I'm often asked to speak about Project LIBERTY and the progress we have made so far. The past couple of weeks, I spoke with farmers and business leaders at a couple Iowa events.
On Tuesday, February 16th, I was in Spencer at the 26th Annual Northwest Iowa Ag Outlook Conference & Trade Show. I spoke about the project time line, cellulosic ethanol technologies, farmer incentives for harvesting cobs, and the benefits of the project. It was great to learn that some of the 125 people that attended my session had also been to LIBERTY Field Day in Emmetsburg last November. Based on the many questions, there is a lot of interest in LIBERTY and this new revenue opportunity through cob harvesting. To find out more about cob harvesting, visit the POET Biomass website.
The following Tuesday, February 23rd, I spoke at the Alternative Energy Conference in Sheldon at the Northwest Iowa Community College. The unpredictable weather kept some from attending the conference. About 70 people made it through the storm to hear a variety of people talk about alternative energy. I followed Kelly Manning of Growth Energy, so the stage was set well for me to address the national impacts of Project LIBERTY. Here's my presentation:
These events were great forums to continue to advance the discussions on POET's role in the nation's alternative energy campaign - reducing greenhouse gases, reducing dependence on foreign oil, and creating jobs in rural America. I look forward to seeing many of you at future events.
There has been a lot of talk about the final rule on the Renewable Fuel Standard (RFS2) released recently by the U.S. EPA (funny how 3,000 pages will do that). Most of that talk has centered on what the rules mean for the existing corn ethanol, which the EPA determined meets the threshold of emitting at least 20 percent fewer greenhouse gas emissions than gasoline.
But what hasn't generated nearly as much discussion is what the document had to say about cellulosic ethanol. The cellulosic biofuel requirement in RFS2 is 16 billion gallons by 2022. The law had called for 100 million gallons this year, but the EPA reduced it to 6.5 million due to a projected production shortfall.
In their analysis of cellulosic ethanol made from crop residues such as corn stover using a biochemical process like we're employing for Project LIBERTY, the greenhouse gas (GHG) reduction is 130 percent in comparison to gasoline. In other words, driving your car with POET's cellulosic ethanol actually takes carbon out of the atmosphere.
For this reason and because of the availability of agricultural residue, the EPA expects it, and especially corn stover, to be the feedstock that contributes the most cellulosic ethanol toward meeting the 36 billion gallon target. On page 184 of the preamble, they state:
Agricultural residues are expected to play an important role early on in the development of the cellulosic ethanol industry due to the fact that they are already being grown...The most common residues are corn stover (the stalks, leaves, and/or cobs) and straw from wheat, rice, barley, and oats. These U.S. crops and others produce more than 500 million tons of residues each year, although only a fraction can be used for fuel and/or energy production due to sustainability and conservation constraints. Crop residues can be found all over the United States, but are primarily concentrated in the Midwest since corn stover accounts for half of all available agricultural residues.
The EPA sites one recent study showing that "under current rotation and tillage practices, about 30 percent of corn stover produced in the U.S. could be collected, taking into consideration erosion, soil moisture concerns and nutrient replacement costs." The ultimate amount removable by the farmer will of course vary by geographic location, soil quality and tillage practice, the EPA noted.
The EPA goes on to say: "Our agricultural modeling suggests that corn stover will make up the majority of agricultural residues used by 2022 to meet the EISA cellulosic biofuel standard (4.9 ethanol-equivalent Bgal)." Although we're only producing small amounts of cellulosic ethanol now, POET would like to be a big part of that big goal.
On Tuesday, February 23rd, I'll give a presentation on Project LIBERTY at the Alternative Energy Conference. The event will be in Sheldon, Iowa at the Northwest Iowa Community College, Building A. I'm scheduled to speak at 10:45 am. My presentation will focus on the project time line, cellulosic ethanol technologies, cob harvesting, and the project benefits. Hope to see you there!
On February 8th, the United States Department of Agriculture (USDA) made public new proposed rules for the Biomass Crop Assistance Program (BCAP). The 2008 Farm Bill authorizes BCAP, which assists land owners and operators with the collection, harvest, storage, and delivery of material for biomass conversion activities.
Project LIBERTY commented on BCAP back in 2009 to USDA. USDA used these comments to update the draft of the rules that we see today. The BCAP program can help the land owner in many ways. One benefit is the matching payment program for the delivery of an eligible crop to the plant. One of those "eligible crops" is the corn cob feedstock required by Project LIBERTY.
We will look over the draft and send comments to USDA. Once BCAP is final, POET Project LIBERTY will apply to become a biomass conversion facility and farmers can register to receive matching payments.
In the last week of 2009, the Wall Street Journal ran a piece by reporter Ian Berry on the financial benefits that will come to farmers from producing cellulosic ethanol. Here's one paragraph from the piece:
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.
If you still have your hard copy from December 30 lying around, it's on Page B5.
Derek Young, of Wallingsford, Iowa, is accustomed to eating Halloween cookies during harvest. This year, for the first time in his life, he was eating Christmas cookies.
A wet autumn led to a long harvest this year: poor conditions for an efficient harvest, but, as it turned out, a good “worst-case” scenario for testing the speed of new cob harvesting equipment.
Now that the harvest is over, Young had a few minutes to talk with me about how progress went testing prototypes for corn cob harvesting.
He said his work this season generated some interest among other farmers in the area.
“Early on, a fair amount of people were driving by, checking it out,” he said.
Q: I know that one of the main concerns from farmers is that cob harvesting will slow down their harvest. Did you find this to be the case this year?
A: “No, I didn’t. You know, there’s a learning curve with a lot of new equipment. I thought it was going to be a lot worse than what it was.”
Young was using Vermeer equipment (pictured here) to harvest the cobs in his field this year. He said representatives from Vermeer were very helpful in making sure everything ran smoothly.
“As long as the partners you’re working with truly are partners, you’re going to be in good shape.”
Q: In order to secure a steady supply of cobs, what issues does POET need to educate the farm community about to make them comfortable adding this to their operation?
A: “Of course a big question is ‘What are we going to get (price for cobs)?’ … I think lot of growers, if they see it brings a lot of value to their operation, I think they’re going to be on board.”
Young said one of the main concerns is still the speed of harvest.
“It can’t be seen as something that’s going to seriously hamper harvest, especially coming off a year like this.”
He said it’s also important that POET’s efforts address a broad cross-section of the agricultural community: large and small operations alike.
“I think a lot of people (smaller operations) wonder where they might fit into this. It can’t be seen as something for the big guys.”
Q: How do farmers feel about taking some stover off the ground?
A: “There are some people out there that really think ‘Oh, you’re going to be taking a lot off the soil.”
Young said he heard that opinion occasionally around town. Personally, though, he’s seen improvements in farming over the years that have added a lot of material to fields, and he doesn’t think it will be an issue of serious concern.
“I think about how there’s so much more stover and residue than there was years ago.”
Q: How difficult will it be to promote this effort to farmers nationwide?
A: Young thought that farmers are eager to help the ethanol industry and want to be involved in both grain-based and cellulosic ethanol.
“We need to keep a viable ethanol industry going or there isn’t a corn industry,” he said.
The blogs
were especially interesting because we could gain some insight into the public’s
thoughts about what POET is doing thanks to the blog posts and comments from
readers.A few issues came up
repeatedly, and I’d like to address them here:
Q.Does
the cost include factors such as depreciation, labor, insurance, etc?
A.Yes.
We’ve been making ethanol for more than two decades, so we’ve got a pretty good
sense of how to figure the cost of production at an ethanol plant. All commercial
factors were included in our final number.
Q.Does the cost incorporate the benefits of tax credits or other
government incentives?
A.No, the $2.35 figure represents the cost without any financial
assistance.
Q.Will removing corn cobs damage the soil?
A.POET is funding research through Iowa State University to gather additional
information on this important issue, but a number of studies have already been
done on this subject, and they all indicate that taking corn cobs will not make
a significant difference in soil nutrient content.
For instance, an April, 2009
study by Canadian researchers published in the Agronomy Journal concluded that “The potential thereforeexists
to use crop residues for ethanol production or otherindustrial
purposes without adversely affecting the long-termproductivity of
medium- to heavy-textured soils providing that<40% of the total
above ground residues other than grain areremoved and the frequency
of removal is no more than 2 yr outof three.”
Previous
research from Iowa State (before POET was involved) has shown that the
corn cob represents 5-7 percent of the nutrients (Nitrogen,
Phosphorus, Potassium) in the stover.To
be clear, that does not include the grain. This is consistent with other research we've seen.
There has been enough
research done to move forward confidently in this project, however we continue
to seek more information so we can help farmers find the best way to manage
their land while providing cobs for cellulosic ethanol production.
Q.What are POET’s assumptions for the cost of purchasing cobs, and will
farmers bring cobs in for that price?
A.POET figures the cost of cobs at $55/ton. We figure the average farmer
stands to gain a profit of about $20 per acre based on this cost, which
includes equipment, labor and other costs. In addition to that, the Biomass
Crop Assistance Program will provide farmers up to an additional $45/ton in
matching funds for two years to help defray startup costs for farmers entering
the biomass market.
We've had a great reaction from farmers in the Emmetsburg, Iowa area, and we're confident that others will have a similar reaction once they learn the details. POET Biomass, a new division at POET, helps farmers tailor their cob harvesting plans to best fit the needs of each particular farm.
The opportunity to view pre-commercial biomass harvesting equipment that will collect feedstock for cellulosic ethanol proved as irresistible to members of the press as it did to farmers in the Emmetsburg area. There was quite a lot of news coverage as you can see from our news page. Here are a few of the online highlights:
Ken Anderson of Brownfield Ag news posted seven audio clips of speeches and interviews with speakers, farmers, POET team members and agricultural equipment manufacturers on their site.
Chuck Zimmerman posted tons of content to his blogs Domestic Fuel and AgWired as well as photos and videos that are worth checking out. Here's one of POET CEO Jeff Broin's speech:
Finally, there was an extremely complementary opinion piece about the event from the nearby Estherville News. Among other things, it said: Corn-based ethanol is in fact the best thing to come down the road for
Iowa farmers, Iowa's economy and the environment for a very long time. Except
for cellulosic ethanol, of course. We agree.
During the Project LIBERTY Field Day, a slide show of the biomass harvesting equipment played on four big screens under the tent. There were a total of 16 agricultural equipment manufacturers at the event and you can view many of them on that slide show:
The equipment manufacturers and partners represented were AGCO, CASE IH, CLAAS, Demco, Fantini, Iowa State University, Idaho National Lab, John Deere, Ken's Truck & Trailer, Milstak, Redekop, Stinger, SmithCo, Unverferth, Vermeer and Wildcat. For photos of the equipment in action, be sure to check out our photo gallery.
