Poet becomes first cellulosic project to get DOE loan guarantee
The U.S. DOE has finally made its first conditional commitment for a loan guarantee for cellulosic ethanol. On July 7, the agency announced it is offering a conditional commitment for a $105 million loan guarantee to Poet LLC for the development of its 25 MMgy corn cob-to-ethanol facility, dubbed Project Liberty, at Emmetsberg, Iowa. Construction of the facility, which will be co-located with Poet’s 57 MMgy corn-based facility in Emmetsberg, is expected to begin in August, according to the DOE. Production is slated to begin in May 2013.
The DOE has been heavily criticized for its lack of loan guarantee offerings to cellulosic biofuels projects. Since the program’s inception in 2005, multiple applications have been filed by would-be cellulosic ethanol producers, but until now none have made it through the arduous application process successfully. Several project developers, including Poet, have stated that federal loan guarantees are vital to the commercialization of cellulosic ethanol due to the risk associated with constructing their first-of-a-kind facilities. Earlier this year, the USDA stepped in to provide loan guarantee commitments for several cellulosic ethanol projects. During a joint USDA/DOE conference call to discuss the DOE’s award to Poet, Agriculture Secretary Tom Vilsack said his agency plans to make additional announcements within the next six months. It was unclear whether the DOE, which placed dozens of loan guarantee applications on hold in May due to the program’s looming Sept. 30 expiration date, is also planning additional biofuels loan guarantee approvals.
Both Vilsack and Chu stated that the Obama administration is firmly committed to developing new sources of ethanol and other biofuels as part of a diverse strategy to reduce the nation’s dependence on foreign oil. The DOE loan guarantee for Poet is the latest example of this move to out innovate and out build the rest of the world, they said. “This project will help decrease our dependence on oil, create jobs and aid our transition to clean, renewable energy that is produced here at home,” Chu stated. “The innovations used in this project are another example of how we are seizing the opportunity to create new economic opportunities to win the clean energy future.”
The total project cost for Project Liberty is $261.2 million, according to the DOE. Initially, ethanol produced at the facility is expected to cost approximately 50 cents more per gallon than gasoline, but those costs are expected to be reduced over time. Chu said one of the most exciting aspects of Poet’s project is its plan to locate cellulosic plants near traditional starch-based plants. Given that Poet operates a total of 27 corn-based ethanol plants throughout the U.S., the potential for widespread commercialization of cellulosic ethanol using Poet’s technology is substantial. Poet has said it plans to produce 3.5 billion gallons of cellulosic ethanol by 2022.
Poet plans to utilize corn cobs collected from farmers located near the Project Liberty. Last fall, the company conducted its first commercial harvest of the material and collected 50,000 bone dry tons of cobs from 85 farmers. Vilsack said the collection and storage activities indicate Poet’s confidence in its enzymatic hydrolysis conversion technology. “Obviously they wouldn’t be doing that if they didn’t think they had something that could be operational by 2013,” he said.
Once Project Liberty is complete, it is expected to generate approximately $14 million in additional revenue for area farmers, provide 40 permanent jobs at the facility, and produce enough ethanol to displace more than 13.5 million gallons of gasoline annually. Approximately 200 jobs will be created during construction of the plant.