The largest U.S. ethanol producer and a Netherlands-based company will invest $250 million to commercialize ethanol production from discarded corn cobs and stalks.
South Dakota-based POET LLC and Royal DSM said they hope to start production on the cellulosic ethanol project in the second half of 2013, with initial production of 20 million gallons.
Ultimately the joint venture plans to expand the project to POET's other 26 corn-based ethanol plants, and then license it to other ethanol companies' plants. POET Chief Executive Jeff Broin said the venture hopes to have the technology licensed to "hundreds" of plants within the next eight to 10 years.
"This has been what POET has been working toward for about a decade," Broin said of the venture during a media conference call.
Royal DSM N.V., a science-based company with 22,000 employees, is active in a range of industries from pharmaceuticals to plastics and will apply its yeast-fermentation process to the project. The venture will be based in South Dakota, but the first project will take place at a plant being built next to POET's existing corn-based ethanol plant in Emmetsburg, Iowa.
POET is forgoing an already-approved $105 million federal loan guarantee issued through the Department of Energy, as Broin said Royal DSM's involvement makes the loan unnecessary.
The project comes amid widespread pessimism about the slow pace of progress in the cellulosic ethanol industry. The federal renewable-fuels mandate calls for the production of 16 billion gallons of cellulosic ethanol by 2022, Broin noted. The federal Energy Information Administration, in an early release of its annual energy outlook Monday, noted that its view of technology development and market-penetration rates for cellulosic biofuels has "grown somewhat more pessimistic" from a year ago.
Other cellulosic ethanol technologies include wood-based biomass and switchgrass. POET's project differs from many others in that it relies on a pre-existing infrastructure in the nation's corn belt for ethanol production.
"By making this a reality by 2013, we are no longer talking, we are getting this done," said Feike Sijbesma, Royal DSM's chief executive and chairman.
Ethanol producers have been looking for new revenue sources as growth in conventional corn ethanol slows. Many ethanol plants have also started extracting corn oil from their production process as a way of adding revenue.
POET has since 2008 been developing the project in Emmetsburg using the discarded corn cobs and other residue, or "stover", left over in fields after the crop is harvested. The company has said it has addressed concerns about how taking the post-harvest remnants from the field could impact soils.
DuPont Co. (DD) has a similar project, and is planning to start construction of a biorefinery in Nevada, Iowa this year that will also use corn residues left over from the harvest. The chemical company, whose businesses also include seed company Pioneer Hi-Bred, is working with Iowa State University to fine-tune the process. The plant's capacity will be 27.5-million gallons, the company said.
POET and Royal DSM will each hold a 50% share in the joint venture. The $250 million investment, subject to regulatory approvals, does not include expansion beyond the initial plant.
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