from Brownfield Network

Cellulosic ethanol faces serious challenges
Wednesday, April 4, 2007, 2:26 PM

by Peter Shinn

Cellulosic ethanol may be the future, but it’s got to overcome some serious hurdles. That appeared to be the consensus view of the panelists who testified Wednesday at Senate Agriculture field hearing on the campus of South Dakota State University (SDSU) in Brookings.

South Dakota Senator John Thune (R) chaired the hearing and was the only Committee member in attendance. He told the crowd of over 150 that the mark-up on prices U.S. consumers pay for foreign oil amount to little more than a tax to fund terrorists.

“When you pay $60 or $70 a barrel for oil to a country like Iran or Saudi Arabia or Venezuela,” Thune opined, “you’re essentially paying a terrorism tax.”

But can ethanol substantially reduce U.S. dependence on foreign oil? Most panelists agreed that corn-based ethanol has upward limits of around 15-billion gallons of production per year. President Bush wants to mandate use of 35-billion gallons of renewable fuels by 2017. That, panelists said, means cellulosic ethanol must become commercially viable to make up the difference.

Thune asked Dr. Kevin Kephart, Vice President of Research and Dean of the SDSU Graduate School, what he believed were the upward limits of U.S. ethanol production. Kephart replied that he didn’t really know, but suggested that an analysis conducted by the National Corn Growers Association could prove accurate.

“They feel that from a combination of starch, oilseed and cellulosic feedstocks,” Kephart testified, “that in the North Central Region alone, we have the capability in a few years to produce 65 billion gallons of renewable fuel.”

But making cellulosic ethanol economically viable isn’t going to be easy. Jeff Fox is Vice President of Legal and Governmental Affairs for Sioux-Falls-based Poet Companies, a major ethanol producer which last week changed its name from Broin Companies. Fox testified that among the numerous challenges confronting cellulosic ethanol is simply collecting enough biomass to supply even a small biorefinery.

“Collection, storage and delivery - be it corn stover or be it switchgrass - it’s a huge amount of material to get even 25 million gallons produced,” Fox explained.

South Dakota Corn Growers Association President Reid Jensen agreed. He testified that leaving corn stover in the field has a fertilizer value of around $16 per ton. And he said for many corn farmers, harvesting corn stover would probably never make financial sense, even if there were a market for it as an ethanol feedstock.

“I think it’s going to depend on the rotation the farmer’s in,” Jensen said. “If he’s in a corn-soybean rotation, I don’t know if he’ll take any stover off. If he’s in a corn-corn rotation, where he’s continuous corn, you probably could see up to maybe 40%” stover removal.

So what should government do to encourage continued development of the domestic ethanol industry? Unanimous recommendations of panelists included extending the volumetric excise tax credit for ethanol production, keeping the tariff on imported ethanol in place, and encouraging production and distribution of higher-percentage ethanol blends like E-20, E-30 and E-85.

And for the next farm bill, Fox recommended having a government payment for biofuel crops delivered to biorefineries that would be matched by the energy company running the biorefinery. And according to Fox, whatever policies Congress adopts, there’s no question it’s going to take a team effort to make cellulosic ethanol a reality.

“It takes a combination of assistance from the government, from the universities and then the people in industry,” Fox said. “And obviously… corn farmers.”