Cellulosic ethanol, once the way of the future, is off to a delayed, boisterous start

The “now hiring” sign is up online for Emmetsburg, Iowa, where the nation’s largest maker of ethanol used for motor fuel is putting the final touches on a manufacturing plant that will rely not on corn, but on the stalks and cobs left behind.

The company, Poet, is looking for an accountant, electricians, lab technicians, a supervisor for starch and cellulose operations, and more. Large flatbed trucks have already dropped off 2,600 tons of big bales at the distillery’s 22-acre stack yard. Equipment is visible from miles away across the flat, open prairie. The process is a bit like making moonshine on an industrial scale, helped along by some high-tech, bioengineered enzymes.

“My gosh, it’s been a boon for everybody,” said Myrna Heddinger, a retired nurse serving her third term as the mayor of Emmetsburg, a town of 3,500 people that has squeezed in 500 temporary construction workers. “We just don’t have that many places for people to rent to stay,” she added.

Poet and its joint venture partner, the Dutch industrial giant and enzyme maker DSM, have received $100 million in Energy Department grants and $20 million in financial incentives from the state of Iowa. They say they expect to begin production of ethanol at the Emmetsburg plant in early 2014, at a rate of about 20 million gallons a year.

Not a moment too soon. For months, a brawl has been brewing in Washington over the future of ethanol plants like this one, pitting well-financed oil giants against trade groups and companies representing the politically well-connected biofuel industry.

The heart of the dispute is the Energy Independence and Security Act passed by Congress in 2007 with rare bipartisan support. The law provided a road map for increasing the use of renewable agricultural byproducts in the U.S. motor fuel supply. The Poet plant is just what Congress envisioned, a Middle America biofuel displacing Middle East crude — with some possible climate benefits to boot.

Corn-based ethanol, which makes up nearly 10 percent of U.S. motor fuel, has been in large-scale production for years. But Congress was worried about driving up the price of corn used as feed for livestock and poultry. So lawmakers capped the total production of corn-based ethanol and set a schedule for ramping up the use of “advanced” biofuels made from corn husks, switch grass, wood chips and other stuff known as “cellulosic” material to 16 billion gallons by 2022.

There’s one problem, though: So far, no company has produced cellulosic ethanol at commercial volumes.

A slower-than-expected start

Congress assumed that it could be phased in gradually, but not this gradually. This year refiners were supposed to mix about one billion gallons of it into motor fuel. So far, there has been hardly a drop. More than a dozen companies have tried and failed to find a profitable formula combining sophisticated enzymes and the mundane but costly and labor-intensive job of collecting biomass.

Congress had the foresight to provide a safety valve. The Environmental Protection Agency, using its authority under the 2007 law, slashed the cellulosic ethanol quota this year, first to a paltry 14 million gallons and then again to 6 million, equal to about 0.004 percent of the fuel consumed by U.S. automobiles. It also extended the deadline for compliance. The EPA is widely expected to announce minimal quotas for next year soon, too. Oil industry lobbyists believe the EPA will also, for the first time, trim the minimum quotas for corn-based ethanol, angering farm interests and big corn-ethanol producers.