“We’re really in supply-chain development. We’re not studying it anymore. Compared to other supply chains that other big industries use, this is relatively straightforward,” he said.
Both DuPont and Abengoa have forged contracts with large farmers to take a portion of the stover left on their corn fields, leaving enough to restore soil health. DuPont estimates there is enough extra stover to make between 1 billion and 2 billion gallons of ethanol annually.
“The encouraging thing to me is that farmers really like it. It works well in the farmer’s operation. They can see it is sustainable in their operation, and it is something they can continue doing,” said Jan Koninckx, DuPont’s global business director for bio-refineries.
A pullback now from the fuel standards, just as profit margins change because of soaring corn prices, could be disastrous. And not just for producers.
“Today ethanol sells for 60 cents per gallon less than gasoline at the rack, so every gallon of ethanol lost will cost the consumer at the pump,” Standlee said. “Recent studies indicate total consumer savings generated by ethanol in 2011 were between 84 cents and $1.07 per gallon.”
Ethanol producers fear some in Congress, at the behest of the oil lobby, may undo incentives such as the fuel standard that helped build an industry from scratch.
“We don’t want change to impact the investment in cellulosic,” said Standlee.
Added DuPont’s Koninckx, “We wouldn’t work on this if we thought it would be permanently dependent on government support.”
To turn a profit on cellulosic ethanol, producers need to see crude oil trading at a floor price of $70 or $80 a barrel, he said, confident that ambitious goals for cellulosic ethanol can be met.
“If you put yourself back in 2005, you’d say, ’I’m not sure that could ever be done.’ But it was done. I think (the goal) is quite doable,” Koninckx said.