Poet to produce cellulosic ethanol this year

Sioux Falls, S.D.-based Poet is moving forward on cellulosic ethanol, announcing today that it expects to have a pilot plant operational and producing the next-generation fuel by later this year.

The company, which is the largest ethanol producer in the U.S., said production at the pilot cellulosic facility in Scotland, S.D., will start in the fourth quarter. Construction of the facility started a few months ago, adjacent to Poet's research center  at that location and a 9 million gallon per year ethanol production plant.

"Poet is making a $4 million investment in this pilot facility, which will give us the scale we need to make final improvements in our technology before we start construction next year on Project Liberty, our commercial-scale cellulosic ethanol plant in Emmetsburg, Iowa," said Jeff Broin, president and CEO of POET, at a news conference in Nebraska.

Broin made the announcement at the American Coalition for Ethanol Conference and Trade Show in Omaha.

The pilot facility is expected to produce 20,000 gallons per year from the cellulose in corn fiber and corn cobs. The larger Project Liberty will convert a 50 million gallon per year grain to ethanol plant in Iowa into an integrated corn to ethanol and cellulose to ethanol biorefinery. The company is targeting production of 125 million gallons per year at the commercial-scale plant, with 25 million gallons of that to be cellulosic ethanol.

Poet grabbed the top spot in ethanol production in the U.S. last year, and continues to open new, traditional ethanol plants across the midwest (see Poet opens Ohio's first ethanol plant). The company currently operates 23 facilities in the U.S. with three more under construction, producing more than 1.3 billion gallons of ethanol per year.

Despite the rising costs of corn, the company has not announced plans to look at other potential non-food sources of cellulosic feedstock for its next-generation facilities.

"Very little field corn is used as food in this country, so corn in itself is not exactly a food source. It does end up getting fed to cattle and hogs, and that becomes a food source," said Broin. "But of course cellulose is more of a non-food source."

Broin said the company has a "tremendous amount of potential" to grow more grain and more cellulose on the land it operates today through efficiency. And he pointed out that a recent study from Stanford University said there's more than a billion acres of idle cropland worldwide that has the potential to grow more grain for biofuel.

"So we see a very bright future for biofuels in general, both from grain and from cellulose."

Last week, London's BP (NYSE: BP) and Cambridge, Mass.-based Verenium (Nasdaq: VRNM) joined a growing list of cellulosic ethanol supergroups that have joined together to develop new biofuels (see BP, Verenium to tackle next-gen biofuels).

Under that deal, BP plans to invest $90 million in a new partnership with Verenium, with the two groups forming a 50-50 owned company that will license existing intellectual property from each firm and will own jointly-developed intellectual property in cellulosic ethanol production.

Poet has been working with Denmark's Novozymes to develop enzymes for its cellulosic ethanol process for the past few years.

The company's $200 million, commercial-scale Project Liberty plant in Iowa is expected to be operational in late 2011. Poet said that by adding cellulosic production to an existing grain ethanol plant, it will be able to produce 11 percent more ethanol from a bushel of corn.

Poet is working with the U.S. Department of Energy on the first phase of Project Liberty, and received $80 million in funding to be put toward all aspects of the project leading up to construction. A subsequent phase two agreement is expected to be negotiated to cover a portion of the construction costs.

The South Dakota pilot cellulosic facility is outside of Poet's partnership with the DOE and all construction costs will be covered by Poet.

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