DOE & USDA announce action plan for cellulosic ethanol production

DOE & USDA announce action plan for cellulosic ethanol production

Public Law No. 110-140 requires, among other things, that by 2022 there are 36 billion gallons of biofuel produced, of which 16 billion gallons is to come from cellulosic biofuels. Toward that end, DOE and USDA announced an interagency blueprint to expand efforts to derive biofuels from crop and forest waste; the program aims to ensure that future biofuel production comes from outside the fuel supply. [A major criticism of the current U.S. ethanol program is that it competes for feedstock that is part of the food supply, thus driving up prices and limiting supply. See, for example, http://www.checkmatepublicaffairs.com/bioproductsarticle.php?storyid=648.] As part of the program DOE will award up to $76.3 million, subject to Congressional appropriation, to POET LLC, a South Dakota biorefinery developer, for the design and construction of an economically viable cellulose-to-ethanol biorefinery that uses corn cobs and other corn waste. This award follows what appears to be a DOE trend of putting all of its eggs in one basket; witness the support given on the so-called next generation of coal plants. One has to wonder if it would not be better to offer a very substantial prize to any entity that develops such a process. Two events have cast a shadow over the current ethanol production industry. First, there is a glut of supply, making many investments uneconomic. [See, for example, http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080331/REG/129513155 and http://www.farmpolicy.com/?p=516.] Second, because of trade barriers, the U.S. has paid much too much for ethanol; Brazil could supply much less expensive ethanol for U.S. refineries if the current Administration was not so obsessed with providing an unnecessary financial subsidy to the agricultural industry. [See, for example, http://www.treepower.org/news/nytethanol2006.html.] The U.S. used 6.8 billion gallons of ethanol in 2007; more than half of gasoline in U.S. had some ethanol mixed into it, mostly to create E10 (90% gasoline; 10% ethanol). Still the number is modest compared to total fuel consumption. In 2007 U.S. drivers consumed 139 billion gallons of gasoline. The interagency action plan can be found at http://www1.eere.energy.gov/biomass/pdfs/nbap.pdf.