Corn Ethanol Subsidies Likely on Scrap Heap, Largest Ethanol Producer Poet Moves to Cellulosic

Three US Senators reached a deal last weak to repeal $6 billion a year in corn ethanol subsidies by the end of the month. 

Dianne Feinstein (D-CA), John Thune (R-SD) and Amy Klobuchar (D-MN) agreed to do away with the 45-cent per gallon blenders’ tax credit and the 54-cent per gallon tariff on ethanol imports. 

The tax credit would stay in place for cellulosic ethanol, Reuters reports. 

The Senate already passed an amendment to eliminate incentives last month, but that amendment was largely symbolic because it was attached to a bill that was not expected to pass.

The corn ethanol industry, which relies almost exclusively on corn as a feedstock, has been widely criticized for driving up food prices, while doing little to improve the environment.

Also, the industry is currently double-incentivized by the federal government. In addition to the subsidy and tariff, the federal Renewable Fuels Standard calls for increasing ethanol blending levels and establishes financial penalties for failure to reach mandated levels.

It’s unclear how the Senate deal will make its way to the floor for a vote – either as an amendment or a standalone bill. But the agreement with key midwestern Senators means it is likely to pass. 

However, there’s no telling what House Republicans will do. They seem more focused on playing politics with bills that will never pass (see their plans to repeal parts of the 2007 energy law) than they are on passing compromise legislation.

Poet Receives Loan Guarantee for Cellulosic Plant

The largest US corn ethanol producer, Poet, has received an offer from the US Department of Energy (DOE) for a $105 million loan guarantee to support development of a commercial-scale cellulosic ethanol plant in Iowa.

Project Liberty is the flagship cellulosic facility for the company and is expected to produce up to 25 million gallons of ethanol per year from the corn cobs, leaves and husks left over after corn kernels are used to make ethanol and other products. The facility will use enzymatic hydrolysis to break down cellulosic material in plants.

It’s expected to produce enough biogas to power both the Project Liberty facility and POET’s adjacent grain-based ethanol plant.

POET estimates the project will generate approximately 200 renewable energy jobs during construction and 40 permanent jobs at the plant. POET estimates the project will also bring approximately $14 million in new revenue to area farmers.

POET plans to replicate the cellulosic process pioneered at Project Liberty at 27 of their other corn ethanol facilities. The company estimates this would create a combined annual capacity of one billion gallons per year of cellulosic ethanol.

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