Des Moines Register
08-06-06
Brasher: Companies tout new technology featuring biomass, but at what price?
Iowa refinery using cornstalks, grasses is planned Iowa plant to use corn stover,
grass in the works
By PHILIP BRASHER
Register Washington Bureau
Washington, D.C. - President Bush's call for America to end its dependence on
oil has set off a scramble among companies that are promising to make a new
elixir - ethanol that is distilled not from corn but from far more plentiful supplies of
crop waste and perennial grasses.
Iowa, the undisputed king of corn-derived ethanol, is among the places that
companies are proposing to build refineries to make the motor fuel from biomass,
or plant cellulose.
Among the companies proposing such biorefineries: New York-based Xethanol
Corp., which announced plans last month to build a plant at Blairstown, Ia.,
capable of making 35 million gallons of ethanol a year from cornstalks and
switchgrass as well as grain, and a 50-million-gallon plant at Augusta, Ga., that
would use feedstock from the forestry industry.
Canada-based Iogen hopes to break ground on a 20-million-gallon plant in Idaho
next year that would make ethanol from wheat straw.
A Spanish company, Abengoa Bioenergy, is believed to be close to announcing
plans to build a U.S. plant.
"As soon as the president announces the big push of cellulose to ethanol, then
there are a thousand players in there touting their technology," said Norm Olson,
who manages Iowa State University's biomass research center in Nevada. "It's
tough to keep up with what is real and what isn't."
It's not just Bush's support that has attracted interest. Shortly after Bush uttered
his oft-quoted line in January that America is addicted to oil, the Energy
Department announced that it would offer $160 million in grants to fund up to
three demonstration biomass-to-ethanol refineries. The grant would fund 40
percent of a project's cost.
The deadline for companies to apply is Thursday. DOE officials say they have
received numerous applications but haven't released any other details.
Iogen, which has financial backing from Royal Dutch Shell, is one of the
companies that applied. The DOE program will be key to getting other investors
on board, said Brian Foody, Iogen's chief executive.
"We do not have the final commitments to go ahead," he said. "The role that
DOE plays will be important to our investors' decisions."
Industry and government experts say the technology is still several years away
from being able to produce ethanol cheaply enough.
It costs $1.10 to $1.20 a gallon to make ethanol from corn, which is a bargain
given the cost of gasoline. But the country can't produce enough corn-derived
ethanol to replace more than a fraction of U.S. gasoline consumption, currently
about 140 billion gallons a year.
The 101 ethanol plants now in operation nationwide can produce about 4.8 billion
gallons a year, including 25 in Iowa with a capacity of 1.5 billion gallons annually.
At most about 15 billion gallons of ethanol could be made from corn without
disrupting feed or food markets, according to industry estimates.
The Energy Department last month released a "road map" for cellulosic ethanol
that calls for replacing 30 percent of the nation's gas usage by 2030, which will
require about 60 billion gallons of ethanol.
But making ethanol from biomass requires a costly extra step: breaking down the
fibrous material in plants, the cellulose, into sugars that can then be distilled into
alcohol.
One way is with enzymes similar to those used to give blue jeans an aged
appearance. That is the process used by companies like Iogen.
Some firms also are trying a gasification process, which uses heat to turn
biomass into chemicals that can then be converted into ethanol. Gasification is a
"potential end-run" to the problem of breaking down biomass, said Robert Brown,
a chemical engineer who is director of Iowa State's Office of Biorenewables
Programs.
DOE's road map listed a number of research hurdles facing the technology,
including studying the mechanisms that control the synthesis of cell walls and
identifying the genes that determine the traits of microbes used in fermentation.
Companies closely guard their cost-of-production estimates, but DOE experts
believe the figures are still well above their $1.07-a-gallon target.
Xethanol has announced that the partners in its cellulosic-ethanol projects
include PRAJ Industries, an Indian company that specializes in designing and
building ethanol plants, and Aventine Renewable Energy Inc. of Pekin, Ill., a U.S.
ethanol distributor.
But Xethanol has disclosed relatively little about its technology, fueling skepticism
among others in the industry. Officials with Xethanol did not respond to repeated
requests through its public relations firm for an interview.
Xethanol hasn't shown "whether their cellulosic production that they tout is viable
yet," said Spencer Kelly, an analyst who follows the ethanol industry for the Oil
Price Information Service.
Nathanael Greene, who follows bioenergy issues for the Natural Resources
Defense Council, an environmental group, said: "My growing sense is that the
more noise you hear from a company the less cutting-edge their analysis really
is. The exciting stuff is happening very quietly."
Xethanol now operates a small, 5-million-gallon-a-year corn-to-ethanol plant in
Blairstown. The project in Augusta, Ga., would use a former pharmaceutical
plant.
Iogen, which contracted with farmers in Idaho to supply wheat straw, is probably
closer to commercializing biomass ethanol than any other company, Kelly said.
Iogen operates a demonstration plant in Ottawa, Ontario, that can produce up to
4 million gallons of ethanol annually. The company hopes to have its Idaho
facility in operation by 2009, Foody said.
Xethanol is likely trying to get a jump on its competition even if the production
costs are still high, said Mike Ott, director of the BIOWA Development
Association, which is pushing for a biomass industry in the state.
"There is considerable risk in this. I respect them for taking that," he said.
Reporter Philip Brasher can be reached at (202) 906-8138 or
pbrasher@dmreg.com