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Wood Bioenergy: Project Count Edges Up; Future of Cellulosic Ethanol Uncertain

As of January 30, 2011, Wood Bioenergy US counted 445 wood-consuming, announced and operating bioenergy projects in the continental US, up from 441 in December 2010.  In total, these projects – which include wood pellet, wood-to-electricity, and cellulosic ethanol projects – represent potential, incremental wood use of 123.7 million green tons/year by 2021 in the continental US.  Based on Forisk analysis, projects representing only 68.5 million tons/year (55.4%) pass basic viability screening.  (Click here to download the free Wood Bioenergy US summary.)

Recent government decisions have favored cellulosic ethanol. On January 12, 2011, the EPA granted a waiver for E15 (15% ethanol, 85% gasoline blend) for model year 2001-2006 vehicles. The agency granted a waiver for E15 for model year 2007 and newer vehicles on October 13, 2010 and delayed the decision for model year 2001-2006 vehicles until DOE completed testing. The fuel is still restricted for vehicles with a model year 2000 or older.

The USDA selected three cellulosic ethanol projects to receive loan guarantees: Coskata, Enerkem, and INEOS New Planet BioEnergy. Coskata received a letter of intent to receive a $250 million loan guarantee for a 55 million gallon plant in Greene County, Alabama. Enerkem will receive  an $80 million  loan guarantee for its 10 million gallon plant in Pontotoc, Mississippi. INEOS New Planet BioEnergy LLC will receive a $75 million loan guarantee for its 8 million gallon plant in Vero Beach, Florida.

Despite these favorable decisions, uncertainty continues to surround cellulosic ethanol and advanced biofuel projects. For example, Range Fuels has reportedly shut down its cellulosic ethanol facility in Soperton, Georgia after producing one batch of ethanol this year. The plant will work through technical issues and raise additional funds needed to complete construction of additional phases of the commercial-scale facility.  Overall, the slow progress of cellulosic ethanol projects has increased scrutiny from private financiers, necessitating public USDA loan guarantees.

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