EPA expected to lower 2011 cellulosic biofuels volume

By Kris Bevill | August 27, 2010
After evaluating the market availability of cellulosic biofuels, the U.S. EPA said in July that only five producers are expected to contribute cellulosic ethanol to the overall volume next year and that it might reduce the cellulosic target by as much as 240 million gallons from its original goal. The renewable fuel standard established in the Energy Independence and Security Act of 2007 called for 250 million gallons of cellulosic biofuels to be produced in 2011, but the EPA is predicting a much lower actual achievable volume of between 5 million and 17.1 million gallons.

The EPA said it evaluated both domestic and foreign sources of cellulosic biofuel before issuing its proposed volume standard. The agency found only five U.S. cellulosic ethanol producers with the potential to contribute next year, including: AE Biofuels, Agresti Biofuels, DuPont Danisco Cellulosic Ethanol, Fiberight LLC and KL Energy Corp. Ontario-based Iogen Corp. was the sole Canadian producer with the potential to export cellulosic biofuel into the U.S. in 2011. A handful of producers questioned the EPA's method of reaching those determinations, but the agency stood by its analysis. EPA senior press officer Cathy Milbourn said producers were encouraged to submit any production changes to the EPA during the proposed volume standard comment period. The EPA would then re-evaluate before issuing its final standard in November.

According to the proposed standard, Fiberight is pegged to be the largest cellulosic ethanol contributor next year. The company is expected to ramp up its Blairstown, Iowa, facility to its full production capacity of 5.7 MMgy by late 2011 and the EPA said it could produce as much as 2.8 million gallons of cellulosic ethanol next year. Craig Stuart-Paul, Fiberight CEO, said that production estimate is "doable" and the company has been rapidly installing necessary production equipment at the facility.

Agresti Biofuels is expected to contribute 1 million gallons of cellulosic ethanol from a 20 MMgy municipal solid waste-to-ethanol facility to be located in Pike County, Ky. The company is currently in the final stages of setting up a demonstration-scale facility in Vietnam, according to program director Zig Resiak, and won't begin construction on the Kentucky plant until the Vietnam plant is up and running. "Everything is dependent on Vietnam," he said. "It all comes down to that first demonstration project." Resiak said the Kentucky site has been cleared and is ready for construction to begin as soon as the Vietnam plant comes online in the fourth quarter of this year. According to Resiak, 1 million gallons of cellulosic ethanol from Agresti next year is an "absolutely" attainable goal and he believes the company can produce more than its allotted share.

The EPA expects AE Biofuels to produce 500,000 gallons of cellulosic ethanol from a corn-based ethanol plant in Keyes, Calif. The AE Advanced Fuels Keyes facility is anticipated to begin producing late this year using starch-based feedstock, but the EPA said the plant will transition to some cellulosic feedstock beginning in mid-2011. The company plans to eventually use up to 25 percent cellulosic feedstock at the 55 MMgy facility.

Wyoming-based KL Energy Corp. has been slowly ramping up its 1.5 MMgy cellulosic facility in Upton, Wyo., since 2007. According to the EPA, KL Energy said it intends to produce 400,000 gallons of cellulosic ethanol next year from wood chips and wood waste.

DuPont Danisco Cellulosic Ethanol's 250,000 gallon per year demonstration-scale facility at Vonore, Tenn., will be expected to contribute all of the cellulosic ethanol it produces next year to the overall volume. DDCE told the EPA it doesn't plan to produce more than 150,000 gallons in 2011.

The EPA stated that while it is uncertain whether Canadian producers would export cellulosic ethanol, Iogen Corp. is producing cellulosic ethanol at its demonstration-scale facility now and could potentially participate in the RFS2 program next year. According to the EPA's proposal, while all of the ethanol produced to date at Iogen's 500,000 gallon per year facility has been sold locally, the company is exploring the possibility of exporting in 2011 and could contribute up to 250,000 gallons of fuel to the total volume requirement. However, Iogen Executive Vice President Jeff Passmore said the company has no current plans to export large amounts of fuel to the U.S. in 2011. Additionally, he said Iogen doesn't plan to produce 250,000 gallons of fuel at its facility next year. "We have no plans to export," he said. "We're using our fuel for demonstration purposes. Some might get sent to the U.S. for small fuel demonstrations such as car races, but we don't have any plans for major exports." Passmore said Iogen has delivered approximately 8,000 gallons of cellulosic ethanol to the U.S. this year, all of which was used for racing applications, and he anticipates a similar scenario to occur next year.

Several notable projects were left out of the EPA's expected producer list because they are not scheduled to be complete until 2012. The EPA said it will continue to monitor proposed projects and it anticipates significantly increased cellulosic ethanol production beginning in 2012. However, none of the expectant 2011 producers are currently producing cellulosic biofuel at the rates they project for 2011. The EPA noted that several significant hurdles need to be overcome before the anticipated production rates can be achieved, including outstanding issues in the areas of technology, funding and construction. Producers on the EPA's list were not surprised that the agency expects a lower production volume than initially anticipated and said it reflects the current state of the industry. "The reality of the marketplace is that there are not that many people producing [cellulosic ethanol] right now," Fiberight's Stuart-Paul said.

"Nobody's breaking ground at the moment," pointed out Iogen's Passmore. "It takes over a year to build these plants, so I think it reflects the commercialization challenges that the cellulosic ethanol industry faces. Those challenges need to be addressed by Congress if we're serious about achieving the targets."