Cellulosic Ethanol Under EPA’s Revised Renewable-Fuels Law

The U.S. Environmental Protection Agency’s revised US Renewable Fuel Standard (RFS2), released in May, mandates that the use of 100 million gallons of cellulosic biofuels annually by 2010.  The mandate rises by 250 million gallons annually in 2011 and climbs to a whopping 16 billion gallons per year by 2022.

Currently, a mere four companies – Cello Energy, Range Fuels, Fulcrum Bioenergy and Southeast Renewable Fuels – will account for more than 90 percent of the cellulosic ethanol produced in the United States, according to Platts.  These companies will need to meet the EPA’s 100 million gallon estimate of cellulosic biofuel production in 2010 – if they can deliver.  And that is a big “if.”

As Platts puts it:

Cello Energy, an Alabama company with a 20 million gal/year plant in that state, was expected by EPA to account for more than 70 million of the total production next year, after it built another three plants. When first announcing its RFS2 proposal, EPA called Cello an “exception” to a cellulosic biofuel industry that was “essentially in its infancy.” Woodburn, however, disagreed with EPA’s high hopes for Cello, saying it would be a “questionable” move by the agency to include more than “a small amount,”or less than 5 million gallons, of Cello production in its 2010 forecast until Cello had proven production and had actually built its plants. An EPA spokeswoman Thursday declined comment on Cello. During a trial this summer over a contract dispute with investors,evidence was submitted that showed production from Cello’s cellulosic diesel plant did not contain any bio-based carbon. The company had claimed it could turn cellulosic material, used tires and plastics into fuel, according to court documents. “Technically [Cello] does have a plant down there,” said Woodburn Thursday. He said Cello head Jack Boykin had told him after the June trial that Cello had so far produced roughly 5,000 gallons of synthetic diesel using wood chips and hay.

. . . Southeast Renewable Fuels’ sweet sorghum-to-ethanol process should not be included in EPA’s cellulosic production tally because the bagasse — the fibrous residue remaining after stalks are crushed — will be used for power generation rather than liquid fuel. Southeast CEO Don Markley agreed in an interview Thursday, calling his process an “advanced” biorefinery. Either way, the timeline for Southeast’s 20 million gal/yr plant has been pushed back due to delays with financing, he said. RFS2 lists an “end of 2010″ start for initial Southeast production of 5 million gallons, but Markley said it is now not expected until the last quarter of 2011, with full capacity hit in early 2012.