Cellulosic ethanol project receives $14.75M

Sioux Falls, S.D.-based Poet said it has been awarded $14.75 million to build its first cellulosic ethanol commercial plant (see Poet to produce cellulosic ethanol this year).

Iowa Power Fund Board awarded a $14.75 million contract to Poet and, in return, received a seven-year royalty agreement with Poet. The Iowa Department of Economic Development said it has also granted a $5.25 million award to Poet for the biorefinery commercial project.

The company is building a pilot facility in Scotland, S.D., which is expected to be completed by early 2009. It is expected to produce 20,000 gallons per year from the cellulose in corn fiber and corn cobs.

Poet said the biorefinery technology developed and used in its Scotland plant will be put to use in its $200 million Emmetsburg, Iowa, plant planned to start operation in 2010.

The larger Project Liberty in Emmetsburg will convert a 50 million gallon-per-year grain-to-ethanol plant into an integrated corn-to-ethanol and cellulose-to-ethanol biorefinery. The company has also received an $80 million grant from the U.S. Department of Energy (DOE) for the Emmetsburg plant.

The company said it is targeting production of 125 million gallons per year at the commercial-scale plant, with 25 million gallons of that to be cellulosic ethanol.

Poet said it has ethanol plants in several locations throughout Iowa, including Ashton, Coon Rapids, Corning, Gowrie, Hanlontown and Jewell (see Poet opens Ohio's first ethanol plant).

The plant would make ethanol from corncobs instead of the grain, which is currently used to generate fuel at Poet's 32 Iowa plants.

Over the past year, corn prices have reached record levels, which has negatively impacted profit margins for ethanol plants and spurred interest in alternative feedstocks.

Today, corn cobs sell for roughly $30 to $60 per ton. Poet said it expects area farmers will be able to reap $5.4 million to $10.8 million annually by selling their cobs to the plant.

The U.S. government has set a goal for 36 billion gallons of biofuels by 2022 (see ADM, Deere, Monsanto in corn stover research). Fifteen billion gallons of that fuel can be traditional corn-based ethanol, according to the federal law.

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