As we reported in the October issue of Prairie Farmer, cellulosic ethanol has a lot to prove next year.
It’s been a running joke in ag for some time – “Cellulosic ethanol has been three to four years away for the past 10 years.” Most know the best jokes have a bit of truth to them. This one certainly does.
Prior to joining Farm Progress, I worked for Country Journal Publishing in Decatur. Biofuels Journal is one of several magazines they publish. When I joined in 2006, the corn-based ethanol industry was in the middle of their building boom. I remember a company publicly stating they would not join this fly by night fad and would stick to their core business. Not long after, they announced plans to build their own ethanol facility.
Even then, we were writing stories that identified the future of ethanol as the same fuel, but made from cellulosic materials. And, yes, the articles said this was only a few years away from becoming a reality. A couple years later, the editor of the magazine changed, but the message that cellulosic was only a few years away remained the same.
In 2009 (or maybe 2010) I heard University of Illinois Extension professor Emerson Nafziger recite the above joke. I probably laughed the loudest because I’d seen it firsthand. It was refreshing to hear someone come out and say it.
And here we are in 2012. At the Farm Progress Show, both Growth Energy’s Tom Buis and Poet CEO Jeff Lautt said cellulosic ethanol will be commercially produced in 2013. Poet is building a 20-million-gallon-a-year facility in Emmetsburg, Iowa. DuPont is working on a plant in Nevada, Iowa. These are some big names investing some big bucks into cellulosic ethanol.
Is it time to stop joking?
That’s a tricky question. I fully believe we’ll have commercial cellulosic ethanol in 2013. However, I don’t think it will take off like gangbusters like corn-based ethanol did in the last decade. Here’s why.
According to Lautt, their cost of production on cellulosic ethanol is $3 per gallon. That sounds like a fairly thin margin to me. As our leadership works toward making necessary budget cuts, I don’t see them being overly friendly to the ag industry. We’re making good money.
Additionally, I’ve heard that Obama’s new CAFÉ standards, which seek a nation-wide average of 54.5 mpg by 2025, are extremely biased toward electric vehicles. Sources have said the GHG lifecycle for electricity is measured from the outlet onward. Yeah, that’s right, they’re not taking the mining of coal into account.
One last point, I have yet to hear solid numbers on what the going rate of cellulosic material is. Some companies have said the price is “proprietary” when pressed on the issue. If these profit plans are built around a zero cost for cellulosic material, I’d say they’re on shaky ground at best.
What do you think? Will 2013 be the breakthrough year for cellulosic ethanol? Or, will it be a more bulked up pilot phase?