Biofuel Maker return Loan Without Selling Cellulosic Ethanol

Even with generous federal help, cellulosic ethanol production is having trouble taking off.

Abengoa Bioenergy got nearly $230 million in federal loans to build a cellulosic Ethanol biofuel refinery (production capacity of 25 million gallons ethanol per year). However, it has paid back this loans without selling any cellulosic ethanol.

Abengoa is a large multinational green energy company based in Spain. The company reported about $8 billion in revenues last year, so it likely has the resources to pay off a DOE loan. However, the company’s decision to not sell any of the ethanol biofuel is puzzling. The plant isn’t yet at full production, but the company maintains it’s producing enough ethanol biofuels for commercial sales.

Abengoa’s Hugoton is the third major cellulosic biofuel plant built in the U.S. and is hailed by the Obama administration as a “milestone” for green energy. The plant produces cellulosic ethanol — that is, Ethanol biofuels made from the parts of corn people don’t eat.

Abengoa’s $132 million loan is only a small portion of DOE’s $30 billion loan program which includes financial support for solar panels, wind turbines, alternative fuel vehicles and nuclear power plants.

The federal government has tried to encourage the use of cellulosic ethanol biofuels for years with tax credits and a mandate that refiners blend 16 billion gallons of cellulosic ethanol biofuels into the fuel supply by 2022. DOE support helped pay for more than half the construction of the $400 million ethanol plant, which has a production capacity of 25 million gallons a year and will generate 21 megawatts of electricity — enough to power the facility and sell some extra wattage back to the grid.

But even with generous federal help, cellulosic ethanol production is having trouble taking off.