Fagen begins construction on Hungarian plant

By Susanne Retka Schill | July 15, 2010
Posted Aug. 26, 2010

A Fagen/ICM corn ethanol plant began construction this week in Eastern Europe. Budapest-based Pannonia Ethanol Zrt., a company developed by Ethanol Europe, has contracted with the U.S. team to build an American-style corn ethanol plant along the Danube River about 50 miles from Budapest at Dunafoldvar, Hungary. The 50 MMgy plant being built adjacent to a Cargill grain handling facility is expected to be completed in mid-2012.

The environmental assessment was completed in June and final approvals obtained. Site preparation is nearing completion and the Fagen Inc. team has arrived in Hungary, with a small group of Americans directing local subcontractors in the project.

The environmental impact assessment posted on the Pannonia website gives details of the project. A natural gas-fired combined heat and power plant will generate 1.5 MW of electricity to be used at the plant, making a significant improvement in the facility's environmental footprint. The greenhouse gas (GHG) assessment indicates the ethanol produced at the plant will reduce GHG emissions 57 percent.

The favorable GHG score excludes any indirect land use effects partly because the methodology is still unsettled, according to the report, but primarily because the issue is irrelevant to the Hungarian situation. With a significant potential to increase corn production from existing and idled cropland, this project is not expected to have any indirect effects. Hungary's farmland is currently under utilized and corn yields are low by European standards. In order for biofuels to be eligible to satisfy the requirements of the Renewable Energy Directive, they must satisfy the requirement that they be certified as effecting at least a 35 percent net reduction in GHG emissions.

The project enjoys support locally and nationally in Hungary, according to the environmental assessment. "The Dunaföldvár government has consistently supported the project, and in early 2010, the national government passed a decree awarding the project with the status of ‘State Supported Large Project,' which is only given to projects of vital significance to the Hungarian economy." Agriculture is a significant contributor to the Hungarian economy with corn the most important crop. The vast majority of corn is exported, and the new ethanol plant would become the single largest corn consumer in Hungary, "and is viewed as providing price support for this commodity."

Ethanol Europe says in its documentation that it expects to pursue one or more project expansion plans within the next four years. The list includes doubling the plant capacity, capturing carbon dioxide, building an ethanol loading facility on the Danube and becoming a steam host for an adjacent biomass power plant. Negotiations are underway with a developer to build a small straw-fired power plant to supply renewable energy to the local power grid and steam for the plant.