The Energy Department on Wednesday said six companies could receive up to $385 million in government funding over four years to demonstrate the commercial viability of producing ethanol in untraditional ways.
Energy Secretary Samuel Bodman, who sought proposals a year ago for three "biorefineries" that would receive $160 million from the government, said he decided to more than double the grant program as a way to reach President Bush's goal of using 35 billion gallons a year of ethanol and other alternative fuels by 2017 — a fivefold increase over current requirements.
The U.S., which currently has 114 ethanol plans in operation, produced about 4.9 billion gallons of ethanol last year, according to the Renewable Fuels Association, an industry trade group. By comparison, the country consumes roughly 140 billion gallons of gasoline per year.
Production of ethanol from corn alone is expected to reach no more than 12-15 billion gallons a year, Bodman said, because of the need to use corn to feed cows, chicken and other livestock. High demand for traditional corn-based ethanol has already driven up the cost of corn and livestock.
As a result, the government wants to accelerate research into the production of "cellulosic" ethanol made from wood chips, switchgrass and other feedstocks. President Bush has toured research labs in Delaware and North Carolina to promote the use of these technologies as a way to reduce American dependence on foreign oil.
"While it requires a more complex refining process, cellulosic ethanol contains more net energy and results in lower greenhouse gas emissions than traditional corn-based ethanol," Bodman said. Since cellulosic ethanol can come from numerous feedstocks, Bodman said, it can be made "in nearly every part of our country."
With companies paying for at least 60 percent of the projects on their own, Bodman said, the announcement could spur a $1.2 billion investment in cellulosic ethanol. Congress has not yet approved Bodman's proposal to increase the ethanol grants, and the Energy Department has not finalized agreements with the companies.
Under the announcement made Wednesday:
- Abengoa Bioenergy, a St. Louis-based division of Spain's Abengoa SA, would receive up to $76 million to help construct a 11.4 million gallons-per-year plant in Colwich, Kan., that would use corn stover, wheat straw and switchgrass.
- Agribusiness company Alico Inc. of LaBelle, Fla. would get up to $33 million to help construct a plant in LaBelle, Fla., that would produce 13.9 million gallons of ethanol per year, plus electricity and hydrogen, from yard wastes, wood wastes and vegetation.
- BlueFire Ethanol Inc. of Irvine, Calif., would receive up to $40 million to help construct a 19 million gallons-per-year plant in Corona, Calif., that would produce ethanol from landfill waste.
- Broin Cos. of Sioux Falls, S.D., would get up to $80 million to help construct an 18 million gallons-per-year plant in Emmetsburg, Iowa, that would make corn-based ethanol and cellulosic ethanol from corn fiber, cobs and stalks.
- Canadian biotechnology firm Iogen Corp. would receive up to $80 million to build a plant in Shelley, Idaho that would produce 18 million gallons of ethanol per year from agricultural residues such as wheat and barley and rice straws.
- Range Fuels Inc. of Broomfield, Colo., would get up to $76 million for a plant to be built near Soperton, Ga. that would use timber scraps to produce 40 million gallons of ethanol per year and 9 million gallons annually of methanol.
The companies selected plan to use a variety of technologies to produce ethanol. They have lined up major investors including Goldman Sachs Group Inc., Waste Management Inc., DuPont Co. Royal Dutch Shell PLC and venture capital firm Khosla Ventures.
Several executives emphasized Wednesday that the technology is closer to maturity than many people realize.
"Cellulosic ethanol is not five or six years away," said Alico's chief executive, John Alexander. "It is almost today."