Ethanol fuel mandate unlikely to be met

Technology still looks promisingA federal mandate to produce 100 million gallons of ethanol next year from celluose cellulose is unlikely to be met, because credit and legal troubles have hurt the fledgling industry.

Cellulosic ethanol, made from such sources as grass and wood, is starting slowly but is expected to provide at least 16 billion gallons of the fuel by 2022 under federal renewable-energy goals.

But tight credit markets have stalled development, and only one commercial plant is scheduled to start operation next year.
Another plant, run by Cello Energy, was expected to provide about half the 100 million gallon goal next year. But its ability to do that was put in doubt this summer when an Alabama jury ordered the company to pay damages for misleading investors. The jury found that the plant’s fuel was being made with crude oil and not cellulose, as Cello had told investors.

As a result of the troubles, the Environmental Protection Agency was considering lowering the 100 million gallon goal for 2010, according to Margo Oge, the director of the EPA Office of Transportation and Air Quality. A copy of her remarks at a recent energy conference in Nevada was made available by OPIS, an energy information company that sponsored the conference.

She wasn’t available for comment, but EPA spokesman Dave Ryan said in a statement: “We are continuing to assess the viability of the various technologies and companies in supplying cellulosic biofuel as we finalize the standards and in particular the cellulosic biofuel standard for 2010.”

Cellulosic ethanol is a promising technology, in part because it avoids having to use food crops such as corn to make ethanol. The industry expects to be successful and eventually meet the federal targets, but it acknowledges that could be difficult in 2010.
“It’s certainly a challenging goal,” said Matt Hartwig, a spokesman for the Renewable Fuels Association.