Bush Comments Lend Another Boost to Cellulosic Ethanol
February 29, 2008

By Dale Buss

The politicians in Washington aren’t on the same page on every issue with the U.S. auto industry. But it’s increasingly clear the most important of them see eye to eye with some major automakers when it comes to cellulosic ethanol.

Remaining presidential candidates have made a point of touting cellulosic ethanol — which can be made from a number of sources other than corn — as an important alternative fuel. On Thursday morning President Bush added to the chorus of support at his White House news conference. He emphasized cellulosic ethanol as a crucial part of the short-term answer to problems of fuel pricing and availability, as well as a long-term solution.

Answering a reporter’s question about tax breaks for renewable forms of energy, Bush referred to the growing pressure under worldwide food prices that is being created by a rise in competing demand for U.S. corn stocks by ethanol producers.

“If you look at what’s happened with corn out there, you’re beginning to see the food issue and the energy issue collide,” the president said. “And so, to me, the best dollar spent is to continue to deal with cellulosic ethanol in order to deal with this bottleneck right now.” He also said “the best way to deal with renewables is to focus on research and development that will enable us to use other raw material to produce ethanol.”

Now clearly, such huzzahs — especially from a lame-duck president — won’t make much difference by themselves in accelerating cellulosic ethanol into the American energy mainstream. That is particularly true as long as the Bush administration continues to oppose Congress’ intention to tax oil companies to help fund renewables research, asserted Arnold Klann, founder and president of BlueFire Ethanol, an Irvine, Calif., company that is ramping up to break ground on California’s first cellulosic ethanol plant.

But having hopes expressed by the president for the fast rise of significant production of cellulosic ethanol in this country is sweet ratification of the strategy of General Motors. In January the company announced a partnership with a suburban Chicago startup, Coskata, that uses proprietary strains of bacteria to make ethanol out of farm waste, wood chips, old tires, landfill plastic and other organic materials.

Coskata plans to produce enough cellulosic ethanol by later this year to begin fueling the GM test fleet at the Milford (Mich.) Proving Grounds. If that works, Coskata projects it could be running its first commercial-scale plant, producing 50 million to 100 million gallons of ethanol annually, by 2011 — including the two years it will take to build the plant. The company projects its process can produce cellulosic ethanol for less than $1 a gallon, about half of today’s cost of making gasoline. Some outsiders calculate its cost would come out to about $1.30 a gallon on an energy-equivalent basis to gasoline and could debut in the marketplace at a retail price of around $2 a gallon.

The Coskata partnership intensifies an interest GM already has displayed in corn-based ethanol by offering the largest selection of E85 vehicles in the marketplace.

“To see the president give this level of attention (to cellulosic ethanol) was very heartening to us because we’re such strong proponents of ethanol and are committed to the next step of developing cellulosic ethanol,” said GM spokesman Greg Martin.

What’s more, said Wes Bolsen, chief marketing officer of Warrenville, Ill.–based Coskata, such support can only help the company’s prospects for securing investments in additional new cellulosic ethanol plants by corporate partners on the other end of the supply chain from GM: feedstock suppliers. Coskata, Bolsen said, is talking with major companies in the paper industry about supplying pulp, with municipal-waste processors about supplying organic waste and with other companies that could provide large and reliable supplies of feedstocks for a local Coskata plant.

“We’re in discussions, and we need to close deals,” Bolsen said. “We’re at the tipping point.”

Bolsen conceded that, because Coskata already considers its technology proven, there’s not much the company or its partners can do to get to the point of supplying cellulosic ethanol more quickly. And although GM executives have said they’re also interested in potential partnerships with other cellulosic ethanol producers, GM spokesman Alan Adler said, “Most of the companies we’ve looked at are still at least somewhat invention-dependent, meaning it will take a few years to get up and running and probably longer than Coskata’s gasification-based technology, which is ready today.”

No other automaker so far has demonstrated a commitment to or even interest in ethanol, or cellulosic ethanol, that rivals GM’s. Ford, for example, believes cellulosic ethanol “is ultimately where we need to be,” said spokeswoman Kristen Kinley, in part to alleviate the food-vs.-fuel debate. But she said, “At the moment, fuel/ethanol producers are still working to find a cost-effective and efficient way to produce cellulosic.” In the meantime, she said, Ford is providing and developing other alternative-fuel technologies including hybrids, plug-ins and hydrogen fuel cells and continues to add to its own fleet of E85-capable vehicles.

BlueFire Ethanol's Klann underscored the importance of getting funding of loan guarantees from Washington that would advance the nation’s fledgling cellulosic ethanol industry. He said, “There are probably three or four companies’ technologies ready to be built that could offset oil consumption, but there is no funding for it” from Congress. “And the capital markets can’t handle this first-of-its-kind technology form a financing standpoint.”

Meantime, Klann said, BlueFire — a public company that was hatched by renewable-energy concern Ark Energy — is ready to build a plant in California that will produce 3.1 million gallons of cellulosic ethanol annually from municipal waste.

Photo by General Motors
Research scientists Milind Patel and Seth Fischbein operate a series of fermenters to test multiple cultures simultaneously at the Coskata facility in Warrenville, Ill.

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