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Looking at the sudden growth of Cellulosic Ethanol

Cellulosic ethanol plant in Nevada, Iowa. Photo by Ben Nuelle.

by Ben Nuelle

In April, the Environmental Protection Agency announced a little over 1 million gallons of cellulosic ethanol was produced in the first quarter of 2016. Production is well ahead of 2015 where only 2.2 million gallons were produced. In his state of the Union Address in 2006, U.S. President George W. Bush proposed to expand the use of cellulosic ethanol so why is it all of a sudden starting to take off?

Bob Dinneen is president and CEO of the Renewable Fuels Association.

He says cellulosic ethanol is just starting to take off and slower than anyone anticipated.

“In part because in 2008, when the price of oil ran up to $240 a barrel, you had a global banking crisis that made it difficult to go get a bank loan for a car. Nevermind walking into an investment bank and saying I need $400 million for new technology that is going to require a new infrastructure and a building market that’s uncertain.”

Dinneen says banks in 2008 and 2009 were laughing people out of their building. But now things have changed.

“The economy has gotten better. Money is now free for investments and people are recognizing the technology works and that we just need to have a growing market. That’s why the EPA’s decision last year was so bad because they sent a negative signal to the investment community that there’s not going to be a growing market for renewable fuels that EPA was going to constrain it artificially based on how much ethanol the oil companies wanted to use.”

The real story is right here in Iowa.

“The first cellulose producer was a corn ethanol producer in Iowa, Quad County in Galva, Iowa. They were the first ones to crack the code and are the only one’s producing volumes today producing credits. That’s the story. You now have cellulosic ethanol being produced.”

Dinneen says other reasons include the economy has gotten better and money is now free for investments. He says people are recognizing technology that works.