BlueFire shifts second cellulosic ethanol project to Mississippi; taxes, timing issues in move from California
BlueFire's process
In California, cellulosic ethanol pioneer BlueFire Ethanol Fuels announced strategic relocation of its second planned biorefinery to Fulton, Mississippi.
After having been awarded a $40 million dollar grant from the DOE for a second planned facility in California, BlueFire Ethanol, in 2007, began development and licensing work to build their second biorefinery plant utilizing the company’s concentrated acid hydrolysis process for conversion of post-sorted MSW), rice and wheat straws, wood waste and other agricultural residues to ethanol.
The Fulton, MS project will allow BlueFire to utilize green and wood wastes available in the region as feedstock for the ethanol plant that will be designed to produce approximately 18 million gallons of ethanol per year.
BlueFire has completed a 20-month licensing process and is currently awaiting the final financing needed to break ground on its ethanol biorefinery in Lancaster, CA. The Lancaster facility will use post-sorted cellulosic wastes diverted from Southern California’s landfills to produce approximately 3.9 million gallons of fuel-grade ethanol per year.
“We wanted to move quicker, and DOE said we needed to move quicker than we were able to in California. The Economic Development people in Mississippi, and in Itawamba county, welcomed us, and facilitated the project in every way. After going through a 20-month process with our Lancaster facility in California, we expect to be done with permitting by the end of the first quarter, after starting in July, and we have already located an off-take partner for our ethanol, upriver in the Memphis area.
“The economic problems in California were another problem. The state increased the sales taxes associated with the Mecca project by $1 million. For a “first of kind” technology project, it’s tough, and we asked for some consideration because of the nature of the project. But the state was unable to assist.
California, which stood to gain $8.3 million in tax revenue from the Mecca project (in addition to the $5.3 million from Lancaster, which also saw taxes rise, to $6.3 million), will see the revenues and jobs move to Mississippi, after the proposed increase to $9.3 million.
Klann confirmed that financing conditions for bioenergy project remain tough. “Some power side solar and wind projects are still getting through, but a lot of these depend on the credit of the utility — very little else is going forward unless the DOE provides a loan guarantee.
“A project like ours, ironically, is very close to qualifying under the non-recourse project financing model. In that case, the lender is trying to limit risk by contracting it out – off-take risk, feedstock risk, and so on. We have off-take contracts with credit worthy buyers and credit worthy feedstock contracts, plus we have guarantees from engineering, procurement and construction (EPC) contractors in terms of the performance of their work. What we don’t have is the performance guarantee on the technology – because it is first-of-its-kind. If the government could help with a guarantee of performance – then we would be able to qualify for a different financing instrument.
“Meanwhile, the current loan guarantee structure is for a broader performance of the loan, and now the DOE wants this rating, developers have to go to Fitch or something — because the that’s the advice which the guys in the trenches at DOE are receiving from the Morgan Stanley guys.”
BlueFire is one of four ethanol companies awarded funding from the U.S. Department of Energy to construct ethanol production facilities. Unlike remote corn ethanol production plants, BlueFire’s biorefineries will be located near markets with high demand for ethanol.
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blairaj | Oct 20, 2009 | Reply
This is an important article because it demonstrates that cellulosic ethanol is being produced in increasing amounts in the U.S. This is good for biofuels production because now there is more opportunity for biofuels producers to switch to greener solvents, i.e. ethyl acetate, as opposed to fossil fuel derivatives like hexane and methane. TBK Biodiesel uses ethyl acetate produced from cellulosic ethanol as an important reagent (see “Davy Process” for more information on exactly how this will work). TBK Biodiesel is just one example of a company whose process demonstrates a shift away from traditional transesterification, a widely used process which uses fossil-fuel-derived solvents to produce “biofuel”. When one sees increasing cellulosic ethanol production one also sees a greater opportunity for ethyl-acetate production for use in second generation biofuels like TBK Biodiesel.