U.S. to list loan guarantees for biomass plants

WASHINGTON Wed Jan 19, 2011 7:13pm EST

WASHINGTON (Reuters) - A handful of next-generation biomass plants will be named on Thursday as recipients of federal loan guarantees intended to bring new biofuels to market, said an industry source.

The loan guarantees would assist construction of commercial-size plants using material such as wood chips, straw or crop debris. The new feedstocks, predominantly cellulose, are supposed to replace corn as the major U.S. source of biofuels over time.

Agriculture Secretary Tom Vilsack said last fall that five biomass projects around the nation would be selected for Agriculture Department loan guarantees. He said he hoped to announce the awards by the end of 2010.

"That's what I'm gearing up for -- loan guarantees for cellulosic ethanol producers," said an industry source on Wednesday, speaking on condition of anonymity.

Half a dozen applications were under review at USDA last fall with up to $650 million in guarantees available, said one official. USDA awarded two guarantees in 2009.

A USDA spokesman declined to comment ahead of an expected update by Vilsack on renewable energy programs on Thursday.

POET, the No 1 ethanol maker, Bluefire, Coskata, Abengoa Bioenergy Corp and Iogen Corp are among the pioneers in cellulosic ethanol. Range Fuels holds a USDA guarantee for its biomass plant in Soporton, Georgia.

Loan guarantees were among four areas cited by Vilsack for USDA assistance to biofuels. The others were matching funds to retailers to install so-called blender pumps, implementation of a program defraying the cost of feedstock to biofuels plants that expand production and the launch of a program that pays up to 75 percent of the cost to farmers to grow and biomass crops in nearby biofuel or bioenergy plants.

As of January 5, USDA approved three plants for the crop program. All are owned by POET, including a plant in Emmetsburg, Iowa, that would use corn stover to make ethanol.

(Reporting by Charles Abbott; editing by Sofina Mirza-Reid)