Connecticut company to produce low-cost cellulosic ethanol

By Kris Bevill
Posted August 20, 2009, at 2:25 p.m. CST

As corn ethanol producers continue to deal with tight margins and tough markets, a new name in the industry prepares to launch itself to the front of the class by producing cellulosic ethanol for less than $1 per gallon.

Connecticut-based American Energy Enterprises Inc. plans to construct a commercial-scale ethanol production facility in New Milford, Conn., and according to company chairman Christopher Brown, will use wood waste to produce ethanol at a cost of 80 to 85 cents per gallon. The plant is expected to begin production in mid-2010 and will initially produce up to 15 MMgy. Once production commences, units will be added monthly to increase capacity until the plant reaches its full capacity of 80 MMgy to 100 MMgy.

The project was launched several years ago, but experienced some delays. "We, like all companies, had a bit of a hit when the Wall Street money went down, but we've back-filled it in a good way," Brown said. The company is awaiting approval on a $50 million U.S. DOE grant application it recently submitted and is hopeful it will be approved by the end of August. However, Brown said the project will move forward with or without the grant money. "We have funding for it," he said. "We're in the final negotiation on permitting and the land in New Milford so we can move ahead and break ground within the next two months." Brown said the local community has been very supportive of the project as have local and state government officials.

A contributing factor to the company's low production cost is its plan to acquire feedstock at no cost or, in some cases, at a profit. Brown said that tipping fees for wood waste at landfills and wood chip companies in the region range up to $60 per ton. American Energy will offer lower fees or take the wood waste for free. "We're in good shape with the municipalities, the local tree groomers and handlers of that material, and some of the waste companies," he said, adding that contracts are in place to supply the plant with triple its need for feedstock for the first five years. Brown said the option to ship feedstock by rail to the facility from over 100 miles away is available, but so far, the 1 million tons of feedstock required annually can be acquired from within a 15-mile radius of the plant.

Another significant piece of American Energy's business plan is an agreement with Perdue University to license yeast developed by researcher Nancy Ho which Brown said will dramatically increase ethanol yields. Brown said the company initially believed it would produce 30 to 50 gallons of ethanol per metric ton of feedstock but, with the addition of the Perdue yeast, yields could grow to 80 to 100 gallons per ton of feedstock.

Indigenous waste wood, which usually consists of a mix of hard and soft woods, will be the primary feedstock for the facility. Brown said the preferred feedstock is fast-growing poplar, but "we'll take what we can get." The company eventually plans to use agricultural plant materials, including switchgrass, and is in communication with a Maryland-based agriculture group seeking viable options to retain local farm land without growing food crops.