Calls for More Incentives for Cellulosic Ethanol
June 17, 2008
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Carlos Riva, chairman of Verenium Corp., said on Monday that the federal government needs to offer more incentives for commercial development of ethanol if the industry is going to establish itself as a viable source of renewable energy and a credible way to cut your carbon footprint.
Most ethanol in the America is currently made from corn. This form of ethanol has undergone a lot of controversy due the world food crisis, as some claim the use of corn for fuel instead of food has pushed up global food prices. There are also questions regarding if corn-based ethanol is actually better for the environment than traditional fossil fuels.
Cellulosic ethanol is made from non-food sources, including switchgrass, crop residues, and other plant waste. Advocates of cellulosic ethanol claim that it is a more effective way to reduce your carbon footprint as the production requires less energy and it does not take away from food stores. However, rapid growth in cellulosic ethanol would likely result in farmers altering their crops if it was more profitable to do so, which would have the same negative impact on food prices.
The government recently passed a bill that provides $320 million in loan guarantees over the next two years for the construction of cellulosic refineries. If lawmakers are able to find more funding, the have expressed that they would increase this amount by $150 million. Mr. Riva said this law was a good start in supporting this fledgling industry. However, the cost of even a moderate sized plant can run close to $150 million so the guarantees from the government do not actually go that far.
Riva said, “It’s going to be very difficult to convince a commercial bank to take the technical risk associated with the new technology.”
America has a goal of producing 16 billion gallons of cellulosic ethanol by 2022, in an effort to reduce the national carbon footprint. If this goal is to be met, much more needs to be done to offset the risk of the cost and time of construction.
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