Friday, August 6, 2010

Next Generation Ethanol is Years Behind Schedule Due to a Lack of Funding

By Nick Chambers

ZeaChem Harvest

Next generation cellulosic ethanol company, ZeaChem, shows off how it harvests hybrid poplars for making biofuel at a recent groundbreaking in Boardman, Ore. (Photo: Nick Chambers. All rights reserved.)

With the Environmental Protection Agency's approval of the new Renewable Fuels Standard (RFS) mandating a steady increase in the amount of next generation ethanol produced in the U.S. year over year, you might think that the burgeoning industry would have an easy time of finding the money to build their new facilities�bringing them from pilot scale experiments to full-on commercial production. By 2016, the RFS calls for the production of 16 billion gallons of this type of ethanol, up from almost nothing today.

This next generation of ethanol, known as cellulosic ethanol, is a far cry from the highly controversial (and environmentally questionable) corn ethanol that has become so pervasive. Cellulosic ethanol is made from non-food sources including waste agricultural products such as corn stover, wheat straw, and thinned forest residues, as well as purpose-planted non-food crops such as switchgrass and hybrid poplar. Given its much better environmental performance, lack of competition with food, and the new RFS mandates, cellulosic ethanol appeared to have an easy task ahead of it.

But recently the EPA has been reneging on its self-imposed RFS requirements. The mandate for cellulosic ethanol production in the U.S. was supposed to be at 100 million gallons this year, but the EPA reduced it to a mere 6.5 million. And last month the EPA said that its 2011 requirements for cellulosic ethanol would be reduced from 250 million gallons (as required in the RFS) to less than 17 million gallons. The EPA's reasoning is that there just aren't enough commercial facilities yet to support that level of production. But the industry is starting to cry foul.

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