Soon after hearing about Big Oil’s numerous challenges to the Renewable Fuel Standard, attendees of the Fuel Ethanol Workshop this summer, heard from producers forging ahead to commercialize cellulosic ethanol. The placement of these sessions was apropos as challenges to the RFS are heating up in almost direct proportion to the progress of cellulosic ethanol plant construction.

“The single most important reason why the oil industry is fighting the RFS is that it is seeing cellulosic ethanol on the cusp of commercialization,” Bob Dinneen, president and CEO, Renewable Fuels Association, told the audience. The oil industry has already lost 10% of the barrel to ethanol, and could lose 30% of the market to cellulosic ethanol and other advanced biofuels in the not-too-distant future, he adds.

Technological advances have enabled cellulosic ethanol to be made from many feedstocks, such as corn stover and cobs; wheat straw; sorghum; grasses like switchgrass and miscanthus; woody biomass; municipal solid waste; and more. “This broadens the strength and depth of our industry,” says Brian Jennings, executive vice president, American Coalition for Ethanol.

As the cellulosic ethanol industry goes deep, so will its impact on Capitol Hill. More states outside the traditional corn ethanol belt will be able to participate in converting feedstocks to biofuels as well as for electrical generation. This will likely translate into more political clout and votes for renewable energy policies, says Tom Buis, CEO, Growth Energy. Even within the Corn Belt, there will be new opportunities.

Plants make progress

POET-DSM Advanced Biofuels, for example, expects to begin producing cellulosic ethanol from corn stover early next year at its Project Liberty plant in Emmetsburg, Iowa. Adjacent to POET-DSM’s corn ethanol plant in Emmetsburg, the new facility will initially be able to produce 20 million gallons of cellulosic ethanol per year. It will eventually ramp up to 25 million gallons or more. By co-locating with the corn ethanol plant, the company can combine some operations and reduce costs. In addition, the cellulosic ethanol plant will generate steam and biogas that can be used by the corn ethanol facility.

The Project Liberty plant collected 75,000 tons of crop residue in 2012 from more than 100 growers primarily within a 35-mile radius of Emmetsburg, and is projected to collect 120,000 tons this year. POET-DSM expects to annually purchase about $20 million worth of corn stover for Project Liberty. Please see the accompanying sidebar for more on corn crop residue business models.

DuPont Industrial Biosciences is also expected to begin cellulosic ethanol production next year. Located next to the Lincolnway Energy corn ethanol plant in Nevada, Iowa, it will be capable of producing 30 million gallons of ethanol, requiring about 190,000 acres of corn stover collected from a 30-mile radius of the plant.

Abengoa Bioenergy aims to have its 25 million-gallon-per-year cellulosic ethanol plant in Hugoton, KS, in operation by January 2014. The company, headquartered in Spain, chose Hugoton because of the diversity of crops produced in the area. It will begin using corn stover, but could also use wheat straw, grain sorghum and prairie grasses. In addition, Abengoa will be able to produce up to 20 megawatts of electricity from biomass.

These companies acknowledge that the existence of the RFS is important to continued investment in the cellulosic ethanol industry as a whole. The RFS also opens up market access. Prior to enactment of the RFS, ethanol had limited access to consumers, Growth Energy’s Buis pointed out.

But, these companies also have confidence in the economics of their technologies. POET-DSM and DuPont Industrial Biosciences, for example, plan to broadly license their technologies and expertise in the various facets of production, from biomass collection to the enzymes, equipment and processes used in biofuel production. Steve Hartig, general manager, licensing, POET-DSM, said, “If we didn’t believe in this, we wouldn’t be making this kind of investment.”

Corn crop residue model - pros and cons of different collection models

Corn crop residue for use as a feedstock could provide corn growers a new source of income in Iowa, where POET-DSM Advanced Biofuels and DuPont Industrial Biosciences are expected to begin producing cellulosic ethanol next year. As the cellulosic ethanol industry develops and expands, more growers will be able to participate. In fact, both POET-DSM and DuPont Industrial Biosciences have announced plans to license their technologies.

Both companies have conducted multi-year harvest, storage and soil sustainability research with organizations, including Iowa State University and USDA. POET-DSM’s methods seek to maximize cob content and minimize stalk content in its feedstock.

Questions about collection and transportation and profitability for the grower remain, but the following models discussed at the Fuel Ethanol Workshop held in St. Louis, Mo., over the summer, offer a look at their approaches. We also take a look at the pros and cons of different collection systems to help growers in their decision-making process.

POET-DSM Model

  • Collect and transport the biomass for the ethanol plant yourself; or
  • Engage the services of an aggregator (such as a custom harvesting crew that might also transport your crop residue to the ethanol plant); or
  • Contract with POET-DSM to handle the entire biomass collection, staging, storage and transport process

DuPont Industrial Biosciences Model

  • Contract with a cellulosic ethanol producer to handle the entire stover collection/transport process

Exploring different collection models

Do-it-Yourself (DIY):

Pros: At $60-76 per dry ton, growers capture as much of the crop residue’s value as possible. This is also the option for growers who do not want anyone else touching their fields.

Cons: Collection, loading/unloading and transportation equipment (and associated operating capital) needed.

Aggregator Services:

Pros: Aggregators (such as a customer harvester; farmer group; or ag retail outlet) would have the necessary collection, loading/unloading and transportation equipment, eliminating the need for the grower to purchase such equipment or spend the time for biomass harvest.

Aggregator would establish contracts with farmers to collect and haul biomass as well as establish delivery contracts with the ethanol producer. POET-DSM also engages with professional aggregators to perform the entire process of baling, staging, storing and transporting biomass.

Cons: Grower must share part of the value of corn stover collection with third-party aggregator.

Ethanol Producer Handles Entire Collection, Transportation Process:

Pros: Ethanol producers, like those above, have worked with other organizations to manage many of the challenges. Studies on the impact of crop residue removal on soil are ongoing.

Cons: Grower must share part of the value of corn stover collection with ethanol producer.

In the future, other cellulosic ethanol producers would unlikely take this route as they would be more focused on ethanol plant capital/operating costs and obtaining additional financing, says Wally Tyner, agricultural economist, Purdue University, who has conducted several corn stover economic studies. For cost estimates on corn stover for bioenergy production, see Purdue Extension publications RE-3-W and RE-6-W.