EMMETSBURG, Iowa—Despite its grand scale, the event that marked the opening of the Project Liberty ethanol plant in northern Iowa last week at times felt a bit like a homey church function.
At a cavernous warehouse in this small Iowa town, nearly 3,000 people gathered at long tables swathed in red, white, and blue cloth to watch the ceremony. Speakers onstage talked about a vision—a "fantasy," as the event materials put it—finally made real. Then a minister blessed the plant before attendees, many of them farmers, lined up for a lunch of burgers and coleslaw. A country singer took the stage, which was bookended by stacked bales of the plant's straw-like fuel.
The so-called fantasy that the Liberty plant—a $275 million co-venture between Sioux Falls, S.D.-based ethanol producer POET and DSM, a Dutch chemical conglomerate—aims to realize is the first commercial-scale production of cellulosic ethanol. Unlike corn ethanol, a fuel long criticized for straining the land and water resources needed to grow corn for food, cellulosic fuels are made from biomass such as corn stalks, leaves, and other organic waste material.
Project Liberty's endeavor requires no small amount of faith. Though cellulosic ethanol has the potential to reduce emissions by up to 86 percent compared with gasoline, it has faced numerous challenges. Aside from the costs associated with developing a new technology to break down biomass and turn it into fuel, the industry has grappled with uncertainty surrounding the ethanol mandates from the Environmental Protection Agency (EPA).
The agency sets annual targets for biofuel production via its Renewable Fuel Standard, but is considering lowering those targets for the first time since the standard was introduced in 2007. Regardless of the targets, there's also a practical limit on how much ethanol the U.S. market can absorb. Most gasoline sold at the pump is a blend of no more than 10 percent ethanol, the maximum amount the EPA has deemed appropriate for all U.S. cars.
Despite the hurdles, three major cellulosic ethanol projects are moving ahead this year in the United States. Aside from Project Liberty, which received both federal and state funding and is set to produce 25 million gallons a year at full capacity, the Spanish renewable energy company Abengoa plans to produce the same volume from its facility in southwestern Kansas, opening in October. And the chemical giant Dupont is opening a plant this year in Nevada, Iowa, with a target of 30 million gallons per year. (To put those amounts in perspective, the U.S. consumed nearly 135 billion gallons of gasoline in 2013.)
The new projects will strive to avoid the trajectories of Mississippi-based KiOR and Florida-based INEOS Bio, companies that also touted cellulosic ethanol firsts when they debuted last year but have since failed to achieve any significant production because of financial and technical setbacks. (See related blog post: "Five Things I Learned in Iowa About Biofuels")
Bringing Farmers Under the Tent
One of the key tasks for POET in ramping up Project Liberty was to sign contracts with farmers for the biomass it would need to stoke the plant, which is attached to a corn ethanol facility. The notion seems simple: corn is harvested, and what's left on the ground is a mix of leaves, stalks and husks called corn stover. Why not make money from it?
But corn stover does have agricultural value, because it protects soil from erosion, so removing all of it is a bad idea. Working with scientists at Iowa State, POET determined that up to 25 percent of a field's stover could be removed without adversely affecting the soil. To harvest, store, and deliver that stover requires special baling equipment and other changes to farming operations, which means it's not a slam-dunk proposition for a lot of farmers.
Bruce Nelson, a corn and soybean farmer with land three miles north of Emmetsburg, said he began harvesting corn stover seven years ago in anticipation of the cellulosic ethanol market, eventually partnering with a friend to do it for his own family farm and for neighbors. "We made mistakes, and we've corrected them as time goes on," he said, mentioning a variety of complications with harvesting, storage, and hauling that he has learned to address.
"The hardest thing about this whole biomass harvesting is that you have a very small window to harvest it. Everybody wants to get their corn out of the field really fast so that they can come in and spread fertilizer and do tillage," Nelson said. "Now we're trying to do another harvest in between that process."
Nelson said that getting all the equipment for that separate harvest is "an investment, to say the least," but that it's possible to make the money back within four or five years. Why did he decide to try it? "I don't know. My friend and I always laugh about this, like, why did we ever do this?" Nelson said. "We just thought that it was possible."
Finding that not all farmers wanted to make the investment that Nelson did, POET offered an alternative: It would take on the baling and delivery but offer a lower payment. Rod Pierson, vice president of operations at POET, said that the company has closed supply deals with between 200 and 300 farmers. The farmers store their stover and are given delivery dates so that the plant has biomass coming in year round, Pierson said. (Vote and comment: "Are Biofuels Worth the Investment?")
Still, some have worries about the impact that a growing cellulosic ethanol industry could have on agricultural land. Craig Cox, senior vice president for agricultural and natural resources for the Environmental Working Group in Ames, Iowa, expressed concern that if cellulosic ethanol takes off, corn stover might be harvested in a way that's unsustainable.
Cox said that the same claims now being made about cellulosic ethanol—good for the environment, good for farmers, good for American energy security—were also made about corn-kernel ethanol, and he said they were wrong. "I don't see how we've really changed the policy landscape. And it looks like we're not going to change the physical landscape in ways that would make a huge contribution to larger environmental issues surrounding agriculture," he said.
Cox said he would rather see more focus on the use of perennial grasses to make "drop-in" biofuel, a fuel that can be substituted directly for gasoline. Drop-in biofuel can be delivered from the same pumps as gasoline at fueling stations and its use would not depend on gasoline-blending mandates the way ethanol does. "If there is a future for biofuels and for cellulosic biofuels, I think that's where it is," he said.
A Turning Point for Cellulosic Fuel?
The American Petroleum Institute, the oil industry trade group, has lobbied against the Renewable Fuel Standard, calling it "irretrievably broken." Though major oil companies including Chevron, Shell,* and BP have invested in advanced biofuel projects, their production is nowhere near that projected for the new plants coming online this year. It's tough to imagine that cellulosic ethanol could ever prove as economically compelling as oil for these companies, a fact that Chevron's chief of emerging technologies acknowledged last year as the company scaled back its plans to make fuel from forest biomass.
Many ethanol proponents, including Iowa Governor Terry Branstad, blame the oil industry lobby for the EPA proposal to reduce the 2014 targets for the Renewable Fuel Standard. "The misinformation on the coasts is phenomenal," Branstad said during a news conference at the Project Liberty opening. (Take the related quiz: "What You Don't Know About Biofuel")
In 2013, the EPA drastically lowered the targets for cellulosic ethanol in response to petitions from the oil industry. But realistically, the United States wasn't producing anywhere near enough cellulosic ethanol to meet those targets anyway; after assessing the actual production levels, the EPA retroactively revised its target from 1 billion gallons to less than 1 million. The number on the table for 2014 is 17 million gallons.
POET's Pierson said his year-end production goal for the Liberty plant was 14 million gallons. If that happens, Pierson said, "We're on a path to success at that point."
Jeremy Martin, senior scientist with the Union of Concerned Scientists, called the EPA's proposal to reset the ethanol target a "painful hiccup" for the industry, but a necessary one. "Getting the policy on a realistic track, which really meant accepting that the schedule has to be slowed down—we've been arguing for a while that is the right thing to do," he said.
That's why the prospects for the cellulosic ethanol industry as a whole may well rest on the three plants opening this year. "What's going to matter a lot more than press statements is how these facilities work over the next year or so. I think these three companies all have enough skin in the game and enough resources under their control to show what that looks like," Martin said. "That will be the basis for decisions for future investments."
Different Pathways to Biofuel
One of the open questions in the development of cellulosic ethanol is how exactly to make it. The three new plants use a biochemical method, breaking down the biomass with enzymes and then fermenting it. Other efforts like KiOR's are centered on a thermochemical approach, heating the biomass with little or no oxygen to make a product that can be processed into fuel. A key advantage of the latter approach is that it can accommodate diverse materials, whereas a biochemical approach must be optimized for a particular feedstock, according to Martin. (Vote and comment: "What Breakthroughs Do Biofuels Need?")
The POET-DSM plant received $100 million from the Department of Energy (DOE), which is funding a variety of biofuel efforts. Jonathan Male, director of the DOE's Bioenergy Technologies Office, said that while the department still supports the commercial-scale production of ethanol, it has in the past couple of years "de-emphasized R&D into cellulosic, and transitioned and emphasized more into biomass to make fuels that are drop-in."
Male said that drop-in biofuel technologies represent "the next wave of ideas in our pipeline," but that today's cellulosic ethanol plants are pioneering ways of harvesting and transporting biomass that will be valuable regardless of what biofuels are ultimately produced.
"Everything we do is driving down risks, whether it's risks in volume, risks in quality, or technical risks, logistics risks," Male said. "If you are able to address those risks, then that's how one is then able to stimulate investment in a tough environment like we have right now." (See more stories: "Biofuels at a Crossroads")
Project Liberty and the other two cellulosic ethanol plants set to open are the products of years of research. POET CEO Jeff Broin said, "We worked hard to get into the technology, and the timing really was a matter of how long it took to be ready. It wasn't a race." Added Broin's partner at DSM, CEO Feike Sijbesma, "The market is big enough in the United States and abroad for several players."
Indeed, POET-DSM is counting on other players to enter the market so that it can license its technology to them. In that sense, the venture's success will not depend on the profitability of Project Liberty alone. When asked at the opening event whether there was one milestone that would be a critical proving point for Project Liberty, Broin and Sijbesma answered nearly in unison: "Today."
*Shell is the sponsor of the Great Energy Challenge initiative. National Geographic maintains autonomy over content.