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Robert Rapier: Cellulosic Ethanol is Going Backwards

Alternative Energy

In last month’s article Where are the Unicorns?, I discussed the fact that the commercial cellulosic ethanol plants that were announced with great fanfare over the past couple of years are obviously running at a small fraction of their nameplate capacity. In fact, April was a record month for cellulosic ethanol production according to the EPA’s database that tracks this information, but that meant that at least 8 months into the learning curves for these plants actual production for that month was only about 6% of nameplate capacity.

May’s numbers are now in, and the situation has gotten worse. After reporting 288,685 gallons of cellulosic ethanol in April, May’s numbers only amounted to 114,018 gallons. This is only about 2.4% of the nameplate capacity for the announced commercial cellulosic ethanol plants. If we use year-to-date numbers, the annualized capacity is still less than 3% of nameplate capacity for facilities that cost hundreds of millions of dollars to build. Let that soak in. POET alone spent $275 million, with U.S. taxpayers footing more than $100 million of that bill. Abengoa reportedly received $229 million from taxpayers for its project. For this (plus however much that was spent by INEOS), the combined plants are running at an annualized capacity of 1.7 million gallons of ethanol, which would sell on the spot market today for $2.6 million.

We can conclude from this that the three companies with announced commercial cellulosic ethanol facilities — INEOS, POET, and Abengoa (NASDAQ: ABGB) — are finding the going much tougher than expected. I believe that the costs to produce their cellulosic ethanol are higher than the price they will receive for the ethanol. This is the sort of monthly cash drain that led to the shutdown of everyone else that ever tried to produce cellulosic ethanol commercially.

I suspect that INEOS has given up trying to produce cellulosic ethanol (their press releases have certainly dried up), and I suspect that the others aren’t too far behind. And there will be more tax dollars that have been flushed down the drain in pursuit of cellulosic ethanol, which companies have tried to produce economically — without success — for more than 100 years. It seems that those who do not learn history waste a lot of taxpayer money as a result.

R Squared

6 Comments on "Robert Rapier: Cellulosic Ethanol is Going Backwards"

  1. penury on Tue, 23rd Jun 2015 9:41 am 

    I think the plants and production are working as designed. They have received over 600 million of tax payer dollars. Several of the involved have made their money and the taxpayer is hosed again. This is not a glitch.this is the program.

  2. BobInget on Tue, 23rd Jun 2015 10:23 am 

    Today we have diesel powered machines to
    plant, spray, irrigate, cut, rake,bale, transport, cook, transport mix with oil based fuels, all that free cellulose. Once mixed with gasoline at a refinery (can’t ship ethanol by pipelines)
    once again the mixture gets loaded onto trucks for retail sales.

    Contrast that to natural gas that in most cases can be shipped almost directly from well-head to ‘gas stations’ with existing pipleines.

  3. HARM on Tue, 23rd Jun 2015 11:24 am 

    penury certainly gets how our “free market” economy works. The EROEI equivalent of paying someone to dig a hole and then fill it back up again.

  4. Nony on Tue, 23rd Jun 2015 2:19 pm 

    They hired a bunch of ex-McKinsey consultants and got in good with the neoliberal politicians.

  5. peakyeast on Tue, 23rd Jun 2015 4:46 pm 

    We need all those plants – they can easily be converted to using the preproduct of Soylent-green – when that becomes available in larger amounts…

    Any moment now…

  6. Makati1 on Tue, 23rd Jun 2015 8:39 pm 

    Be it fusion reactors, biofuels of all kinds, LNG terminals, etc, they are ALL scams to get a big grant and then pretend to do something useful until the money runs out.

    Capitalism breeds suckers that want to get rich without working. They deserve to be fleeced. I think being skinned alive is more in their future, actually. The system is on the cliff edge and the ground under is cracking and shaking.

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