Answering public questions about corn cobs, POET's cellulosic ethanol costs
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.
