POET's Vision on US Ethanol

AMSTERDAM – The opening of POET’s 21st ethanol production facility in Portland, Indiana, turned it into the largest ethanol producer in the world with an annual production capacity of 1.1 billion gallons. The Sioux Falls-based company also received an 80 million USD grant from the United States Department of Energy to convert an existing 50 million gallon per year dry-mill ethanol plant in Emmetsburg, Iowa into an integrated 125 million gallon per year corn-to-ethanol and cellulose-to-ethanol plant. POET seems to be in a strong position, which is exactly the opposite of what analysts have been saying about the industry as a whole for the last few months. With significant additional capacity coming into the market in 2008, limited blending, logistics and consumption capacity and narrow margins as a result of high corn and low ethanol prices, the industry seems to be heading towards consolidation.

Ethanol Statistics sat down in Amsterdam with Mark Stowers, Vice-President of Research and Development at POET, to discuss what looks like an interesting period lying ahead. Dr. Stowers expressed his vision on the market, discussing the E10 blend wall in the U.S., the maximum corn-ethanol production capacity, financing issues and current market conditions. He explains why POET isn’t concerned about what’s happening to the industry at the moment, based on the efficiency of all its processes, from building plants in under a year to yielding close to 3 gallons of ethanol per bushel. POET is “ahead of the industry”, according to Dr. Stowers.

The E10 blend wall
With POET growing so rapidly, we asked Dr. Stowers what he sees as the main challenges in further expanding production capacity. “I think that broadly speaking, expansion for POET and the rest of the industry is ultimately limited by the E10 blend, the so called blend wall. I think a lot of activity has to be focused on breaking the blend wall in terms of new formulations that allow for greater inclusion of ethanol into fuels. All other limitations I see now are traditional things associated with emerging industries, such as financing, marketing and logistics.”