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Poet's Jeff Broin made news today with a press release. Poet currently produces 20,000 gallons cellulosic ethanol under pilot plant operations. They plan to start commercial plant construction by end of of this year and produce cellulosic ethanol commercially in this one plant by early 2012.  He referred to cellulosic ethanol production in general as disappointing and delayed.  Paraphrased:  to much hype not enough "put up".

 

Following some interesting points of Press Release:

 

Poet = 26 plants and 1.6 billion gallons of ethanol capacity (this is grain ethanol)

 

(corn cobs)

 

As we said six months ago, we’ve been able to cut costs from over $4 per gallon to $2.35 per gallon. Our goal will be to have the cost at $2 per gallon when we start up, which will make us competitive with gasoline but more expensive than grain‐based ethanol.

 

That first commercial production facility, which we call Project LIBERTY, will be co‐located with our grain‐based ethanol plant in Emmetsburg, Iowa.

 

Within 4‐6 years, our goal is to make this process competitive with grain‐based ethanol.

 

By 2022, POET plans to be responsible for 3.5 billion gallons of cellulosic ethanol production by adding the technology to our existing facilities, licensing our technology to other producers and finally, transferring our technology to other forms of biomass such as wheat straw, switchgrass and municipal waste. To put this in perspective, 3.5 billion gallons is over 20% of the cellulosic ethanol mandated in the Renewable Fuel Standard. Our model that co‐locates grain and cellulose plants takes biomass from the same acres and gets us to the commercialization of cellulosic ethanol faster. It also makes both ethanol processes more efficient, significantly reducing Green House Gas emissions for corn ethanol, and maximizing the use of the corn plant.

 

But that number may expand as we build additional grain‐based ethanol plants. With dramatically expanding corn yields predicted by the USDA and seed biotech companies, in the near future this country will be awash in corn just as it has been for most of my lifetime. Those rising yields will lead to additional surplus corn that will enable expansion of corn‐based ethanol production and more cellulose as well.

 

By adding this technology to our plants, it will give POET the ability to produce one billion gallons of cellulosic ethanol per year by 2022

 

POET will also take this technology and make it available to other existing corn ethanol producers. Because of the advantages provided to the corn‐ethanol production process, this technology will be necessary for those plants that desire to be among the industry’s most efficient and environmentally friendly. Many of the corn ethanol producers we talk to are watching and waiting for the commercialization of cellulosic technology and are interested in installing it. We project that these opportunities represent another 1.4 billion gallons of production capacity.

 

Finally, we see another 1.1 billion gallons coming by transferring our technology to other forms of biomass, much of this outside the Corn Belt. This will be accomplished through a variety increase our country’s energy independence, while cleaning our air and creating jobs.

 

So that is POET’s vision. We plan to take a direct or supporting role in the production of 3.5 billion gallons of cellulosic ethanol by 2022 – over 20% of what has been required by Congress:

 

1.0 billion gallons from our existing network of plants

1.4 billion from other corn‐based biorefineries in the Corn Belt

1.1 billion from other waste products and dedicated energy crops

 

The DOE estimates that 10‐20,000 jobs are created for every one billion gallons of ethanol production capacity.

 

Research has shown that there is 1.3 billion tons of available biomass in the United States – and it is available in each and every state in the Union. So through cellulosic ethanol, every state can participate and be part of the solution.

 

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Comments on Poet's plan:

 

They're increasing ethanol production within the same corn acres. This should be more efficient and cost effective. The cooperating farmers and supporting machinery builders already busy with production ready acres, equipment, process, etc. so it appears the process will hit the ground running. Also, the dual process within existing ethanol plants should be effective as additional production piggy backed upon existing infrastructure. The 26 plants cooperate and share process improvements/problems.

 

As I understand corn cobs not particularly important bio mass for corn field regeneration as compared to other green parts of corn plant.

 

Poet, roughly has 1/8 of current grain ethanol capacity and plan to produce 1 billion gallons cellulosic ethanol by  2022 within their current facilities. So, if all grain plants followed suit....8 billion gallons with the lowly corn cob. But, USDA is projecting dramatic corn yield increases to come. So, why wouldn't the corn cob have potential of 10 billion gallons ethanol?

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I've read about this plant in Iowa... very cool. 

 

As a "farm boy", the one thing I was impressed with is that they've worked with machinery manufactures and created a "one pass harvesting machine"... so that one combine can make one pass through the field, harvest the grain, and bail the cobs/shucks all at the same time...

 

GetStoredBlogImage?symbolicName=originalX1656YsiteXDTNYcatalogXcatalog&category=CMS&width=235

 

http://www.dtnprogressivefarmer.com/dtnag/common/link.do?symbolicName=/ag/blogs/template1&blogHandle=production&blogEntryId=8a82c0bc23f3b11601245f1b2527055d

 

this greatly reduces the cost for the farmer.  Efficiency in farming is all about reducing the number of "passes over the field" (aka "use less diesel")...

 

Apparently cobs have a higher concentration of cellulose as opposed to corn stover.  As you mentioned, harvesting the cobs will NOT be depriving the soil of the needed nutrients that the stover provides to continue to build up top soil.  I remember working in fields that had been alfalfa for 4 years, and plowing it under to return to corn... and finding old mostly degraded corn cobs still there...  I don't think the farmers will miss them.

 

I think that their idea is brilliant.  When they "co-locate" these cellulostic plants, they are able to use much of the same infrastructure, making their final production cost much less then a stand alone facility.

 

Much of what they are doing to bring down the cost is to streamline the front end collection, storage and handling of feedstock process.  With time, innovation and leadership, this will come.  They have been very quick to ask for and follow the suggestions of the farmers.

 

IMHO, the few farmers that are still in the business these days, are there for a reason (this is my "agra-darwinist theory" ;)), simply their ancestors were stronger, smarter and able to best keep up with the times and changes in technology.  They learned from the previous generations, and rather then resting on these previous accomplishments, they were driven to drive the advances further, and to keep innovating and pushing for more efficiencies and higher production.  Those that didn't, well, they "lost the farm", couldn't keep up, and threw in the towel.  These folks are born innovators, and have many good ideas.  A successful agribusiness will notice this, and harness their ideas.

 

Poet seems to have taken this to heart.

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Qoute from Poet;

"As we said six months ago, we’ve been able to cut costs from over $4 per gallon to $2.35 per gallon. Our goal will be to have the cost at $2 per gallon when we start up, which will make us competitive with gasoline but more expensive than grain‐based ethanol"

 

They are going to have to cut costs more or ethanol is going to have to have more room in the market for it's price to come up. With grain based ethanol running $1.45 FOB rail western Midwest and corn at it's current value this leaves ethanol from corn at breakeven to red and cellulose far worse with higher costs and not near enough value in the cellulosic RIN to offset $0.90 cost differences.

 

Note that at $1.45 this means oil companies are getting ethanol at $1.00  (1.45-.45 blender credit) vs rack E0 87 at $2.30. The blend wall is here my friends and more production will just make it unprofitable for all but the oil patch. More E85 stations with blenders are needed but cannot be built fast enough with no working capital, time, or permits to build. The longer this drags out the less money is there to "git 'er done".

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Isn't it cool, that national policy put in place incentives for business and investors to rush to production of ethanol to compete with oil. National objectives and goals set in place for a mission to wean ourselves somewhat from oil. To produce alternative fuel that would work to deter our exposed to oil shortages and price manipulations.  Investors were confident that the federal government had their back. Funny, doesn't seem to as critical a mission as before. These government agencies not so motivated to facilitate needs of ethanol producers. What's the hurry with confirming E15.....it takes time to test and test and test and test. Hold on not so fast as the Global Warming king makers need to qualify this fuel. They need to invent new formulas to uncover potential future hazards to planet earth. Only they possess this crystal ball power to understand international market forces and resulting harmful farming practices.

 

No good deed goes unpunished. Oil can push the concern button with pay for influence and slow up the market acceptance of ethanol. A good thing for them. They are not in a hurry, besides maybe some good ethanol plant deals coming their way.  They obtain majority production capacity on the cheap and easily control or discipline the market to proper price and productions. Ya, having cheap ethanol not good long run for this industry. This fuel should be shadowing price of unleaded. Demand should quickly adjust the supply of ethanol. That EPA decision would provide immediate relief. Would that be the best short term, with least cost?   

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Isn't it cool, that national policy put in place incentives for business and investors to rush to production of ethanol to compete with oil. National objectives and goals set in place for a mission to wean ourselves somewhat from oil. To produce alternative fuel that would work to deter our exposed to oil shortages and price manipulations.  Investors were confident that the federal government had their back. Funny, doesn't seem to as critical a mission as before. These government agencies not so motivated to facilitate needs of ethanol producers. What's the hurry with confirming E15.....it takes time to test and test and test and test. Hold on not so fast as the Global Warming king makers need to qualify this fuel. They need to invent new formulas to uncover potential future hazards to planet earth. Only they possess this crystal ball power to understand international market forces and resulting harmful farming practices.

 

No good deed goes unpunished. Oil can push the concern button with pay for influence and slow up the market acceptance of ethanol. A good thing for them. They are not in a hurry, besides maybe some good ethanol plant deals coming their way.  They obtain majority production capacity on the cheap and easily control or discipline the market to proper price and productions. Ya, having cheap ethanol not good long run for this industry. This fuel should be shadowing price of unleaded. Demand should quickly adjust the supply of ethanol. That EPA decision would provide immediate relief. Would that be the best short term, with least cost? 

Government..Come on fleebut..Government has been above and beyond in it's support of ethanol.. Where the H are the Free Marketers settin mg up Blender Pumps ? Where has the ethanol Industry been the Past 6 years setting up blender pumps..

 

Oh that's right they were too busy selling gravy to the Oil Companies..

 

I have absolutely no pity for an Industry that has gotten Government support from day one and still manages to shoot itself in the foot at every opportunity...

 

 

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The gravy being unleaded blend agent, right? Open honest market not the problem. It's a little slow to react, specially with marginal cost differential. This ethanol thing is an attempt to establishing such a fair market. Meaning to bring more competition and stability to the fuel market. Competition a good thing.  This is the perfect spot for regulators. To adjust the market to increased competition and allow advantage to small business. The place of maximum advantage, maximum fairness, and least risk.

 

The financial community a good analogy. Big Wall Street firms try to monopolize investment opportunities. These firms attract much international capital as they have maximum influence, trader information, government influence, and the brightest accountants to cleverly manipulate investments to compound roi. Problem is these firms exploit all resources in such attempts. They have no moral code, why should they? So, if they see long term weakness within oil futures or ethanol, maybe mortgages....they have investments to hedge or inflate.  As result large investment firms have maximum power to inflict financial risk with the potential to cause citizen suffering and economic jeopardy. These the titians of finance.  Compare the cost and testing required by UL to allow and regulate blender pumps. The cost of such equipment a magnitude more expensive as result. Pump manufactures are well versed in producing safe pumps. They have been doing so for a long time, yet at some period the regulators got traction to make us safe. Just like our horrendous auto regs all making us safer. We are presently a nation operating from permits and allowed to trade by permission from the regulation industry all justified to make us safe at a BIG expense. The unintended results? Eliminating small business competition, slow change, less innovation, and Trial Lawyer corrosion.  Upon reality, if regulation excessive and too expensive, it make consuming public less safe. Meaning no one dare change and inflict themselves with Trial Lawyer liability and paying off the testing agencies. Innovation improves safety as well. So, IMHO we should reel in by 3/4 the day to day regulation industry and be less safe. We should review, permit, and approve of financial devices. It should be common and safe for citizens to investments. No need to go to sleazy Wall Street. Mom and Pop should be able to finance their retirement with financing home purchases or credit cards.  They should easily and with little risk be able to rent out housing. You see, I think the regulators are political. They do a disservice to open markets. They empower big government and big business. Does it make sense to you that we can't stop internet fraud, crime, identity theft and yet the federal regulators just yesterday passed fines for violation of old housing rentals. $30,000 per violation. Regulations that pretty much give the regulators power to destroy if so motivated.  Why do the courts afford so much protection for deadbeats stealing money? Wouldn't you think the power of government facilitate fairness? Shouldn't the government decrease risk upon internet and financial community as much as regulating  lawn mowers?

 

What missteps did ethanol industry preform. Not enough pumps or flex autos. It appears to me (from sidelines) the regulators the biggest stumbling block?

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Where has the ethanol Industry been the Past 6 years setting up blender pumps..

That should be 7 years. I was calling NEVC and Clean Fuels, e-mailing Scott Negley at Dresser Wayne and trying to get my ethanol plant board of directors motivated in early 2003. I can still hear my one board member friend telling me that "all we need is 10% everywhere, not blender pumps". So much for the vision most people have.

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