By Katherine Yung
Detroit Free Press Business Writer
After a lengthy delay, construction of what could be the nation’s first large-scale wood-to-ethanol plant in the country is to start this year in Michigan’s eastern Upper Peninsula.
If successful, the $232-million biorefinery in Kinross Charter Township would transform the production of ethanol and spawn dozens of other facilities like it.
It sounds like something out of science fiction: create 20 million gallons of ethanol each year by combining bugs with half a million tons of wood chips.
That’s the premise behind the ethanol plant. It’s one of a number of projects around the country that are racing to become the first to produce large quantities of ethanol from non-food materials, such as trees, garbage and algae.
Today, most of the ethanol in the U.S. that is blended into gasoline is derived from corn. Critics say using food to produce fuel contributes to higher food prices and is a poor use of resources when many suffer from malnutrition around the world.
But finding other materials that can be turned into ethanol on a commercial scale at a competitive cost has eluded scientists for decades.
The new biorefinery hopes to change that. The facility will be built on 40 acres in Kinross, a community of 7,561 residents south of Sault Ste. Marie, with construction expected to finish in late 2013.
A 7-year-old New Hampshire company called Mascoma developed the wood-to-ethanol process but struggled in recent years to get financing for the project. It has finally overcome this hurdle, obtaining an $80-million grant from the U.S. Department of Energy and the backing of Valero Energy, the nation’s largest independent oil refiner and a leading ethanol producer.
Valero will invest $132 million in the facility, becoming the majority owner. The State of Michigan is chipping in $20 million. J.M. Longyear, a natural resources company that owns more than 165,000 acres of forest land in the Upper Peninsula and Canada, is contributing the land for the biorefinery.
Initially, the plant plans to produce 20 million gallons of ethanol a year, using small trees harvested from a 150-mile area around the plant. But annual output is expected to double to 40 million gallons, and possibly reach as much as 80 million.
All of the ethanol will go to Valero, which plans to sell most of it and blend the rest into its own gasoline.
Government officials in Kinross and Chippewa County welcome the investment, saying the project will benefit Kinross’ economy. The plant is expected to create 60 jobs.
“We’re all in favor of it coming in and making jobs for people,” said Jim Moore, a Chippewa County commissioner.
However, the project has sparked opposition from the Sierra Club and the Sault Ste. Marie Tribe of Chippewa Indians.
The Sierra Club and Larry Klein, a Kinross resident, are suing the Energy Department, accusing the agency of failing to perform adequate environmental review procedures when it awarded the project the $80-million grant.
“We want it stopped,” said Klein, 62. “The air quality is not going to be as good.”
The Energy Department would say only that it is reviewing the lawsuit. In an environmental assessment of the project released in July, the agency found that “for all resource areas, there would be no impacts or that the potential impacts would be negligible.”
According to the assessment, 71,000 acres of timber, mostly from the Upper Peninsula, would be harvested annually for the plant if it produces 40 million gallons of ethanol a year. That’s similar to the amount of wood utilized by several paper mills in the region that closed in recent years, the agency said.
The Energy Department’s findings failed to satisfy the 40,000-member Chippewa tribe, some of whom live near the plant’s site. Chippewa children already suffer from higher than normal asthma rates, said Kathleen Brosemer, the tribe’s environmental program manager.
Last April, the tribe’s board passed a resolution opposing the project. Besides air quality, the Chippewas worry about the impact the logging will have on the area’s forests.
“The harvesting that has already occurred has degraded the forests,” Brosemer said.
Mascoma, Valero and J.M. Longyear all declined to discuss the controversy, citing Mascoma’s “quiet period.” Mascoma has filed for an initial public offering and cannot discuss its business prospects because of securities regulations.
Raymond Miller, director of Michigan State University’s Forest Biomass Innovation Center who has participated in a public-private effort to facilitate the project, said the biorefinery will not deplete the forest resources.
“We grow between two and three times as much wood each year as we use,” he said.
In addition to environmental concerns, uncertainty exists about whether the plant will be able to produce all the ethanol it promises.
Mascoma has developed its own biochemical process to make ethanol by combining wood chips with microorganisms. It has proved that its process works at a small demonstration facility in Rome, N.Y., but experts say that ramping it up on a much larger scale could be challenging.
Skeptics include David Pimentel, a professor of ecology and agricultural sciences at Cornell University. He said these kinds of projects are doomed to fail because too much wood is required to produce a gallon of ethanol.
Another wood-to-ethanol plant in Georgia that was owned by Range Fuels and utilized a different technology went belly-up last year, costing taxpayers $64 million.
Mascoma is one of a dozen commercial-scale biorefineries that have received approval for grants or loan guarantees from the federal government, which supports these efforts in order to reduce the country’s dependence on imported oil.