DuPont said it would stop operations at an advanced biofuel’s plant, or cellulosic facility. It cited its merger with Dow Chemical as one of the reasons why it made this decision — a $150 billion deal that closed in August and that reshapes and redefines the combined enterprise.
“As part of DowDuPont’s intent to create a leading specialty products company, we are making a strategic shift in how we participate in the cellulosic biofuels market. While we still believe in the future of cellulosic biofuels, we have concluded it is in our long-term interest to find a strategic buyer for our technology including the Nevada, Iowa, biorefinery,” DuPont said in a statement.
Its sale, though, gets to the heart of the debate over biofuels — whether they are actually economic when it comes to blending ethanol with gas or whether such mandates merely tilt markets in favor of those who produce such biofuels. At the same time, there is a lot of discussion over whether the fuel additives are good for the environment or whether it is more efficient to just burn gasoline straight up.
The issue has pit the nation’s oil refineries against biofuel’s producers. If refiners can’t buy the proper amount of ethanol then they are forced to buy credits from those who have exceeded the federal requirements. The shortage, they say, has pushed up prices.
The current mandates passed in 2007 and it required 1 billion gallons of cellulosic ethanol production by 2020. But today’s output is only 7 million gallons, says the Renewable Fuels Association. Cellulosic ethanol is made from wheat grass and wood chips and is considered the next-generation to today’s prevalent form ethanol, which is derived from corn.
“Cellulosic biofuel innovators have been dealing with mixed policy signals and tremendous regulatory uncertainty for the past decade,” Renewable Fuels Association Chief Executive Bob Dinneen said in an interview with Reuters.
Beside DuPont, the same story says that Abengoa sold its advanced ethanol Kansas facility for $48.5 million last year.
To be clear, there are two generations of ethanol: the first is tied to corn while the second is more advanced cellulosic ethanol and associated with things like switchgrass, wood chips and municipal waste. Most of the criticism is tied to corn, which is not only less efficient than cellulosic ethanol but it is also an essential food.
Cellulosic fuel sources are abundant and could supply billions of gallons of ongoing ethanol. But the conversion process is expensive and undeveloped. To move it along, the U.S. Department of Energy has been investing hundreds of millions into the endeavor.
When fully operational, those “bio-refineries” have been predicted to produce more than 130 million gallons of cellulosic ethanol per year. But they are not there yet. Hence, the decision to pare down the requirements for advanced ethanol — and the decisions by advanced ethanol makers like DuPont and Abengoa to sell their plants.
In the long run, however, ethanol has potential: oil giant BP, has said that bio-fuels could provide up to 23 percent of the global demand for transportation fuels by 2030. So, some enterprising companies may buy such cellulosic plants at bargain prices with the expectation of making profits. Even DowDuPont will have some involvement.
“We will continue to participate in the overall biofuels market through specialty offerings, including biofuel enzymes and engineered yeast solutions that improve yield and productivity for biofuel producers,” DuPont said in its statement. “We plan to work closely with local, state, and federal partners to assure a smooth transition as we pursue the sale of the business.”
The Obama administration had placed high hopes on cellulosic ethanol, saying that it would one day supplant corn-based ethanol that is used mostly today. Ethanol derived from corn, however, is controversial because incentives divert it away from being a food crop and instead, into transportation, increasing food prices. Some studies also say that the process of converting corn to ethanol is inefficient and dirtier than just burning petroleum.
Both Republican and Democratic administrations have sought to reduce dependence on foreign oil while also improving air emissions. Critics say, however, that their objective has been to win the farm vote. During the campaign, Donald Trump said he would favor continued ethanol requirements, however, his administration is now focused on reducing regulations — and that also applies to the current ethanol requirements.