NEW FUELS & VEHICLES REPORT - March 14, 1997

Two New Cellulosic-Ethanol Plants In Late Preconstruction Stages

Two new projects for producing ethanol from cellulosic feedstocks are in the late preconstruction stages at opposite ends of the country. One, in California, is intended to use rice straw as the feedstock. The other plant, to be built in New York, will use municipal garbage.

The California plant is being planned by Arkenol, Inc. for a site near Sacramento. Its design production capacity is 12.5 million gallons per year. The location is a major rice-growing area and heretofore the huge volumes of rice straw have been burned as waste. Now, however, air-pollution restrictions on burning the straw are going into effect - posing a major problem for the farmers.

Arkenol sees ethanol production as the solution, by using a proprietary concentrated acid-hydrolysis process. "We have a plant fully licensed and permitted near Sacramento for rice straw," said a company official. "We are in the financing phase right now."

Arkenol will be operating the Sacramento plant, with ownership in the hands of a general partnership, said the company source. "We hope to be under construction some time this year," he said, admitting that finding project finance is difficult - partly because of the uncertainty over the federal ethanol tax credits and other subsidies. "The economics are very good but the industry needs the tax credits, at least initially," the source said. "You learn from your mistakes."

Process steam from the plant will come from a natural gas-fired power plant sited next door. Byproducts of the rice-straw feedstock are lignin, which can be used as a soil conditioner; carbon dioxide (CO2); and silica. The CO2 and silica will be sold for a wide range of uses, said the source.

Arkenol, based in Mission Viejo, CA, has other cellulosic-ethanol projects under development, in the 20-30 million gallons/year range, said the source. One of these plants is in Pennsylvania, using hardwoods as the feedstock and producing lignin and CO2 as byproducts. Other plants are also in the U.S. and in The Netherlands (using waste paper as the feedstock), Brazil (sugarcane bagasse), and Italy (crop residues). The source would not be more specific.

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