Poet will 'pause production' at its Iowa plant that makes ethanol from corn cobs, husks
Blaming the federal government for failing to support the industry, a South Dakota company said Tuesday it will stop production in northwest Iowa of an environmentally friendly ethanol that's made from corn cobs, stalks and other crop residue.
Poet, the nation's largest ethanol producer, said it will continue research and development at the Emmetsburg plant it opened in 2014.
The company said it will cut about 30 of the plant's 70 workers in February. It partnered with Royal DSM of the Netherlands to build the $275 million plant, which has production capacity of up to 25 million gallons of cellulosic ethanol annually.
Taxpayers have invested heavily in the project: Poet and DSM received about $120 million in state and federal incentives to build the plant and develop the technology over about a decade.
Poet says it will continue to make ethanol from corn at a sister plant next door. That plant employs 40 workers.
Cellulosic ethanol — made from biomass, including grass, wood and, at the Poet plant, crop residue — can reduce greenhouse gas emissions up to 95% when compared with gasoline.
In 2017, DuPont closed a cellulosic ethanol plant in Nevada, Iowa, then sold it last year to Verbio North America Corp., the Michigan-based subsidiary of German-based Verbio Vereinigte BioEnergie AG. The company plans to produce renewable natural gas at the plant.
Poet blamed the U.S. Environmental Protection Agency for the "pause production" at the plant. Renewable fuels leaders say EPA waivers to oil refineries since 2016 have undercut demand for ethanol and biodiesel and sunk prices.
The EPA determines how much renewable fuel must be blended into the nation's fuel supply, annually, under a federal mandate called the Renewable Fuel Standard.
"Over the last three years, EPA management of the RFS has held back cellulosic ethanol advancement, hindered future agricultural markets for U.S. farmers, and undermined what the president has promised,” Poet spokesman Kyle Gilley said in a statement.
About 35 biodiesel or ethanol plants nationally have cut production or closed, either temporarily or permanently, because of the small refinery exemptions, industry leaders say. Including the Poet plant, five are in Iowa.
Political and industry leaders have demanded the EPA make changes to the renewable fuel requirements that fully restore the demand lost as a result of waivers to small oil refineries. That would fulfill a deal President Donald Trump made with Midwestern Republican leaders.
"While the EPA continues to ignore the deal President Trump made with renewable fuels leaders, more jobs have been lost in Iowa," said Iowa agriculture secretary Mike Naig. "Their policy decisions continue to harm families across rural America. It's time to stop this nonsense and uphold the spirit of the RFS. We encourage Iowans to make their voices heard during the EPA's open comment period, which runs through Nov. 29."
At the same time the EPA has granted oil refinery waivers, it has restricted growth for the next generation of fuel, said Brooke Coleman, executive director of the Advanced Biofuels Business Council.
"It's a punch to the face and a punch to the gut simultaneously," Coleman said. "It's common sense to want to stop to see if the policy can get fixed."
The Emmetsburg plant, called Project Liberty, opened five years ago to great fanfare, including a flyover by a squadron of ethanol-powered planes and a visit from King Willem-Alexander of the Netherlands.
State and national leaders touted the plant as a giant step forward in developing an ultra-green fuel. And officials said the technology would help transform rural economies, creating jobs and paying farmers for corn stover — the cobs, husks and other residue left on the ground after the harvest.
Poet said it expected to pay about $20 million annually to farmers for their crop residue.
The federal government provided $100 million — and Iowa taxpayers, about $20 million — to help develop the technology behind Project Liberty and build the plant. Royal DSM invested $150 million in the plant.
Poet has spent years and millions of dollars developing the technology needed to use biomass to make ethanol as well as working through operational problems at its Emmetsburg commercial plant.
The ethanol producer sued Andritz Inc., a Georgia engineering company, for failing to create a process for treating stover that could economically scale for commercial production. In April, a panel of three arbitrators said Andritz should pay Poet about $7.5 million.
Poet said it would continue to improve production at the cellulosic ethanol plant, focusing especially on mechanical reliability, and develop options for licensing the technology in other countries that "favorably support the use of low-carbon fuels from crop residue and other biomass."
Poet said the plant will use the bales of corn stover stored on site or already under contract, but it will not purchase additional biomass at this time.
While commercial production at the plant has ended, some limited production will resume under the research and development initiatives, the company said.
Poet also said the EPA has changed approval mechanisms that slow the development and commercialization of ethanol technology.
“Because of these policy changes, the economic landscape for cellulosic ethanol in the U.S. makes private and global investments in this technology more challenging," Hugh Welsh, president of DSM North America, said in a statement.
Welsh said the two companies will explore licensing opportunities "in countries that are not choosing oil over agriculture.”
Despite the shift, Poet and DSM said they remain committed to scaling up "this cleaner, renewable fuel as a solution to reduce carbon emissions."
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at firstname.lastname@example.org or 515-284-8457.
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