Big Cellulosic Ethanol Bone Tossed To Oregon

President Obama said in his State of the Union address that it was time to “double-down on a clean energy industry that never has been more promising.” Apparently, he includes cellulosic ethanol in that category, despite the industry’s many woes and skeptics.

With the U.S. Department of Energy (DOE) largely out of the clean energy loan-guarantee business after the controversial Section 1705 program lost new-financing authority this past September, the administration is using the Department of Agriculture (USDA)—and, specifically, the Biorefinery Assistance Program that was part of the 2008 Farm Bill—to extend a $232.5 million loan guarantee to ZeaChem, a Colorado-based compan, to build a plant in Boardman, Ore., thatwould use wood and farm waste to produce 25 million gallons of ethanol a year.

image via ZeaChem

The guarantee covers 60 percent of the loan amount, so should the ZeaChem plant go the way of the recently failed cellulosic ethanol company Range Fuels–which received more than $100 million in grants and loans beginning in the Bush administration and continuing in the Obama administration—taxpayers wouldn’t be on the hook for the full amount. Also, the USDA said ZeaChem “must meet specified conditions before the 60 percent loan guarantee can be completed,” including getting a recently completed demonstration-size plant up and running efficiently.

Still, this isn’t the first instance of government assistance to ZeaChem. Back in 2009, the DOE gave it a $25 million grant to build a 250,000 gallon per year demonstration project in Boardman (it’s nearing completion). Then, just last October, ZeaChem was one of the industrial partners in a $40 million USDA grant to the University of Washington for the development of cellulosic ethanol—and another partner was GreenWood Resources, which is growing poplar trees in the Boardman area for use in the ZeaChem plant.

Pete Danko is a writer and editor based in Portland, Oregon. His work has appeared in Breaking Energy, National Geographic's Energy Blog, The New York Times, San Francisco Chronicle and elsewhere.

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