A long-awaited western Canadian cellulose ethanol project is gaining momentum and the choice of its location has narrowed down.
Sustainable Development Technology Canada said Iogen Corp. has been declared the first eligible applicant for a loan from a $500 million federal fund to encourage the construction of second generation biofuel plants.
“It’s a big step forward,” said Jeff Passmore, executive vice-president of Iogen.
The federal government agrees.
“Canada is one step closer to making our country’s first full scale cellulosic ethanol facility a reality,” said federal environment minister John Baird.
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“With technologies such as this, Canada is well positioned to be a world leader in the renewable fuels industry.”
Iogen has run a small demonstration plant in Ottawa for six years and has been promising to begin construction on a commercial scale facility since the turn of this century.
Possible Canadian locations mentioned by company officials over the years were Birch Hills, Sask., and Vegreville, Alta. One of those names has been removed from the list.
“We’re not looking at anywhere outside Saskatchewan at the moment,” said Passmore, who refused to confirm or deny that Birch Hills is the successful candidate.
If the company receives the federal funding it is seeking, it will begin construction on a $500 million plant starting in 2009, with ethanol production slated for 2011.
Passmore said the plant will produce ethanol but would also be a biorefinery that creates steam, electricity, enzymes and co-products like fertilizer and value-added sugars.
The facility will consume 750 tonnes of wheat straw a day. Passmore said the company has already signed up more than 300,000 tonnes of straw from an area north of Saskatoon.
“We were very impressed with the response we got from farmers,” he said.
Iogen and its investment partners, Shell and Goldman Sachs Group, have applied for the maximum loan, which would be 40 percent of the project value. If approved, the $200 million would be repaid over a 10 year period following project completion. The interest rate has yet to be negotiated.
The company won’t receive federal funding until Sustainable Development Technology Canada does its due diligence process, which entails determining if Iogen’s patented process is commercially viable. That investigation could last one month or more. The loan would then have to be approved by SDTC’s board of directors.
Iogen is also in the due diligence phase of a twin project to be built south of the border near Idaho Falls, Idaho. The company is attempting to secure $80 million in funding from the United States Department of Energy.
Passmore said there is no established timeline for the U.S. project but the two plants will not be built simultaneously.
“I think Saskatchewan is on an earlier time horizon but I don’t want to speculate because due diligence could take longer than I’m expecting it to take.”
Passmore said the U.S. recently passed an act that establishes a mandated market for 61 billion litres of cellulose ethanol by 2022.
“We’re planning to be part of that market as well,” he said.
