The ethanol business is booming, said Bill Day, vice president of communications for Valero Renewable Fuels, during a tour of the company's ethanol plant near Jefferson, Wis. "The profit margins are good, and with the economy recovering, we are seeing ethanol use recovering as well. Basically, it's all good news today," Day said. Valero may add cellulosic ethanol production technology at the Jefferson plant if the technology proves to be viable, he said.
The Environmental Protection Agency is proposing to require production of 14 million gallons of cellulosic biofuels this year, up from 8.7 million gallons in 2012. The proposed target is "a reasonable representation of expected production" this year, said EPA spokeswoman Julia Valentine. "Cellulosic ethanol is being produced today at commercial scale in Florida, and with construction nearing completion at several other commercial sites, we fully expect 2013 to be the breakthrough year for cellulosic ethanol," said Bob Dinneen, president and CEO of the Renewable Fuels Association.
Canada's Iogen will shift its attention to cellulosic ethanol production after agreeing to sell its industrial enzyme operations to Novozymes for about $80 million. "We're fully focused on making cellulosic ethanol a big success," said Iogen CEO Brian Foody. Proceeds from the sale of Iogen's Bio-Products unit will be used for debt repayment, Foody said.
The Renewable Fuels Association and other biofuel industry groups welcomed the Environmental Protection Agency's proposal to require 14 million gallons of cellulosic biofuels this year, but some are concerned that costly imported Brazilian ethanol would displace domestic fuels in meeting the standard. "EPA allows more expensive imported Brazilian ethanol to claim the advanced biofuel [renewable identification number] that is currently trading at 48 cents," despite recent studies suggesting that its lifecycle emissions are not as low as initially thought, said RFA President and CEO Bob Dinneen.
After years in the pre-commercial stage, cellulosic ethanol is expected to finally hit the market in 2013, executives said. "It's been an incredible journey and one that we knew would require thinking differently," said Jim Collins, president of DuPont Industrial BioSciences, which is developing a commercial cellulosic plant in Nevada, Iowa. The upcoming cellulosic ethanol plants will be good for rural communities, but their long-term prospects are still uncertain given the boom in domestic natural gas production, said Dave Swenson, an economist at Iowa State University.