No Further DOE Funding Required...Well, this is an interesting news release.
The pros and cons.
Well the obvious con is that Lignol cannot rely on US Government funding to further finance commercial development of its technology. It must now rely on the commercial merits of its technology to bring it to commercialization along with possible offtake agreements with any one or all of its development partners who have to date demonstrated growing interest in using Lignol's product.
The pros can only be summed up in the upcoming results of the current trial testing of the HP-L Lignin by LEC's development partners.
Should testing prove successful, then LEC can move to the next step in commercialization on a broader scale, and I believe that their partners will step in to cover what the DOE could and shouldn't have to cover moving forward.
It has been stated and should be a given, that the US Government, especially the US tax payers do not want and cannot afford to continuously subsidize ethanol production moving forwar.
Lignol has developed a process that can potentially eliminate any need for ethanol subsidies and make the production of ethanol profittable by selling their HP-L Lignin with ethanol as a by-product.
Today's announcement of no further funding by the DOE should be an eye opener for the competition. It can be construed of as being a negative, but it is something that LEC needs to demonstrate to its peers that they can produce ethanol without the need of Government Subsidies or funding.
Will be interesting to see how the market reacts. atb
Lignol's demonstration-scale project funding from U.S. DOE to be phased out in favour of commercial opportunities
7/15/2011 8:30 AM - Canada NewsWire
VANCOUVER, Jul 15, 2011, 2011 (Canada NewsWire via COMTEX News Network) --
Lignol Energy Corporation (TSXV: LEC), a leading technology company in the advanced biofuels and renewable chemicals sector, today announced that its U.S. subsidiary, Lignol Innovations Inc., has reached agreement with the U.S. Department of Energy's Biomass Program (DOE) to phase out work on the funding award for a demonstration project.
In January 2008, Lignol was selected to receive an award of up to US$30 million under the DOE's "Demonstration of Integrated Biorefinery Operations for Producing Biofuels and Chemical/Materials Products" Funding Opportunity Announcement (FOA) to build a demonstration-scale cellulosic ethanol plant at approximately one-tenth of the projected scale of a first-commercial facility.
After plans for a project in Colorado were halted in 2009 due to the recession and market volatility, Lignol refocused and began to modify the scale and configuration of the proposed demonstration-scale project with the goal of developing a profitable, commercial-scale project. The new project design incorporates innovations and design improvements generated from operation of the Company's pilot-scale biorefinery. The resulting project concept and plant design depart substantially from those that the award was originally based on.
In recent consultations with the DOE, it was agreed that Lignol's current plans cannot be supported within the FOA. Lignol will continue with engineering, technical and project development work, which the DOE has been funding, to meet certain reporting milestones that are expected to be completed in the coming months.
Lignol will pursue development of a commercial project without the assistance of an award from the DOE. The Company has made a significant investment over the past three years in constructing its pilot-scale biorefinery in Burnaby, BC, which is providing Lignol and its partners with important data to develop offtake agreements and to complete engineering designs. Leveraging the benefits of the pilot-scale biorefinery eliminates the need for a capital intensive, demonstration-scale plant and is expected to result in faster development of Lignol's first commercial project.
"In developing a commercial project it is important that we deploy our technology in a way that maximizes value for our shareholders," said Ross MacLachlan, President and CEO. "The financial support we have received from the Department of Energy, together with their advice and cooperation, have contributed greatly to the commercial readiness of our biorefining technology."
"We are now in active discussions with a number of potential partners motivated by the recent surge of interest in advanced biofuels and renewable chemicals. Continued investment in our pilot-scale biorefinery is delivering results that support these discussions, and provides us with an exceptional platform to showcase our technology and work with our partners to develop a viable commercial project," concluded MacLachlan.
About Lignol Lignol (TSXV: LEC) is a Canadian company undertaking the development of biorefining technologies for the production of advanced biofuels and renewable chemicals from non-food cellulosic biomass feedstocks. Lignol's modified solvent based pre-treatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including High Performance Lignin (HP-LTM). HP-L(TM) lignin represents a new class of high purity lignin extractives (and their subsequent derivatives) which can be engineered to meet the chemical properties and functional requirements of a range of industrial applications that until now has not been possible with traditional lignin by-products generated from other processes. Lignol is executing on its development plan through strategic partnerships to further develop and integrate its core technologies on a commercial scale. Lignol also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with its biorefining technology. For more information please visit Lignol's website at www.lignol.ca.