Ethanol Co. POET to Cut Costs and Compete with Gasoline in Two Years
An ethanol pump. (image: 3dphoto.net via flickr.com)
Last week POET, the nation’s largest producer of corn-based ethanol, announced that it has substantially reduced the cost of producing cellulosic ethanol from corn cobs and that it will be able to compete with gasoline within two years, according to an article published by the Washington Post on Wednesday. This comes as exciting news not only for the cellulosic ethanol industry, but also for the renewable fuels and biofuel industry in general, as POET’s technical advancements might be successfully applied to the production of a wide range of biofuels. Of course, the new production method will have an effect on traditional heating oil and gasoline production (and prices) as well.
Today POET generates 1.5 billion gallons of corn-based ethanol a year—more than one quarter of the 5 billion gallons produced annually in the United States. The company’s new pilot plant, which has been operating for a year in Scotland, South Dakota, has cut the cost of making corn ethanol from $4.13 a gallon to $2.35 a gallon, mainly by reducing capital costs and using an improved “cocktail” of low-cost enzymes. In addition, POET claims that the company can use a byproduct called lignin fuel to power the cellulosic plant and provide 80 percent of the energy needed by a conventional corn-based distillery making twice the traditional amount of ethanol.
According to POET Chief Executive Jeff Broin, the new advancement means that cellulosic ethanol has become a real contender in the energy market. “Two years ago I would have told you this was a long shot,” Broin said. “Now I’ll tell you that we will produce cellulosic ethanol commercially in two years.” The more efficient production model means that one acre of land can yield 480 gallons of corn-based ethanol a year and 55 gallons more from processing cobs, leaves, and husks.
POET’s plan to produce cellulosic fuel commercially follows a similar announcement made by BP earlier this month. According to the fuel giant, BP will work with Verenium, a cellulosic ethanol developer, to produce grass-based ethanol in the United States. Cellulosic ethanol is usually made from natural, non-food feedstocks, such as sugarcane bagasse and wood products. The fact the cellulosic ethanol does not cut into food supplies (as corn-based ethanol often does, leading to the need for more farming—and deforestation—in other countries) may help to ease tensions between fuel producers and environmentalists. Plus, the relatively high oxygen content of cellulosic fuel makes it an attractively clean alternative to fossil fuels; cellulosic biofuels may reduce greenhouse gas emissions by as much as 86 percent over fossil fuels (while, at the moment, corn-based fuels reduce greenhouse gases only by 19 percent).
No doubt a great step forward for the ethanol and biofuel industries, the technological advancements introduced by POET still do not ensure that the United States will meet the congressional mandate that refiners use 16 billion gallons of cellulosic ethanol a year by 2025. According to Broin’s most recent estimate—which takes into account POET’s new technology—the United States will be capable of producing roughly 10 billion gallons of cellulosic ethanol a year in the foreseeable future.
How will advancements in cellulosic fuel affect the oil industry? At the moment, Broin has been pressing the Environmental Protection Agency to relax rules limiting the amount of ethanol that can be mixed with regular gasoline, hoping to increase the limit from 10 percent to 15 percent. Today oil companies can sell a product known as E85, a mixture that contains 85 percent ethanol. While E85 service pumps are still rare, most standard vehicles can run off of an ethanol-gasoline mix without any problems (whereas most vehicles aren’t designed to run off of ethanol alone).
To compete with fossil fuels, biofuels like ethanol must be produced relatively cheaply, with costs not exceeding $1 per gallon on a volume basis. “If you can’t chin that bar, you’re not going to be able to compete in the long run,” says Philip New, chief executive of biofuels at BP. As HeatingOil.com reported in September, ExxonMobil has stated its plans to grow green algae to fuel commercial vehicles; Chevron has unveiled the world’s largest carbon-sequestration project in Australia; and, in recent months, Valero, Marathon, and Sunoco have all made purchases that put about 7 percent of the U.S. ethanol business in the hands of the oil industry.
Video: Dr. Mark Stowers, VP of Science & Technology at ethanol-producer POET, discusses the advances behind the company’s dramatic recent cost breakthroughs.
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bio fuel generation takes more energy to make than what you get out in the end product and it takes up too much farmland out of food production. Currently over Eighteen percent of all corn production is going into ethanol production. We’re getting 4.5 million gallons of ethanol a year now. That’s 1 percent of U.S. petroleum use per year, simple math
Thanks for the comment, Jake. However, there are a number of points I think you need to research more deeply and clarify. First, ethanol and biofuel are not the same thing. Ethanol is an alcohol-based biofuel usually made from corn. Although reliance on corn for ethanol has had a negative effect on some food supplies in the past, the future of biofuel is in literally dozens of other source crops: algae, which can be grown in tanks that require no land or fresh water is most promising. Biofuel has successfully been made from wood chips and other lumber waste, and of course, can be made from used cooking oil. None of those sources cut into any food supplies. As for your “simple math,” please show your work. I advise that you do some research on biofuels (our Biofuels category is a good place to start) before you universally condemn them.
[...] The Biomass Crop Assistance Program, a relatively small provision that was a part of Congress’s 2008 farm bill, has grown into a half-a-billion dollar subsidy that provides an incentive for sawmills and lumber mills to sell their leftovers wood byproducts to be converted into biofuel. So-called second-generation biofuels, like biofuel made from wood scraps or cellulosic ethanol made from the husks and leaves of corn, are extremely promising because they does not compete with any food source, unlike corn ethanol or soy-based biofuel. [...]
[...] Ethanol groups may be right to worry. While corn ethanol and soy biodiesel will be included in the administration’s push to boost biofuel production, the agenda laid out by the Biofuels Working Group shows a clear preference for advanced biofuels, saying that “Advanced next generation biofuels will be one of the nation’s most important industries in the 21st century.” Previous legislation has defined advanced biofuels as biofuels not derived from corn or biofuels that have 50 percent less lifecycle emissions than gasoline or diesel; examples include algal biofuels and cellulosic ethanol. [...]