DOE to Offer $105 Million Cellulosic Ethanol Plant Loan Guarantee

The U.S. Department of Energy (DOE) recently committed itself to providing $105 million in loan guarantees to Project Liberty, an Emmetsville, Iowa-based ethanol plant which will produce cellulosic biofuel from field waste left behind after corn is harvested.

Cellulosic biofuels are made from the non-edible feedstocks, and are one of several forms of gasoline/diesel substitutes made from plant-derived organic matter. Two others are biodiesel, made from vegetable and animal fats through a process called esterification, and biofuel from algae.

Project Liberty’s developer is POET, the world’s largest ethanol producer. The plant itself will use corn stover (corn cobs, leaves and husks) in what has been described as a completely “green” and sustainable process -- Through the use of enzymatic hydrolysis, POET will insert enzymes to “unlock” the usable cellulose from the corn waste.

The Emmetsburg plant will be the first commercial test of this process, and the first to use government loan guarantees to build a refinery after the withdrawal of Diamond Green Diesel from the government’s loan-backing program.

The biofuel plant, initially slated for 2009 construction (with actual groundbreaking not taking place until August of 2010) – was most recently delayed until finalization of BCAP (Biomass Crop Assistance Program) payments, which now match those of POET, or $40.24 per ton.

Project Liberty, slated to produce as much as 25 million gallons of cellulosic ethanol, and already the recipient of $80 million from the DOE and $20 million from the Iowa Department of Economic Development, ranks high on the DOE’s list of to-do’s, especially now with the U.S. Environmental Protection Agency, or EPA, shooting for a higher ratio of ethanol in blended fuels to reduce greenhouse gas emissions.

Ethanol fuels like E15 (gasoline with 15 percent ethanol added), are highly controversial. Opponents charge that E15 – EPA-approved for vehicles made in 2001 or later – is damaging to vehicle engines, and may produce toxic tailpipe emissions. Those in favor of using biofuels to reduce pollution (and the nation’s dependence on foreign oil) say that the EPA’s extensive E15 testing assures safety. Moreover, they insist, making biofuels readily available to consumers is the first step toward greater acceptance.

Experts expect the DOE to offer loan guarantees to even more biofuel projects, in spite of the recent introduction of a bill to drop the .45 cent-per-gallon VEETC (Volumetric Ethanol Excise Tax Credit) ethanol tax credit and reduce AFV-RPC (Alternative Fuel Vehicle Refueling Property Credit) tax credit for fuel retailers.