Monday, December 28, 2009

Cellulosic Ethanol

The Obama administration wants to encourage the production of cellulosic ethanol. As a story in today's WSJ (p. C2) tells us, this is a "cornerstone" of its plan to "curb greenhouse-gas emissions." Besides, it seems to have finally occurred to people that driving around on corn-based ethanol means burning what might otherwise have been somebody's food in one's car.

The story, by Naureen Malik, is devoted chiefly to the wariness of private investors to get into cellulosic ethanol, and concomitantly to the wariness of the Dept. of Energy to contribute money in this area until private investors have been lined up, in what Malik calls a "chicken-and-egg problem." (Psssst. Malik. Why consider it a 'problem'? It may be the optimal result -- the non-waste of taxpayers' dollars on a boondoogle.)

She quotes Arnold Klann, chief executive of BlueFire Ethanol Fuels, on the difficulties of finding investors for the projects he has in mind: "They all want to be the first to finance the second project, they won't finance the first."

After all these years, are we still talking as if "the first" cellulosic-ethanol project is a matter for the use of the future tense? The answer: because all the talk of break-throughs in the past has been just that: talk.
Here's a Motley Fool piece on the subject from nearly three years ago. Jack Uldrich was at that time encouraging "investors in ethanol companies such as Pacific Ethanol (Nasdaq: PEIX), Archer Daniels Midland (NYSE: ADM), and Aventine (NYSE: AVR), to begin boning up on cellulosic ethanol...."

Well, I don't suppose the reading could have done them a lot of harm, but there were other things they might more profitably have been boning-up on in terms of market-ready projects.

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