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POET Reduces Cellulosic Ethanol Production Cost from $4.13 to $2.35/Gallon in First Year of Pilot Operation; <$2.00/Gallon Target for Commercial Start

Over the first year of operations of its pilot-scale cellulosic ethanol plant in South Dakota (earlier post), POET has reduced its per gallon production cost from $4.13 to $2.35, exceeding its expectations. Cost reduction came via reductions in energy usage, enzyme costs, raw material requirements and capital expenses. The pilot plant uses corn cobs for feedstock.

The company’s goal is to be below $2 per gallon by the time of the commercial start-up of its Project LIBERTY (Launch of an Integrated Bio-refinery with Eco-sustainable and Renewable Technologies in Y2009) plant, a planned 25 million-gallon-per-year cellulosic ethanol facility in Emmetsburg, Iowa. (Earlier post.)

POET has been working on cellulosic ethanol for close to a decade and there were some days that I wasn’t sure we’d be successful. While we still have some challenges ahead, I can say unequivocably that Project LIBERTY will be commercially viable by the time we start up the plant.

—Jeff Broin, CEO of POET

Broin pointed to several areas of progress in the production process that helped them achieve the overall cost reduction:

  • Chemical raw materials required in the process have been reduced, resulting in an operating cost savings of $0.20 per gallon.

  • The energy used in the pretreatment process has been reduced by more than half.

  • Alternative energy technology has been demonstrated to provide all of the energy for the cellulosic ethanol plant and at least 80% of the adjacent corn-based plant.

  • Enzyme cost has been cut in half and is expected to decline by start-up of Project LIBERTY.

  • Through continuous optimization of the process, entire unit operations have been eliminated, reducing overall capital cost by more than 40%.

Dr. Mark Stowers, Senior Vice President of Science and Technology for POET, said that there are some promising areas for future cost reductions in the cellulosic production process.

There are still several opportunities to make the process more efficient, particularly in fermentation. Additionally our enzyme partners have committed to significant additional cost reductions. But significant gains can also be made once we start up the commercial facility and POET uses its 20+ year history in biorefining to drive cost reductions and efficiency improvements in the process.

—Dr. Stowers

Dr. Mark Stowers, Senior Vice President of Science & Technology talks about the cost savings that POET has achieved in cellulosic ethanol production. Source: POET.

POET’s pilot-scale plant has produced approximately 20,000 gallons of cellulosic ethanol since it started producing on November 18, 2008.

POET, the largest ethanol producer in the world, is a leader in biorefining through its efficient, vertically integrated approach to production. The 20-year-old company produces more than 1.54 billion gallons of ethanol annually from 26 production facilities nationwide. POET recently started up a pilot-scale cellulosic ethanol plant, which uses corn cobs as feedstock, and will commercialize the process in Emmetsburg, Iowa.



Good news. Their cost - which someday will be my cost and yours - is going in the right direction.

But there are "costs" and there are "costs." Some are more real than others.

That is not to say POET is fudging. No reason to think so. And companies have valid reasons to not reveal details to competitors.

There are so many subsidies, hidden and direct, in energy production that we must view announcements with caution. Especially cost numbers about alcohols from newer processes.


Even the future claimed cost of $2/gal is much higher than Brazil's $0.75/gal. and the energy gain ratio will certainly be much lower than Brazil's (10.2/1.0) from improved sugar cane.

What would be the best energy gain ratio for combined (corn + cellulosic) ethanol? Would it reach 2.0/1.0?


Ethanol produces less energy from a crop, than the energy in the biogas generated when the crop is digested. The ethanol production process uses up to 60% of the produced energy in the final ethanol product. It is shown for compressed biomethane generated from silage that the total parasitic demand of the process is of the order of 25%.

Nathan Schock

I work for POET and appreciate the post as well as the comments. Ken, the $2.35 cost includes everything: interest & depreciation, wages & benefits, maintenance, insurance, etc. It also does NOT include a tax credit or any other government support. This is the cost of production, including feedstock.

HarveyD, I'm really not sure what you're talking about with Brazilian ethanol. Today it's MORE expensive than U.S. ethanol, which is why they're talking about exporting U.S. ethanol to Brazil:



The wholesale local price of Brazilian ethanol is varies between $0.75/gal to $0.83/gal before taxes.

When exported to USA, you have to add transportation cost + handling + administration + profits collected at various levels + $0.54/gal for US import duties + all USA taxes. The total final price to continental USA is probably over $2.00/gal.



What is the EROI of the whole thing ? and the gallon / ton of biomass. What is the amount of water consumed in the process ? On how much distance is the biomass transported and is the energy burned in bringing the biomass to the ethanol plant taken into account in your EROI ?


Roger Pham

This is great news. Making cellulosic ethanol economically while reserving corn to feed people and livestocks. Ethanol is needed as gasoline additive.

Ethanol injected separatedly from gasoline can also be used in high-compression turbocharged engine during high boost due to the high octane rating of ethanol. This will help boost fuel efficiency by allowing engine downsizing.

Nathan Schock


We're currently modeling the EROI of our new design and hope to have something soon. It will take into account transporting biomass to the facility, all of which comes within a 30-mile radius. Our yields per ton of biomass are in the 80-85 gallons per ton, but we are confident that we can get them higher than that by commercial plant start-up.


Like U.S. ethanol, Brazilian ethanol uses a commodity as its feedstock: sugar. So it's impossible to say that the local wholesale price of ethanol fluctuates only within an eight cent range. Take a look at this story from a few weeks ago:

Especially read this line:

"A liter of ethanol in Sao Paulo city costs about 1.50 in Brazilian reais, equivalent to US$3.26 per gallon."

Account Deleted

God to hear that Poet is that close to commercial production of cellulosic ethanol. It is worth mentioning that USA’s current ethanol production is about 12 billion gallons per year or about 0.8 million barrels per day of ethanol. This should be compared to a US domestic production of 5.4 million barrels of crude oil per day that after refining only delivers about 2.7 million barrels of gasoline per day. So ethanol is already really big in terms of the domestic US vehicle fuel supply.

The US ethanol industry has the potential to grow bigger than the domestic US oil industry if Poet and others succeed in making ethanol from most kinds of biomass (corn, corncobs, wood, straw etc) at less than 2 USD per gallon and gasoline retail prices stay at 2.7 USD per gallon or more.



Thanks, 80-85 Gallon per ton seems short of what I read here and there where value of 100Gallons per ton were obtained. 30miles seems an awful long transportation for something like biomass that have such a low energy content. What about water consumption ?

Erik don't forget 1 gallon of ethanol equal only 0.7 gallon of gasoline so your 0.8milliom barrels are more like 0.5millions barrels equivalent gasoline. US consume 20 millions barrels of crude oil so quite a loooooong way to go.

Nathan Schock


Keep in mind that 80-85 gallons is where we are TODAY. I bet that most of the people who talk about 100 gallons are either modeling lab results or talking about where they think they can be in the future. As I said in an earlier comment, we know we will continue to push that yield higher, just like we've done with grain over the past 21 years.

We don't believe that 30 miles isn't too far for cobs. Keep in mind that they have a much greater bulk density than the leaves and stalks of the corn plant.

Water use is a little more difficult to model because we could be reusing some of the water in the adjacent grain plant. We believe that it will be about 25 percent below what is used in the grain process, which would make it comparable to petroleum. Once we get a firmer estimate, we'll let you know.



Let's not confuse local retail price with average cost and wholesale price before any taxes, transport, subsidies etc.

In 2008 the average production cost in Brazil was $0.83/gal without direct or indirect subsidies. The average USA cost was $1.14/gal + $0.51 direct subsidies + $x.xx/gal indirect subsidies = about $2.00/gal to $2.25/gal.

Thes best energy saving ratio is 10.2/1.0 in Brazil and 1.66/1.0 in USA. In other words, the energy saving ratio is about 6.14 times higher in Brazil. USA has a long way to go to catch up in both cost and energy saving ratio.



Why you worry about water consumption in South Dakota? I don't see any reason. India - may be. Now days ethanol production is close cycle process and evaporating very little.

If it is expressed money wise I would not worry about biomass transport distance. On other hand oil you have to transport thousands miles not 30 or 40 miles.


Great progress. As we approach 1M bl/day production and start converting that to cellulosic and waste to alcohols - the US energy picture will start to look better. Even with the lower energy content of ethanol, what is consumed going forward has two good advantages:

1) It is renewable.
2) It is made domestically.



water consumption is turning to be a global problem, California imports its water from Colorado, so water problem in California are transferred to Colorado even if it has plenty of water.

Transportation of big quantity of biomass is indeed a big issue for the development of biofuel. A 1 million ton ethanol plant would require 1 truck of 30 tons of biomass every 6 minutes 24hrs/day 364 days a year, that is a lot of energy burned in transportation if the biomass comes from too far away.


Treehugger, I think you meant every 16 minutes. Assuming an average one-way trip distance of 20 miles at 40 mph and 5 mpg, that's a fleet of 4 trucks (realistically 5 to allow downtime) and 267,000 gallons of diesel per year. A 100m gpy ethanol plant is equivalent to 60m gpy of diesel, so fuel transport usage is only 0.4% of your fuel output. Note that POET's Project Liberty is 125m gpy total but only 25m of that is cellulosic, so the actual cob transport is about 1/4th of these amounts.

The dominant energy input is still process heat. The big story with Project Liberty is they burn cob* for heat to distill both their conventional and cellulosic ethanol, almost eliminating fossil fuel use. It's a huge EROEI win.


*They don't burn cob directly because that wouldn't qualify for massive cellulosic funding. So they make some cellulosic ethanol from the cob then burn the rest to make steam. Combined plant output is 125m gpy, of that 25m is cellulosic and 100m is conventional. I estimate the cobs provide 3-4x more BTUs as process heat than as cellulosic ethanol.

I bet their $2.35/gal cellulosic cost includes a credit for process heat. In other words, it actually costs 4.35/gal to make the cellulosic ethanol but the cobs to make each gallon also provide 2 bucks worth of fuel for distillation. So the NET cost of the cellulosic is only 2.35.


Transporting the biomass is a big issue. This is why you locate the biofuel plant close to the biomass sources. If you grow lots of corn and have corn cobs in Iowa, you locate the plant there. It is more cost effective to transport the value added product than the feedstock.



My answer was joke. But in reality water doesn't matter for ethanol production even in India or Pakistan. Very little amount and pour quality can be used. Even sewage water. Its realty not an issue because it is closed cycle process and lot of waste heat is available and you always can get water by evaporating sewage or sea water. Some study showing stupid data about ethanol production and now there are numerous repetitions on this "water" issue.

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