An Italian technology company has secured $99 million in federal loan guarantees, providing a government safety net that removes a major obstacle toward building an ethanol refinery in rural Sampson County in the eastern part of the state.
Officials hailed the project in Clinton on Wednesday as potentially the first of many such refineries spawned by a new cash crop with a global market and North Carolina as a leading producer.
It is so important this project succeeds so we can replicate this around the country, said Dallas Tonsager, U.S. Department of Agricultures Under Secretary for Rural Development.
The planned Chemtex International ethanol plant, which would employ 65 people, is part of a multi-year national race to make transportation fuel economically from plants other than corn. Grasses and stems which have near-impenetrable defenses against insects and fungi are much harder to break down and convert into liquid fuels than corn.
Switchgrass has emerged as the leading contender, prompting scientists in North Carolina and around the country to develop techniques that either bioengineer modified plants or bring down the cost of processing ethanol from reedy, inedible shoots.
Researchers at RTI International in Research Triangle Park and N.C. State University have been working since at least 2008 to come up with a cheaper alternative to corn ethanol. Raghubir Gupta, director of RTIs Energy Technology Center, said the science is a cinch but researchers are pushing to break through a frustrating economic barrier.
Its probably five or 10 years away that we know whether this will work, Gupta said. At the end of the day it will come down to cost: Will it still require subsidies, or can it stand on its own two feet?
Chemtex and the USDA say they have the secret sauce. Chemtex is developing a similar project in Italy that is slated to begin operating in several months.
The North Carolina biorefinery, slated to begin operations in 2014, would be the nations first to make automobile fuel on a commercial scale from field grasses and stalks, its backers say. Others around the country are either pilot projects or use wood chips, a plentiful raw material that could also be used at the Chemtex plant.
The Sampson County project is based on a collaboration between Chemtex and Novozymes, European companies with global markets and North American headquarters in North Carolina. Chemtex, which employs 75 people in Wilmington, developed a process to grind the grasses into a pulpy mass; Novozymes, employing more than 500 in Franklinton, is providing the enzyme cocktail to extract the carbohydrates that can be fermented into a fuel.
The impetus is a federal mandate to increase biofuels, along with a state goal to produce 10 percent of the transportation fuel that is used in North Carolina. Currently only about 0.5 percent of the states fuel use is offset through biodiesel, while ethanol is not being produced at all.
The 20 million gallons of ethanol produced by the Chemtex plant would still be just a fraction of the 500 million gallons needed to meet North Carolinas 2017 biofuels target.
At this point, however, the $165 million project hangs on the U.S. Department of Agricultures willingness to insure more than half its cost. The USDA is also pitching in nearly $4 million to cover up to 75 percent of the start-up costs for the farmers recruited to participate as suppliers of switchgrass, miscanthus, sorghum and other grasses.
Chemtex, along with state and federal officials, has showcased the project in several presentations in eastern North Carolina that have drawn more than 250 farmers. The company needs to have about 25,000 to 30,000 acres in production to supply its refinery, which would produce 20 million gallons of ethanol annually.
A selling point is that the grasses would not displace other crops; they would be grown on marginal, low-yield soil.
Were putting into play land that is sitting idle or generating very little, said Dennis Leong, Chemtexs Wilmington-based executive vice president for marketing and business development. The challenge in North Carolina is weve got to get people to change their mindset that you want to grow biomass.
To date, only a handful of farmers have signed up, representing about 200 acres, said Matt Harrod, Chicago-based director of Chemtexs agri-supply chain. The company has letters of intent with another two dozen farmers who represent about 10,000 acres, about a third of the amount that will be needed.
According to participants in Wednesdays presentation, farmers are skeptical of experimental plants because other touted projects were delayed or went bust. Farmers are also wary of plants that resemble weeds.
They become leery of it becoming a weed of sorts, like crabgrass or kudzu, said Randall Gore, USDAs North Carolina State director. He said Chemtex will be using a sterile variety, like a mule.
Another challenge: Limiting the shipping distance of the supply chain as a way of controlling the fuel costs of trucking. Chemtex is hoping to source most of its plants within 35 miles of the refinery, from farmers in Johnston, Sampson, Duplin and Bladen counties.
This is extraordinarily challenging, said W. Steven Burke, president and CEO of the N.C. Biofuels Center, created by the legislature in 2006 to promote alternatives to fossil fuels. No other technology development sector is so dependent on thousands of acres of land.