POET’s
announcement last week that we’ve lowered the cost of
producing cellulosic ethanol from $4.13 down to $2.35 got noticed by media
outlets and blogs across the country.
Coverage
from national mainstream media outlets included the Washington Post, the Associated Press,
Clean
Skies TV, and many more. Some notable blogs in the energy and alternative
energy sphere also addressed the issue, including R-Squared
Energy Blog, Green Car
Congress, Salon.com,
Climate
Progress and Daily
Tech.
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 therefore exists
to use crop residues for ethanol production or other industrial
purposes without adversely affecting the long-term productivity of
medium- to heavy-textured soils providing that <40% of the total
above ground residues other than grain are removed and the frequency
of removal is no more than 2 yr out of 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.