A report released early Tuesday paints a gloomy future for cellulosic ethanol.
Commissioned by Congress, the study says at the current pace the renewable fuel is unlikely to become a major source of energy for the U.S. But ethanol companies disagree with that assessment.
Cellulosic ethanol is made from corn stalks, wood chips, or other non-food items such as grasses. After years of development, however, there still aren't any commercial-scale cellulosic plants operating in the U.S. The federal government's official goal calls for production of 16 billion gallons of cellulosic fuel by 2022. The report from the National Research Council is pessimistic about the chances of reaching that goal.
"Sixteen billion gallons of cellulosic fuels by 2022 is very unlikely," said Jason Hill, an assistant professor at University of Minnesota and one of the scientists who helped put the study together.
The report findings said that the production goal was an instance of overreach by the federal government, Hill said.
"Congress cannot mandate technology, nor the cost of technology," Hill said. "And that's in essence what they tried to do. So these biofuels are far too expensive to be produced currently."
The report said the high cost of production wards off potential investors in the industry. The only financial backer most cellulosic companies can find is the federal government. Even at current levels, Hill said federal support is too small to provide the rapid growth the business needs.
"For the industry to grow such that it could meet the mandate would require some amazing technological breakthrough as well as additional subsidy and support from the federal government," Hill said.
But ethanol companies are not buying the study's downbeat assessment. One company which plans to build a cellulosic plant is POET, based in Sioux Falls, S.D. In September, the company received a $105 million federal loan guarantee for its cellulosic facility. It's scheduled to be built next to an existing corn ethanol plant in Emmetsburg, Iowa. POET's Jim Sturdevant said just as the process for turning corn into ethanol has become more efficient over the years, similar improvements will happen with cellulosic fuel production.
"Once you go to commercial scale, you'll learn a tremendous amount about how to improve the process," Sturdevant said.
POET hopes to have the plant operational by 2013. To convince skeptics, the plant will have to demonstrate that not only can it produce the fuel, but that it can also make a profit. Minnesota Congressman Collin Peterson said he will be surprised to see that goal reached.
"The cost of building a cellulosic plant, you know it just doesn't work," Peterson said.
Peterson is a supporter of corn ethanol, which he said will be proven to be the most economic.
However, Hill said the Congressional report on renewable fuels came to some unfavorable conclusions on corn ethanol as well. Compared to fossil fuels, the report said corn ethanol may not reduce greenhouse gas emissions as much as supporters claim, and in some scenarios, corn ethanol can actually increase emissions. With the dismal assessment of cellulosic ethanol, the study could also dim Congress's support of the ethanol industry in the future.