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Location for first cellulose plant sought

By MEREDITH MACKENZIE, UPI Correspondent   |   March 20, 2006 at 8:54 AM
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WASHINGTON, March 20 (UPI) -- After months of researching the feasibility of the first full-scale commercial cellulosic ethanol plant, Duane Grant, a farmer from Idaho, is in Canada trying to sell his state to Iogen Corp. in Ottawa, the world leader in cellulosic ethanol production.

"There will only be one first plant," Grant said. "And we want that in Idaho."

Iogen is also looking at two other sites in Canada's breadbasket region, one in Saskatchewan and one in Alberta.

Grant, a barley and alfalfa grower who has been involved with technology applications in farming for quite some time, said there are three factors that make a location in Idaho Falls ideal for Iogen's first commercial cellulosic ethanol plant: its climate, the nature of the farming and the location of the plant.

"Idaho is perfect because of our climate," Grant said. "We have a drier climate and we can then supply dry straw for the first plant."

Having dry straw is important because moisture makes the straw heavier and more costly to transport and more difficult to preprocess with enzymes that are used to break the cellulose stock into basic large sugar components.

The second advantage, Grant said, was the nature of the farming.

"We will have a consistent supply because 80 percent of the fields in this region are irrigated and there is no risk involved from weather or drought," he said.

The third advantage that Grand and a consortium of 126 Idaho growers, who support the plant, see is the location of the plant near a pre-existing Department of Energy Laboratory with a long history of innovation.

"The work they do continues to be on the cutting edge of bio-energy," Grant said.

Grant's presentation to Iogen this week is meant as an information-sharing session to further Idaho's chances of being chosen as the site for the first commercial cellulosic ethanol plant. He and the group of farmers from around southern Idaho, funded by a Department of Agriculture rural development grant, worked to prove the feasibility of the project by gathering the 800,000 tons of straw that would be needed per year of production in a six-week window. This figure represents the amount needed to get the plant up and running.

The growers' group has plenty of incentives to get the plant in Idaho. Not only would the location of the plant become the center for cellulosic ethanol production in the country, but Grant said the cellulosic feedstock market will bring $30 million to $ 40 million of new income to agricultural business within a 10-mile radius of the plant, roughly translating to $50 more per acre for every farmer contributing to the plant.

The plant will be significantly larger than Iogen's demonstration plant in Ottawa, which is designed to produce about a million gallons a year. The commercial plant will produce more than 52 million gallons.

"The main difference, from a process standpoint, is that the point of the demo plant is to be a miniature version of a commercial plant," said Tania Glitcero, Iogen's marketing communications coordinator.

Jeff Passmore, executive vice president of Iogen Corp. said the support and cooperation of the farming community is not the issue standing in the way of the plant's creation.

"The issue is in Washington and the implementation of loan guarantees," he said. "The application process for loan guarantees isn't available yet. You can't just walk in and ask for a loan guarantee. Procedures aren't even in place yet, they just are being developed."

The 2005 Energy Policy Act recognized that there are market barriers to the commercialization of new technology and implemented a way to overcome barriers through federal loan guarantees. The innovators at Iogen estimate costs for the Idaho plant at $220 million to $230 million. Iogen is hoping President Bush will put pressure on the Department of Energy to push forward procedures for applying for the loan guarantees. Though cellulosic ethanol is competitive with corn ethanol, Grant said it is much more expensive to build on the basis of each gallon of production and therefore carries more risk.

Sen. Dick Lugar, R- Ind., spoke out for action on the loan guarantees in a speech about energy security at the Washington-based Brookings Institution last Monday. He called on Bush to make good his State of the Union pledge to make cellulosic ethanol practical and competitive within six years.

"I have asked the president to make sure that the loan guarantees that Congress authorized for cellulosic ethanol production are in place by this summer," he said.

The Idaho congressional delegation is also in support of making the plant happen on its turf.

"Cellulosic ethanol technology is exciting because it adds value to a waste product -- creating another market for our farmers," said Sen. Larry Craig, R-Idaho. "I am pleased that Iogen recognizes the value of doing business in Idaho, and I will continue to work to enable them to open a plant in Idaho."

Cellulosic ethanol production is important beyond fuel security. Selling straw, which Grant refers to as "residue," makes a waste product profitable and even reduces costs for some farmers who expend time, money and fossil fuels to plow straw back into the ground.

"Frankly, plowing contributes to greenhouse gases because the soil is the largest carbon sink on earth," Grant said. "If you turn the soil you release the carbon in the soil into the atmosphere and contribute to global warming."

Grant said being able to remove all but the ideal amount of residue can aid in sustainable farming and keep carbon release from the soil to a minimum.

Passmore said Iogen hopes to have "shovels in the ground in Idaho" by the summer of 2007. Working backward through the lengthy environmental review and the expensive engineering and design process, Passmore said that they need to know about the loan guarantees by June of this year.

"There are three legs to the stool to get this project going," he said. "The technology leg is there with the demo plant. And we have the financing leg in all our equity participants, and the government leg is the one we are working on now."

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