Plant ethanol may help N.C.

State has plenty of crop, wood waste

Technological advances have overtaken five ethanol plants proposed for Eastern North Carolina. One has been canceled and at least one other delayed. None will start production this year.

The projects reflect a growing wariness among investors nationwide about pumping more money into ventures that make ethanol from corn.

Now interest is rising in using cellulosic feedstocks, such as wood chips and corn stalks, to make ethanol. Scientists and engineers, who have been working on cellulosic ethanol production for more than 20 years, are fine-tuning the process so they can produce large quantities of fuel.

The shift from corn to cellulose to make ethanol is unsettling a nascent industry.

However, it is also brightening North Carolina's chances of becoming a biofuels hub. Cellulosic feedstocks, especially wood chips and forestry waste, are plentiful in North Carolina; corn is not.

"This is going to be a huge industry," said Alex Hobbs, associate director of renewable technology at the N.C. Solar Center. "But it's not going to be powered by corn, it's going to be powered by forestry products."

North Carolina, like other states vying for a piece of the action, is trying to navigate through the uncertainty.

This summer, legislators earmarked $5 million to establish a biofuels center in Oxford that would coordinate the state's efforts to produce about 560 million gallons of ethanol by 2017.

Researchers at N.C. State University are experimenting with next-generation feedstocks, such as switchgrass and sweet potatoes. Two pilot plants, each projected to cost $1.5 million, are planned in the Triangle. They are intended to scale up production of cellulosic ethanol to commercial quantities.

Competition for biorefineries and the jobs they create is fierce.

Nationwide, several pilot plants have received funding to make ethanol from cellulose. A week ago, construction on the first cellulosic ethanol plant started in Georgia.

The move toward cellulosic ethanol is an answer as more -- some agricultural experts have said too many -- plans are floated for ventures that make ethanol from corn.

About 130 corn ethanol plants, most of them in the Midwest, produced more than 5 billion gallons of ethanol last year, according to the Renewable Fuels Association, a trade group for the U.S. ethanol industry.

Expansions and construction of about 70 plants are under way to increase production capacity to about 13 billion gallons from corn.

The boom is pushing up grain prices as a glut of supply is depressing the price of ethanol. Plans for more than a dozen corn ethanol plants have been canceled or put on hold nationwide.

"The marketplace is taking a step back," said Bob Dinneen, president of the Renewable Fuels Association.

E85 Inc. had planned to build 10 large corn-ethanol plants nationwide. In past months, the company -- which recently moved from Seattle to Williamsburg, Va., and changed senior management -- canceled five of the plants, including a large facility proposed near Fayetteville.

Construction of a large corn-ethanol facility near Aurora, which was awarded $3 million in state funding, has been delayed for more than a year. Officials at Agri-Ethanol, the Raleigh company that wanted to build the facility, couldn't be reached for comment.

Two smaller corn-ethanol plants planned about 15 miles apart in Hoke and Robeson counties have the best chance of being built.

"The smaller plants are better for North Carolina," Hobbs said. "It's a good place to get started and later modify to cellulose."

Plans for a large cellulosic ethanol plant in Spring Hope are still alive, said Doug McCullagh, who is working on the project with Xethanol, a New York company. Xethanol bought a rusty, idle fiberboard plant near Spring Hope last year for about $11.7 million.

The plant is being razed to make room for a $20 million biofuels park that would produce biodiesel and cellulosic ethanol, McCullagh said.