No sign yet of commercial biofuels investment that Tennessee governor has described as ‘major’

By Erik Schelzig, AP
Wednesday, December 23, 2009

No sign of ‘major’ commercial biofuels investment

NASHVILLE, Tenn. — Gov. Phil Bredesen’s timetable is about to run out for what he has billed as a “major” commercial investment related to Tennessee’s biofuels program.

Bredesen had touted the potential investment after a Republican-controlled legislative panel raised concerns about Tennessee’s involvement in the biofuel initiative last month.

The Democratic governor warned that the panel’s hesitation over an $11 million contract could jeopardize the related investment. Lawmakers relented a week later and approved the contract in an 11-1 vote.

“We’re looking at a significant announcement, I hope by year end,” Bredesen told reporters after a speech to the Farm Bureau in Franklin last month. He described the projects as “a major new investment in biofuels … which doesn’t require any subsidy at all.”

As originally envisioned, the pilot plant in Vonore was to produce 5 million gallons of ethanol per year that could be sold to pay the operating costs of the research refinery. After a revision of the concept, however, the facility will now produce only about 250,000 gallons annually.

Officials say that’s enough to determine whether the process of turning switchgrass to fuel will work for a full-size refinery. But lawmakers said they were surprised by the change in scope and also that the plant will first focus on processing corncobs before moving on to converting switchgrass into ethanol.

The pilot plant is being run by Genera Energy LLC, a for-profit subsidiary of the University of Tennessee, and DuPont Danisco Cellulosic Ethanol LLC, a joint venture of DuPont Co. and Genencor, a division of Denmark-based Danisco AS.

Kelly Tiller, president and chief executive of Genera, told lawmakers last month that “very strong incentives” are in place for Itasca, Ill.-based DuPont Danisco to build a commercial plant in Tennessee in the future. She declined to give specifics.

Vonnie Estes, vice president of business development for DuPont Danisco, said the company’s business model is to license the technology for turning corncobs and swtichgrass into fuel.

“We will build the first couple of plants ourselves, build, own and operate, and then we will license the technology,” she said.

The company plans to build two commercial plants, one using corncobs and the other switchgrass, she said.

“Tennessee is first and has the first-mover advantage, and is the place to build these plants because there is going to be farmers and there is going to be switchgrass and support,” she said.

The 25 million gallon corncob plant will be built in the Midwest, Estes said. When pressed by lawmakers about whether the switchgrass plant would be in Tennessee, she said: “That’s the plan, the intention.”

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