May 8, 2008

IDAHO FALLS, Idaho — A Canadian biotechnology company has decided to build a cellulosic ethanol plant in Saskatchewan, rather than southeast Idaho.

Iogen Corp. said Wednesday it has suspended its operations in Idaho. For the last two years, Iogen had leaned toward building a cellulosic ethanol facility near the community of Shelley, near where farmers already are under contract to provide the wheat and barley straw, corn leaves and stalks, and switch grass used to produce ethanol.

A U.S. Department of Energy spending package included loan guarantees and an US $80 million grant for the project, estimated in 2006 to cost up to US $350 million.

But in March, the Canadian government announced it had allocated $500 million for projects to build next-generation biofuels plants in Canada.

Corey McDaniel, a legislative assistant to U.S. Sen. Larry Craig, said Wednesday that the Energy Department's failure to offer larger loan guarantees was the main reason Iogen decided not to build in Idaho.

He said the delay gave officials in Canada enough time to put together the $500 million incentive package.

McDaniel said that without greater loan guarantees, Iogen and backers Royal Dutch Shell and Goldman Sachs weren't comfortable building in Idaho.

McDaniel said Iogen officials told Craig during a visit last month that having the company build anywhere but in Canada would be an embarrassment.

"It may be that (Iogen) has decided to focus on Canada, instead of a two-track strategy," said Pat Breton, director of communications for Sustainable Development Technology Canada, the government-formed organization put in charge of the befoul funds.

Iogen Corp. is a world leader in making so-called cellulose ethanol from waste residues of agriculture, rather than from edible wheat and corn.

Iogen had identified eastern Idaho as a "sweet spot" for straw in 2005, and began signing contracts with area farmers.

Brandon Bird, executive director of Bingham Economic Development Corp., said he hopes eastern Idaho would eventually help produce cellulosic ethanol.

"We've got what it takes, and we're working on recruiting and marketing our straw supplies," he said.