Ethanol market update: Out with the old, in with the new
As corn-based ethanol producers continue to struggle, cellulosic pilot plants ramp up.
By Dave Hannon -- Purchasing, 1/12/2009 1:21:00 PM EST
While the list of corn-based ethanol plants idling due to sluggish demand continues to grow, the cellulosic ethanol buzz is growing. VeraSun, which filed for bankruptcy in October, announced this week it has halted production at three of its ethanol plants in Bloomingburg, Ohio, Albion, Neb. and Linden, Ind. And Pacific Ethanol this week said it was temporarily idling its Madera, Calif. plant which produces more than 114,000 gallons of ethanol a day.
The problem in the ethanol market, these producers say, is that demand is down due to sluggish oil demand while volatile prices for its raw material, corn, have wreaked havoc on the balance sheets and stock prices. The Wall Street Journal reports that the price of the corn futures contract for March delivery has climbed to as high as $4.26 a bushel Tuesday on the Chicago Board of Trade.
But if corn prices are extracted from that calculation—as it is in the production of cellulosic ethanol which uses plant debris to make ethanol—then the margins get significantly better. And according to a recent story in the USA Today Verenium's cellulosic ethanol demonstration plant in Jennings, La. “cranked up” last week, ushering in a new era of biofuels—one that does not conflict with food prices.
And Poet confirm
ed its cellulosic pilot plant in South Dakota (left) has began production as well making ethanol from corn cobs, serving as a stepping stone to a commercial volume plant. While traditional ethanol plants fall out of favor despite their sky-high hype only two years ago, Reuters reports that U.S. Agriculture Secretary Ed Schafer said on Thursday he expected that the USDA will award a loan guarantee to Range Fuels, based in Colorado, to build a commercial-size cellulosic ethanol plant capable of producing 100 million gallons of ethanol annually.
And ZeaChem announced last week it has received $34 million in funding towards a cellulosic biorefinery. The list of Renewable Fuels Association’s list of U.S. ethanol plants includes at least six plants that will run on waste.
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