DECEMBER 30, 2009
By IAN BERRY, Wall Street Journal
The corn cob could go from farmer trash to treasure if an effort by the world's largest ethanol maker takes root.
Poet, Sioux Falls, S.D., is readying production of a new cellulosic ethanol plant that uses the corn waste product, rather than corn itself, to make the biofuel. The plant, located in Emmitsburg, Iowa, where Poet already has a traditional corn-based ethanol refinery, is expected to produce 25 million gallons per year once it starts commercial production in 2011. Poet already has a pilot project in Scotland, S.D., that produced about 20,000 gallons of cellulosic ethanol since it opened in November 2008.
The plant, called Project Liberty, could be a new revenue source for farmers, proponents say, although the future for the technology remains uncertain.
"We're looking at $30 to $60 per ton is what we'd be paying for the corn cobs," said Scott Weishaar, vice president of Commercial Development for Poet. "You take a look at a farmer who maybe has 1,000 or 2,000 acres of corn, that's pretty significant incremental income to his operation."
Currently, farmers have little use for the stripped-down corn cobs. The industry is moving toward cellulosic, as spelled out in the Environmental Protection Agency's renewable-fuel mandate. The mandate calls for cellulosic ethanol to account for 16 billion gallons of the total 36 billion gallons of production by 2022. Other sources for the cellulosic ethanol include wood waste, switchgrass and other corn "residue" besides the cob, such as the stalks. Corn cobs are currently the sole focus of Poet's cellulosic effort.
Unlike some of the other corn residue, the cobs are seen as having little if any value to the land and can be removed without depleting the soil. And the cob, unlike the grain, doesn't ignite the "food versus fuel" debate. Poet said that it is quickly finding ways to make cellulosic ethanol profitable. Since the pilot project started, it has cut costs almost in half, to $2.35 per gallon from $4.13, by reducing energy usage and enzyme costs, among other expenses. It costs roughly 50 to 80 cents more per gallon to make ethanol from corn cobs than from the grain, Poet said.
It hopes to have the costs per gallon below $2 by the start of commercial operation. Ethanol futures are trading around $1.90 at the Chicago Board of Trade.
Chief Executive Jeff Broin said that two years ago he would have considered cellulosic ethanol "a long shot" but that it is now a reality.
For farmers, harvesting the cobs requires additional equipment, and Poet is working with farm machine manufacturers to "accelerate their development" of equipment that will harvest cobs, Mr. Weishaar said.
The company hosted 16 different equipment makers in Emmitsburg for a field day in November, in which industry leaders showed off prototype machines to area farmers.
One of those companies, Agco Corp., has rarely before, if ever, taken a prototype machine to such a public event, said Agco spokesman Reid Hamre. The Duluth, Ga., company is probably at least several months away from deciding whether to mass-produce the equipment.
"It's a prototype machine, we've got some more testing and exhibiting and gathering of feedback for farmers and dealers we want to do," Mr. Hamre said.