6 Get Grants From U.S. To Support Bio-Refineries

Seeking to encourage motor fuel production from materials that are cheaper and more abundant than corn, the Energy Department said yesterday that it would provide up to $385 million in six bio-refinery projects that would produce cellulosic ethanol, a type of ethanol that can be made from nonfood crops and agricultural waste.

The awards, to be made over four years, are called for under the 2005 Energy Policy Act. They will advance President Bushs goals of making the cost of cellulosic ethanol competitive with gasoline by 2012 and of reducing Americas gasoline consumption by 20 percent in 10 years, Energy Secretary Samuel W. Bodman said at a news conference in Washington.

Dozens of ethanol refineries that use corn are planned for construction over the next two years. But Mr. Bodman acknowledged yesterday that corn alone would not be enough to achieve the ambitious goal of taming what Mr. Bush has called Americas oil addiction.

Because of constraints on farmland and the need for corn in the food supply, corn-based ethanol can produce only up to 15 billion gallons of ethanol, less than half of the 35 billion gallons of renewable and alternative fuels the president set as a goal by 2017 in his State of the Union speech in January.

Corn-based ethanol is already playing a key part in reducing our dependence on fossil fuels and mitigating the growth of greenhouse gases, but we cannot increase our use of corn grain indefinitely, Mr. Bodman said.

Ethanol made from corn has a small effect on greenhouse gases, but ethanol from cellulose cuts those gases sharply.

But cellulosic ethanol is still twice as expensive as corn-based ethanol, which has relied for many years on a 51-cent-a-gallon subsidy to be competitive with gasoline. For that reason, no company has yet to construct a commercial-scale cellulosic plant.

Mike Muston, executive vice president of Broin Companies, which won one of the awards, said Broin could produce cellulosic ethanol for $2.25 to $2.50 a gallon and expected to cut those costs to under $2 a gallon when it started its plant around 2010. Mr. Bodman said the long-range goal was to get costs down to $1 a gallon, which he said would put cellulosic ethanol in position to compete with any technology in the world.

Yesterdays grants will help accelerate the nascent cellulosic industry, Mr. Muston said, allowing Broin, which is based in Sioux Falls, S.D., and its partner, DuPont, to push up construction on an expansion to its Emmetsburg, Iowa, plant by two to three years.

Lawrence J. Goldstein, an energy consultant and critic of corn-based ethanol, said the administration had no choice but to push hard to commercialize cellulosic ethanol. They are throwing money where they ought to be throwing it because they know they cant get within shouting distance of their goal without a major, quick breakthrough in cellulosic, said Mr. Goldstein, a board member at the Energy Policy Research Foundation.

The awards will finance up to 40 percent of the projects, which are expected to total more than $1.2 billion. The projects, which are scattered from Florida to Kansas to California, aim to produce more than 120 million gallons of cellulosic ethanol a year.

The winning companies, in addition to Broin, are a Spanish company, Abengoa Bioenergy; Alico Inc., of LaBelle, Fla.; BlueFire Ethanol, based in Irvine, Calif.; the Iogen Corporation, of Canada; and Range Fuels, of Broomfield, Colo. Range Fuels is partly financed by Khosla Ventures, the Silicon Valley venture capital firm run by Vinod Khosla, an influential voice on ethanol in Washington.

The plants would use low-value materials like switch grass, wheat straw and wood chips.

Even with the new push by the Energy Department, Mr. Bodman said ethanols future was not assured.

We are unclear whether ethanol will be the winner, he said yesterday, referring to the search for a renewable energy source to replace petroleum. Bio-butanol, a crop-based fuel that is to be commercialized later this year by DuPont and the oil giant BP, is an inherently better fuel, he said, because, unlike ethanol, it has as much energy for each gallon as gasoline does.

Matthew L. Wald contributed reporting.

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