Once seen as the answer to the criticisms levelled at corn ethanol, cellulosic ethanol has lost much of its early momentum. The basic arguments in favor of the technology--a negligible effect on food prices and a wider variety of feedstocks, for example--haven't changed. What has dramatically altered the course of the technology has been the financial crisis that's made startup money all-but-impossible to obtain.
Even as the economy shows signs of recovering, money for cellulosic ethanol likely will continue to be scarce, according to Cole Gustafson, a biofuels economist with the NDSU extension service. In a recent column, Gustafson says lenders continue to be wary of cellulosic producers because the technology is unproven and lacks the standard performance benchmarls of its corn-based counterpart.
Even the 30% of private funding requirement by federal loan programs is not likely to materialize for most producers, he adds. "Lenders are cautious following low profit margins that prevailed last year and forced almost a dozen ethanol plants to file for bankruptcy," Gustafson writes.
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