Poet-DSM halts Project Liberty production over RFS mismanagement

By Erin Voegele | November 19, 2019

Poet-DSM Advanced Biofuels LLC, a joint venture of Royal DSM and Poet LLC, announced Nov. 19 it will pause production of cellulosic ethanol at Project Liberty and shift to R&D focused on improving operational efficiency. The company attributed the decision the U.S. EPA’s mismanagement of the Renewable Fuel Standard.

Project Liberty, a 20 MMgy biorefinery located in Emmetsburg, Iowa, converts corn stover and crop residues into cellulosic ethanol. The facility celebrated its grand opening in September 2014. The first-of-its-kind plant was impacted by process bottlenecks. Company officials, however, announced in October 2017 that the bottlenecks associated with feedstock pretreatment had been overcome and the company would move on to focus on downstream processing. 

As part of its Nov. 19 announcement, the joint venture said it will focus on R&D with the goal of improving mechanical reliability, creating additional technological efficiencies and licensing technology in countries that favorably support the use of low-carbon fuels. As part of the effort, Poet-DSM said the facility will use biomass stored on site or already under contract and will not purchase additional biomass at this time. The company also said the team needed to sustain R&D efforts has been evaluated and the joint venture will move forward with a reduced headcount in February.

Kyle Gilley, senior vice president of external affairs and communications at Poet, and Hugh Welsh, president of DSM North America, participated in a press call to discuss the decision to pause production at the plant.

The joint venture has already made tremendous progress with respect to this new technology,” Welsh said. “We’ve produced millions of gallons of cellulosic ethanol. The technological advancements that we’ve already made will pay dividends for decades to come as we move towards a low-carbon future. A future that we would move to much quicker if the EPA would do their job.”

Gilley said that Project Liberty has been producing and selling cellulosic ethanol into the market despite headwinds the EPA has created by manipulating renewable identification number (RIN) prices and not being forward looking in how they set cellulosic volume requirements in annual rulemakings. While Gilley said he can confirm the facility has been producing cellulosic ethanol and selling that product into the commercial marketplace, including into the California Low Carbon Fuel Standard market, he declined to share specific production volumes. He also noted the joint venture will not disclose specific information on the technology improvements it is seeking through the R&D process.

Poet-DSM cited mismanagement of the RFS and other EPA actions as the reasons for its decision to pause production at Project Liberty and focus on R&D. “EPA has continuously implemented [renewable volume obligation (RVO)] levels that reduce incentives for cellulosic biofuels, shrinking the market potential for this new technology,” Gilley said. “At the same time, EPA has blocked new cellulosic pathways by changing the approval mechanisms outside the required legal processes. This has slowed the development and commercialization of technology intended to meet the intent of the RFS. And, just recently, EPA announced 31 new small refinery waivers, reducing the annual blending amounts below statutory requirements, causing a drop in D3 RIN values, removing an incentive for commercializing this technology. Since 2017, the EPA has effectively cut the incentive to blend cellulosic biofuel from nearly $3 to as low as 59 cents per the D3 RIN value. These actions taken by EPA over the last several years have changed the market for cellulosic [biofuel] and created a more challenging economic landscape to operate in.”

While the Poet-DSM will pause production of cellulosic ethanol at Project Liberty, Gilley noted that the adjacent corn ethanol plant owned by Poet will not be impacted. He also said that Poet will continue to produce cellulosic ethanol from corn fiber, but noted the EPA has yet to approve a pathway for that corn fiber ethanol. As a result, the company cannot currently generate RINs for its production.

Welsh said Project Liberty could resume production in the future once necessary R&D improvements are made and market conditions improve. However, he didn’t provide an estimate of when that might be. Regarding licensing efforts, he said the joint venture has historically looked to Brazil, some European countries and China as places where there could be licensing opportunities for the technology.