Abengoa Making Ethanol From Crop Waste at Plant in Kansas

Oct. 17 (Bloomberg) — Abengoa SA, Europe’s largest ethanol
producer, began operations at its first plant that makes the
renewable fuel at commercial scale from crop waste.

The facility in Hugoton, Kansas, can make as much as 25
million gallons of so-called cellulosic ethanol a year and will
reach full production next quarter, the Seville, Spain-based
company said today in a statement.

Other biofuel makers have struggled to produce fuels in
high volumes and at competitive prices, including Gevo Inc. and
Kior Inc. Abengoa is one of the first companies to deliver
cellulosic fuel on a commercial scale, a sign that it may become
a more important part of the U.S. energy supply.

“Costs are coming down, and the Abengoa plant is one of
the ways to help that, through commercialization,” U.S. Energy
Secretary Ernest Moniz said in a telephone interview Oct. 15.
“We will see the next generation of biofuels — cellulosic
biofuels — playing a much bigger role.”

The plant cost about $500 million. It was developed over a
decade, and was supported by a $97 million grant and a $132
million loan guarantee from the Energy Department. It was
completed in August and began initial production at the end of
September.

The decision to finance Abengoa’s biofuel effort was
comparable to the agency’s early backing for utility-scale solar
power, Moniz said.

‘First Movers’

“We’re trying to support the first movers for getting out
there into the market and driving costs down,” he said.

The plant also has a cogeneration system that produces
about 22 megawatts of electricity from biomass. It uses about
half of that capacity and the balance is made available to the
local grid.

“It’s solving multiple problems at the same time,”
Abengoa Chief Executive Officer Manuel Sanchez Ortega said by
telephone.

Cellulosic fuel also addresses concerns that corn and other
food crops should be eaten and not used as energy sources.

“That argument is no longer valid because now you have
technology that allows you to produce biofuels from something
that was waste,” Ortega said. “That’s huge progress.”

Kior, backed by Vinod Khosla and Bill Gates, halted
production at its commercial-scale plant in Mississippi in
January. The company said earlier this year it may sell itself.
Gevo halted production of isobutanol, another renewable fuel, at
its Minnesota plant in 2012 because of contamination issues.
That plant may break even this year.

To contact the reporter on this story:
Justin Doom in New York at
jdoom1@bloomberg.net

To contact the editors responsible for this story:
Reed Landberg at
landberg@bloomberg.net
Will Wade, Jim Efstathiou Jr.

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