POET CEO: Future of Second-Gen Biofuels Depends on E15

The argument for increasing the amount of ethanol blended into gasoline has generally stayed within the this-is-good-for-all-us territory. But in a year of bankruptcy filings and idling plants, the ethanol industry is taking a slightly more doomsday approach.

In a Bloomberg article, Jeff Broin, head of the largest U.S. ethanol producer, said the future of second-generation biofuels -- meaning no corn -- rests on the Environmental Protection Agency's upcoming decision on whether to raise the blend wall to 15 percent.

Brion is CEO of POET and board member of pro-ethanol group Growth Energy. It's not surprising that he wants and needs the government to raise the ethanol-blend limit from 10.2 percent to 15 percent. But as old adage goes, 'It's not what you say, but how you say it."

Broin's argument is this: the blend wall is holding up potential investment. To ensure financing for new projects, the industry needs to expand its sources of supply.

"We believe there are dollars available to re-open corn-based plants and build new refineries that make ethanol from grasses, crop waste and wood chips, should the EPA raise the ethanol limit," Broin said in the Bloomberg piece.

Congress passed biofuels legislation in 2007 -- Energy Independence and Security Act -- that requires the volume of renewable fuel blended into gasoline increase from 9 billion gallons in 2008 to 36 billion gallons by 2022. Of that 36 billion gallons, 16 billion gallons must come from cellulosic biofuel.

Whether or not you agree with the blend wall, the financing issue is a valid one. It is going to take considerable cash to bring large-scale commercially viable cellulosic ethanol to market by 2022.

The folks over a Sandia National Laboratories examined the feasibility of producing 90 billion gallons of ethanol per year in 2030, according to WSJ's Environmental Capital. What did they find? Well, cellulosic ethanol can't compete with gasoline unless oil stays above $90 a barrel.

Oh, and cellulosic ethanol producers need to be insulated from volatile or falling oil prices; have cheap and abundant feedstocks; and manageable capital costs, to boot.

See BNET's additional coverage of the biofuels industry:

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