Western Producer reporter Sean Pratt recently attended a gathering of American wheat, corn and soybean growers in Florida and filed these reports.
TAMPA, Fla. – Maurice Hladik was in damage control mode shortly after he found out that Iogen Corp. had received up to $80 million in a grant from the U.S. government to build a cellulosic ethanol plant near Idaho Falls, Idaho.
He immediately got on the phone and contacted the communities of Vegreville, Alta., and Birch Hills, Sask., which have been trying to lure Iogen’s first plant. Hladik had one simple message for the business community in those two regions.
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“It is certainly not a fait accompli,” Iogen’s marketing director told his fellow Canadians.
“We want to make it very clear this does not signal site selection yet.”
The grant gives the U.S. project a leg up on its Canadian competitors, but Iogen is still awaiting another substantial sign of support before it puts a shovel in the ground in Idaho.
Hladik said the corporation needs about a $200 million US loan guarantee before construction takes place. Cellulosic plants are expensive to build and Iogen’s backers, Royal Dutch/Shell Group, Petro-Canada and Goldman Sachs, want a strong show of government support before they sink their money into such a capital-intensive venture.
Iogen will be meeting with U.S. government officials in the coming weeks to try and negotiate such a guarantee and to work out the details of the $80 million grant.
There appears to be a growing sentiment in Washington to embrace the technology. The U.S. Department of Energy recently set aside $2 billion to establish a loan guarantee program for new energy technologies. Iogen has applied to get a piece of that pie.
But Hladik said Canada isn’t out of the picture either. Although there haven’t been any announcements out of Ottawa, they are still in the race.
“We’re having incredibly good discussions with the Canadian government right now as recent as the last couple of days,” said Hladik on March 2.
“Whichever country gets the risk-sharing package first that would be satisfactory to our investors will probably get the first plant.”
The grant money is part of a $385 million package doled out to six cellulosic ethanol projects. In Iogen’s case, it would help pay for a 68 million litre plant that would turn wheat straw into ethanol.
That is less than half the size of the 200 million litre plant Iogen originally envisioned for its first project.
“It is smaller than we had originally anticipated but it is not necessarily going to stay that small,” said Hladik, adding that the plant size is not set in stone but is the minimum required for the grant received.
Whatever size it ends up being, the plant would still be a substantial upgrade over the company’s four million litre pilot scale plant in Ottawa and would allow the company to further refine its cellulosic processing technology.
Some groups question whether the technology is ready for commercialization. The National Renewable Energy Laboratory, the lead U.S. lab for federal research on cellulosic ethanol, is operating a pilot plant with the goal of perfecting the technology by 2012.
Researchers have developed enzymes that break down cellulosic mass. Now they need to refine the manufacturing process to make it more economical.
“We believe in the next five or six years the United States will have the first fully integrated biorefineries that produce ethanol from cellulose,” said Gary Schmitz, spokesperson for the lab.
Hladik takes offence at the suggestion that the process is not viable, noting that Iogen’s investors have been ready to build for years; they’ve just been waiting for government support. He said the National Renewable Energy Laboratory folks only need to tour Iogen’s pilot plant to see how ready the company is.
“They’re not terribly well informed,” said Hladik. “It’s so easy to say the technology is not there yet if you haven’t kicked the tires.”
