Spanish company Abengoa Bioenergy is gearing up to produce cellulosic ethanol in the US heartland just in time to face a glut of bio-based fuel in the market and waning government support, the New York Times reports.
The company has bet $500 million in Hugoton, Kan., by building a plant on 38 acres for the cellulosic ethanol, which it calls a low-polluting alternative to petroleum products.
The market is saturated with ethanol from corn while automobile manufacturers and the oil industry are balking at increasing the amount of ethanol blended into gasoline.
The EPA is considering reducing the amount of advanced biofuels required for blending into vehicle fuels this year by more than 40 percent below the original target set in 2007.
The Times also reports that the boom in shale drilling has produced additional excess oil domestic oil. Fuel efficient cars and a sluggish economy have cut demand for fuel.
Several companies have failed to develop commercial biofuels or have given up trying. The energy act’s goal of reaching 21 billion gallons of advanced biofuels by 2022 is now considered unreachable.
Photo: US Department of Agriculture Flickr photostream