USDA offers $405M in advanced biofuels loan guarantees to Coskata, INEOS, Enerkem

January 20, 2011 |

Agriculture Secretary Tom Vilsack announced today that biofuels and biomass energy projects across America have been selected for funding to continue the Administration’s support for the development of renewable fuels. Vilsack highlighted the various investments USDA made since he laid out a broad vision to spur rural revitalization through renewable energy production in a speech at the National Press Club in October 2010.

“Building an active biofuels and biomass industry in every region of the country will help to create jobs and provide economic opportunity for people who live in rural communities,” said Vilsack. “The Obama Administration knows these investments will benefit all of America because renewable energy provides the opportunity for a cleaner environment and greater energy security for our country.”

The Biorefinery Assistance Program (Section 9003 of the 2008 Farm Bill) provides loan guarantees to entrepreneurs eager to take advantage of the growing opportunities in renewable energy provided by advanced biofuels. Today’s announcement includes three projects totaling $405 million in guarantee loans.

In rural western Alabama, Coskata, Inc. has received a letter of intent for a $250 million loan guarantee to construct and operate a cellulosic ethanol biorefinery facility.  This 55-million gallon-per-year renewable biofuel project will use woody biomass to produce ethanol.

In Pontotoc, Miss., Enerkem Corporation has been selected to receive an $80 million loan guarantee to build and operate a biorefinery that will be capable of producing 10 million gallons of advanced biofuel (cellulosic ethanol) per year by refining some 100,000 metric tons of dried and post-sorted municipal solid waste through a  thermo-chemical cellulosic process.

In Vero Beach, Fla., the INEOS New Planet BioEnergy, LLC. has been selected to receive a $75 million loan guarantee to construct and operate a biorefinery capable of producing 8 million gallons-per-year of cellulosic ethanol and gross electricity production capacity of 6 MW.  The feedstock for the process will include primarily vegetative waste (citrus and agricultural wastes), yard wastes, wood waste, and municipal solid waste.

Each company has specified conditions that they must meet in order to complete the loan.

The Digest’s Take

First of all, fears that the USDA would only be able to issue three loan guarantees, instead of their hopes for four, or even six as indicated last fall, were realized. The unlucky project that missed out: BlueFire Renewables.

Second, it appears that Coskata has landed the largest biofuels loan guarantee ever issued. And, we finally have more information on the location – to date, Coskata had only divulged that the project was in the Southeast US, but today the USDA confirmed that the project is in western Alabama.

Third, we note that each of the USDA loans were for cellulosic ethanol. Secretary Vilsack indicated that DOE would be issuing a loan guarantee for a 137 million gallon renewable diesel project in Louisiana. The DOE is expected to announce support for the Valero-Darling project.

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Category: Policy

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