Royal DSM and POET will produce cellulosic ethanol from corn crop residue through a biological process using enzymatic hydrolysis followed by fermentation. Up to 25% of corn crop residue left in the field will be collected; the rest will be left behind to fertilize the soil and prevent soil erosion. Independent studies as well as Iowa State University research sponsored by POET, have shown that this amount of residue removal will not cause significant nutrient loss.

A third party study commissioned by POET has shown that fuel from Project LIBERTY has greenhouse-gas intensity 111% below gasoline.

The first commercial demonstration of the technology will be at Project Liberty, which is currently being constructed adjacent to POET’s existing corn ethanol plant in Emmetsburg, Iowa. (Earlier post.) The initial capacity is expected to be 20 million gallons in the first year, growing to approximately 25 million gallons per year.

POET-DSM Advanced Biofuels, LLC, intends to replicate and license the technology to additional plants to be built at the other 26 corn ethanol facilities in POET’s network and license it to other producers in the United States and the rest of the world. The US Environmental Protection Agency (EPA) estimates that in the United States as many as 350-400 new bio-refineries will have to be constructed by 2022 to meet the volume requirement of 16 billion gallons/year of cellulosic bio-ethanol under the Renewable Fuel Standard.

POET, one of the world’s largest ethanol producers, has a production capacity in excess of 1.6 billion gallons of ethanol and 9 billion pounds of high-protein animal feed annually from its network of 27 production facilities.

DSM and POET will each hold a 50% share in the joint venture, which will be headquartered in Sioux Falls, South Dakota. The initial capital expenditure by the joint venture in project Liberty will amount to about $250 million. The closing of the joint venture is subject to regulatory approvals and other customary closing conditions.

The partners expect the joint venture to be profitable in the first full year of production (2014) and to deliver substantial revenues with above-average EBITDA contribution in the medium/longer term.

Both partners in the joint venture bring deep expertise and experience in different areas of cellulosic bio-ethanol.

• As one of the world’s largest producers of corn ethanol, POET has been actively developing cellulosic bio-ethanol for more than a decade. In November, 2008, the company started operating a cellulosic bio-ethanol pilot plant at its research center in Scotland, South Dakota. For the past five years, POET has been working with farmers to bale, transport and store corn crop residue—the cobs, leaves, husks and some stalk left in the field after the grain harvest.

• DSM already has a unique position in the development of cellulosic ethanol as the only company offering both yeast and enzyme solutions to increase conversion rates to make the technology commercially viable. DSM has experience in scaling up biotechnological processes and an extensive global footprint and relationships to help accelerate technology adoption in key markets.

Cellulosic bio-ethanol from corn crop residue represents a large opportunity. If the technology is replicated at POET’s network of 27 existing corn ethanol plants, it could produce up to one billion gallons of cellulosic bio-ethanol per year.

In an analysis of the Renewable Fuel Standard, the US EPA projected 7.8 billion gallons of cellulosic bio-ethanol coming from corn crop residue by 2022. Beyond that, the US. Departments of Energy and Agriculture have estimated that more than one billion tons of biomass is available in America that could produce enough cellulosic bio-ethanol to replace a third of the country’s gasoline use.