By EHREN GOOSSENS
Royal DSM, the worlds largest vitamin manufacturer,
expects to begin producing cellulosic ethanol in the US by
July as the government considers reducing the amount of
renewable fuel that oil companies will be required to buy.
The $250 million plant in Emmetsburg, Iowa, is a joint
venture with ethanol
maker Poet and will
produce about 12 million gallons (45 million liters) this
year, said DSM chief executive Feike Sijbesma. It will be
able to make about 20 million to 25 million gallons annually
and will reach full production by the end of the year.
Demand for the fuel is driven in part by US Environment
al Protection Agency
requirements that gasoline companies blend biofuels into
their products. Those mandates increase annually while US
gasoline consumption is declining.
As a result, the biofuel
percentage in each gallon
of fuel is rising, and is approaching the 10% level that
refiners and automakers say may damage engines. The EPA in
November proposed lowering the rate, a change DSM said is
We think that principle is fundamentally flawed,
Hugh Welsh, the Heerlen, Netherlands-based companys
president for North America, said in an interview at
Bloombergs headquarters in New York. The
blend rate should not be tied to 10%.
Theres no reason a 10% ethanol
blend cant be used
in US vehicles, and fuels with as much as 15% ethanol have
been extensively tested, Welsh said.
The Emmetsburg plant will turn corn waste into cellulosic
ethanol. Thats considered a second-generation biofuel
, an evolutionary step
beyond fuel produced from food crops such as ethanol
from corn and sugar cane.
DSM makes a broad range of chemicals, including enzymes used
in food production and biofuels.
Under the US Renewable Fuel Standard, gasoline and diesel
producers are required to blend 36 billion gal/year of
biofuel into their products by 2022, including 16 billion
gallons of cellulosic fuel.
Oil companies have urged lawmakers to revise or repeal the policy
as more efficient vehicles
and consumers shifting driving habits eat into gasoline
Those rates were set in 2007, and in November the EPA
proposed lowering the 2014 mandate to 15.21 billion gallons,
from 18.15 billion gallons under the original schedule. The
new rate includes 17 million gallons of cellulosic biofuel
The Renewable Fuel Standard will play an important role
in the market, Sijbesma said. Shifting mandates make it
difficult to forecast demand, and DSM is seeking a
consistent RFS policy
The EPA expects to make a decision on the 2014 blend
requirements by June, its administrator Gina McCarthy said