NSAC's Blog

Ethanol Policy: Shifting from Corn Starch to Cellulosic Sources

July 8, 2011

This week, Congress continued to signal that federal biofuel policy is shifting from corn starch based ethanol to cellulosic ethanol production.  On Friday, Senator Diane Feinstein (D-CA) announced that some key Senators, including Senators Amy Klobuchar (D-MN) and John Thune (R-SD), had agreed to end on July 31 the 45 cents per gallon Volume Ethanol Excise Tax Credit (VEETC) for ethanol blended into gasoline and the 54 cents per gallon tariff imposed on ethanol imports.  These subsidies are scheduled to expire at the end of the year.

Under the proposed deal, of the $2 billion saved by ending these subsidies, $1.3 billion would be used for deficit reduction.  The remaining $0.668 billion in FY2011 funding would be divided up with $308 million set aside for a production tax credit for cellulosic biofuel, $253 million for an alternative fueling infrastructure tax credit, and $107 million for a small-producer tax credit.   White House staff have announced that the Obama Administration can support the proposal.  The measure could be included in deficit reduction legislation.

Some members of Congress, who want to see all biofuel subsides cut, oppose the shifting of funds to cellulosic ethanol subsidies.  Senator Tom Coburn (R-OK) noted that last month the Senate voted by 73-27 to end the VEETC and tariff.  This vote was on amendment for an underlying bill that did not pass the Senate.  Representative Jeff Flake (R-AZ) also opposes the Senate compromise that would fund cellulosic biofuels, noting that the full House has approved a bill to end both the VEETC and the ethanol tariff without a compromise to fund cellulosic ethanol.

On Thursday, July 7, the Department of Energy and USDA announced that DOE is awarding a $105 million loan guarantee to the biofuel producer POET to be used for the construction of the first commercial scale plant to produce cellulosic ethanol from corn cobs and corn stover.  The plant, dubbed Project LIBERTY, is to be built in Emmetsburg Iowa near an existing POET grain ethanol production plant.

According to the press release on the USDA website, POET expects that “Project LIBERTY” will produce 25 million gallons of ethanol per year, create over 200 construction jobs and 40 jobs at the plant once it has been built, and provide roughly $14 million in revenue for regional farmers who sell biomass to the plant.

POET estimates that 85 percent of the biomass will be sourced from within the United States.  No information was provided as to what the imported material would be or where it would come from.

Earlier this year, in January, USDA announced conditional loan guarantees for three biofuel companies to produce cellulosic ethanol.  The loan guarantees were funded from the Farm Bill’s Section 9003 Biorefinery Assistance Loan Guarantee Program.  The projects receiving the loan guarantees include:

  • Coskata, Inc. received a $250 million loan guarantee to construct and operate a 55 million gallon-per-year cellulosic ethanol biorefinery facility which will use woody biomass as feedstock.
  • Enerkem Corporation received an $80 million loan guarantee for a biorefinery that intended to produce 10 million gallons of cellulosic biofuel per year using dried and post-sorted municipal solid waste as feedstock in a thermo-chemical cellulosic process.
  • INEOS New Planet BioEnergy, LLC. received a $75 million loan guarantee to construct and operate a biorefinery capable of producing 8 million gallons-per-year of cellulosic ethanol and gross electricity production capacity of 6 MW. The feedstock for the biorefinery will include primarily vegetative waste (citrus and agricultural wastes), yard wastes, wood waste, and municipal solid waste.

Categories: Conservation, Energy & Environment

Comments are closed.