Cash is always good, but biofuel companies are looking to states for more than financial incentives when deciding where to build their plants.

They need capital to combat big infrastructure and construction costs, but beyond that they want to be sure that their investments are done in a broader context, industry leaders said at the 2009 BIO International Convention in Atlanta.

DuPont Danisco Cellulosic Ethanol LLC is building a biorefinery in Tennessee to begin producing cellulosic ethanol, a fuel made from sugars extracted from plant material.

Jack Huttner, Dupont Danisco’s vice president for commercial and public affairs, said the Tennessee government did contribute money to help with the plant’s cost, but that wasn’t the main attraction for his company.

“The more important factor was their vision of building a bio-based economy from the field and the farm all the way through to the fuel pump,” Mr. Huttner said at a May 18 press conference on advanced biofuels.

Mr. Huttner said that Dupont Danisco’s biorefinery will produce most of its fuel from switchgrass, which takes farmers three years to grow.

That lag time presented a problem for farmers, who are not “going to plant something three years in advance unless there’s someone who’s going to buy it,” Mr. Huttner said.

Working with the University of Tennessee’s agriculture school, the state paid farmers to begin growing switchgrass, ensuring that the new biorefinery would have adequate supply once it’s up and running.

This integrated approach – mixing incentives for farmers as well as biorefineries – is essential to forming a nationwide model for the biofuels industry, said Mr. Huttner, who has helped oversee the U.S.’s $300 million bioenergy R&D budget under two presidents.

“This is not like building a testing lab or a pilot plant for a drug manufacturer, where you’re working in 500 liters,” he said.“This is big supply chain, big acreage, big numbers of farmers that have to get organized and big capital.”

“A biorefinery is going to cost north of $250 million, and we can’t move it once we’ve built it if all the farmers in the area within 25 miles decide all of a sudden they’re going to grow asparagus or something,” Mr. Huttner added.

Jill Stuckey, director of alternative fuels for the Georgia Environmental Facilities Authority, said Georgia’s main selling points go beyond financial incentives.

Biofuels require feedstocks, and Georgia has more than enough, she said.

“We grow trees like Iowa grows corn,” Ms. Stuckey told GlobalAtlanta at the Georgia pavilion in the BIO exhibition hall.

Georgia has 24.4 million acres of forest land, second only to Oregon, but many of Oregon’s forests are not accessible for commercial use because they’re nationally protected, she said.

Georgia also has a long history of producing biomass. Knowledge from pulpwood and paper processes can be easily transferred to making wood chips for ethanol and wood pellets used to fuel power plants in Europe and other parts of the world, she said.

A new frontier in Georgia’s biofuel future will be using its ubiquitous pine trees to make cellulosic ethnanol, as one company is already looking to do.

Range Fuels LLC, a Colorado-based company, is building in Soperton, Ga., one of the first commercial-scale cellulosic ethanol plants in the world.

Ms. Stuckey said Georgia can offer companies like Range Fuels a financial incentive that’s less explicit than “throwing millions of dollars" at them but could be just as important: quicker set-up time.

The state accomplishes this through its “one-stop shop” program. About once a month, the State Capitol hosts representatives from some 20 agencies an alternative energy company might need to know.

Companies can make presentations at this meeting to avoid having to chase down these key agencies on their own. This helps them get started more quickly than they might be able to in other states, Ms. Stuckey said.

“We can help companies get that shovel in the ground six to eight months sooner, and that’s big money,” she said.

Novozymes, a Danish company, set up shop in North Carolina some 30 years ago because it made business sense, said Lars Hansen, president of the company’s North American operations.

The company manufactures enzymes and microorganisms that are used to break down chemical compounds.Some of the byproducts can be used as fertilizer, so the company picked an agricultural location for its North American business.

“We came to North Carolina when land and labor and energy were cheap,” Mr. Hansen told GlobalAtlanta.

Now the company sells its fertilizers to farmers in the surrounding area, he said.

The company is employing a similar strategy in Nebraska, where it’s building a $100 million plant to produce enzymes that will break down cellulose into sugars that can be used to make ethanol.

Article courtesy of  Global Atlanta