wiley.com/cgi-bin/fulltext/114801276/PDFSTART. Here's a direct quote: 

"First, alternative fuels (e.g. ethanol) could be rated on their ability to displace petroleum, our most pressing energy security policy issue. To produce 1.0 MJ of ethanol requires about 0.04 MJ of petroleum, while it takes 1.1 MJ of petroleum
to produce 1.0 MJ of gasoline (Figure 1). Th us ethanol displaces 1.1/0.04 equals 28 MJ of petroleum for every MJ of ethanol produced. We greatly extend our supplies of petroleum and thereby reduce its importance by producing corn
ethanol"