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USDA approves $99M, 80% loan guarantee to Chemtex to support development of cellulosic ethanol from energy grasses

Proesa
The PROESA process delivers cost-effective sugars from non-food biomass for use in bioproducts. Source: Beta Renewables. Click to enlarge.

The US Department of Agriculture (USDA), through its Rural Development Biorefinery Assistance Program (Section 9003 of the 2008 Farm Bill), approved a $99-million, 80% loan guarantee to Chemtex International, Inc. to construct a 20 million gallon per year cellulosic ethanol refinery in Sampson County in eastern North Carolina. The plant, with an expected startup in 2014, is a first-of-its-kind commercial facility in the mid-Atlantic region.

Once operational, the facility is expected to convert 600,000 tons of energy grasses per year into an estimated 20 million gallons of cellulosic ethanol using the Beta Renewable’s PROESA enzymatic hydrolysis process. The plant will produce biofuel for eastern transportation markets using non-food biomass feedstocks. Beta Renewables is a $350-million (€250M) joint venture formed from the Chemtex division of Gruppo Mossi & Ghisolfi and TPG.

The loan guarantee approval is subject to conditions that Chemtex must meet prior to closing of the loan.

PROESA combines an enzymatic pre-treatment process with fermentation. The process runs significantly faster than other enzymatic hydrolysis approaches, is acid-and alkali-free and has minimal byproducts, according to Beta Renewables. The parameters are adjustable, providing flexibility in the desired output of C5 and C6 sugars and lignin to be used in the production of ethanol or chemicals.

The same technology being used at a commercial-scale cellulosic ethanol plant in Crescentino, Italy, expected to start operations in the fall of 2012, and in a series of plants to be built by GraalBio in Brazil.

In July, Gevo signed a Joint Development Agreement (JDA) with Beta Renewables to develop an integrated process for the production of bio-based isobutanol from cellulosic, non-food biomass. (Earlier post.

Chemtex is working with local farmers and producer organizations to begin growing energy grasses for the facility. About 30,000 acres will be required to supply the facility with sufficient feedstock.

In partnership with the Biofuels Center of North Carolina, Chemtex has identified nearby farmland that is currently growing Coastal Bermuda grass to manage swine lagoon effluent. Conversion from Coastal Bermuda to high yielding energy grasses, including miscanthus and switchgrass, will provide Chemtex a cost-effective biomass feedstock for cellulosic ethanol production and area swine farmers with increased economic opportunity as well as the land stewardship benefits of enhanced effluent management.

In June, Chemtex was awarded $3.9 million by the USDA, under its Biomass Crop Assistance Program, to support the establishment of more than 4,000 acres of miscanthus and switchgrass across eleven counties in North Carolina. The feedstock will be part of the biomass supply for Chemtex’s facility. The net increased revenue to local growers is projected to be $4.5 million per year.

The new USDA loan guarantee is part of a larger effort to produce advanced biofuels in every region of the country. USDA has funded 8 additional biorefineries that are using feedstocks such as agriculture residue, woody biomass, municipal solid waste, and algae in states including Michigan, Oregon, Florida, Nevada, and New Mexico. USDA is also investing in research by coordinating with five regional research centers to work on the science necessary to ensure profitable biofuels can be produced from a diverse range of feedstocks.

The Biorefinery Assistance Program (Section 9003 of the 2008 Farm Bill), administered by Rural Development’s Rural Business and Cooperative Service, is designed to financially assist with the commercial deployment of production technologies to produce advanced biofuels, and thereby increase the energy independence of the United States; promote resource conservation, public health, and the environment; diversify markets for agricultural and forestry products and agriculture waste material; create jobs and enhance the economic development of the rural economy.

Comments

HarveyD

Instead of handling out Loan Guarantees, Tax Credits, Subsidies and Hand Outs, why not offer Industries regular Loans at regular or preferred rates? This way, the country (i.e. the 99%) would get most of the money back + loads of interests to cover the few loses instead of (loosing) giving away $$$$B every year and getting the country deeper in debt.

JMartin

How about a guaranteed market with a guaranteed price on a declining basis over time. Sort of like a feed-in tariff. Then let the private market lend money.

HarveyD

The idea is for the public at large, via a large government fund, to participate into new technologies and similar endeavors. The fund should be able to make money to gradually pay off the national debt over 2 or 3 decades.

Initially, the funds would borrow $$$$B from the Fed Bank at very low or zero interest rate. The other source of $$$ would be from all the Ex Direct and Indirect gives away which would now be illegal.

This investment fund should never own more than 49% of any private enterprise or supply more than 49% of the risk start up capital in the form of loans-preferred shares etc.

ToppaTom

How can you expect to guarantee markets and price - without huge losses and ruining the market as it always has before?

What this investment fund should never invest is other people’s money and should never invest in politically justified programs and should never invest in technically unsound endeavors, lest it fail miserably.

But that is exactly the case today.

“Should never” is worth nothing.

HarveyD

TT...something has to change.

Giving over $1T/year to private industries (and the 1% to 3% with $$$$) and getting nothing in return is not the solution. That will lead to disaster within very few decades if not years. The public (the 97% soon to be 99%) with diminishing wealth has to participate and get their fair share of the national wealth. The National Investment Fund could be one of the vehicle to do it, at least up to 49%.

Simultaneously, all financial gain must be taxed (no loop hole). The tax rate must be progressive. Low income people (below $20K or $30K) should not pay income taxes. People with above $100K or $150K should pay a lot more. Luxury non-essential goods must be taxed more. For example, vehicles below $20K should not be taxed and those above $60K should be doubled and tripled taxed etc.

Qadir Tapra

The process runs significantly faster than other enzymatic hydrolysis approaches, is acid-and alkali-free and has minimal byproducts, according to Beta Renewables. quick payday loans online

Calvin Brock

Carolina. The feedstock will be part of the biomass supply for Chemtex’s facility. The net increased revenue to local growers is projected to be $4.5 million per year. Matawan Tax Return preparer

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