March 2, 2007

Ethanol plant to be built in South Idaho
 

The federal government said that it plans to pay a partnership worth US$80 million with a Canadian biotech company to help build a plant in eastern Idaho to produce ethanol from agricultural residues like straw and unused parts of wheat and barley plants.

The Energy Department said Iogen Corporation's proposed plant in Shelley, south of Idaho Falls, would be among six plants that could receive up to US$385 million in government funding over four years to demonstrate the commercial viability of producing ethanol in untraditional ways.

Iogen's plant would use 700 tonnes a day of agricultural residues -- including wheat straw, barley straw, rice straw, corn stover and switchgrass -- to produce 18 million gallons of ethanol a year, according to Energy Secretary Samuel Bodman said.

Iogen estimates it eventually could produce 60 million gallons. The fuel would be shipped by rail to the West Coast. The company has been active several years in eastern Idaho, drawing up contracts with 320 farmers for 400,000 tons of barley straw a year.

The company is still waiting on a federal loan guarantee so it can obtain a US$200 million loan to build the plant. Generally, banks will not lend money for commercially unproven products like cellulose ethanol unless the borrower can guarantee repayment if the project fails.

Bodman, who sought proposals a year ago for three "biorefineries" that would receive US$160 million from the government, said he decided to more than double the grant program as a way to reach President George Bush's goal of using 35 billion gallons a year of ethanol and other alternative fuels by 2017 -- a fivefold increase over current requirements.

The U.S., which has 114 ethanol plans in operation, produced about 4.9 billion gallons of ethanol last year, according to the Renewable Fuels Association, an industry trade group. By comparison, the country consumes roughly 140 billion gallons of gasoline per year.

Production of ethanol from corn alone is expected to reach no more than 12 billion to 15 billion gallons a year, Bodman said, because of the need to use corn to feed cows, chicken and other livestock. High demand for traditional corn-based ethanol has already driven up the cost of corn and livestock.

As a result, the government wants to accelerate research into the production of "cellulosic" ethanol made from wood chips, switchgrass and other feedstocks. President Bush has toured research labs in Delaware and North Carolina to promote the use of these technologies as a way to reduce American dependence on foreign oil.