Ethanol plant closes in Kansas amid bankruptcy fears

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Updated Dec 6, 2015

An ethanol plant in Kansas run by one of the largest renewable energy companies in the world stopped production this week and laid off its staff as the company reportedly inches closer to bankruptcy.

Reuters reports that Spain-based alternative energy giant Abengoa is “on the verge of becoming the biggest Spanish bankruptcy ever” as it seeks $450 million through a viability plan that it presented in Europe to creditors on Friday.

The U.S. Department of Energy, according to, provided Abengoa $2.65 billion in loan guarantees, which as the company wavers on the edge of bankruptcy, recalls the stunning taxpayer loss of $535 million following the 2011 collapse of alternative energy company Solyndra, another DOE backed venture.

That same year, the DOE backed Abengoa for a $132.4 millon loan to build its cellulosic ethanol plant in Hogoton, Kansas. Cellulosic ethanol is produced from non-edible plants, as opposed to food-based ethanol, which is largely made from corn in the U.S.

Abengoa also received DOE loan guarantees of $1.45 billion to build a solar plant in Solana, Az. “and $1.2 billion to construct the Mojave Solar Project in California,” according to

Pre-bankruptcy talks have been underway in Europe this past week. International audit firm KPMG is expected in a few days to report on Abengoa’s financial state, according to Reuters.

With company debt at $22 billion, is reporting that Abengoa’s lay-off extends worldwide.

The company is also being sued by corn cooperative CHS Inc. for not paying nearly $5 million for corn delivered to Abengoa’s ethanol plants in Colwich, Kansas; York, Nebraska; and Ravenna, Nebraska, according to

The closure of the ethanol plant in Kansas follows an ongoing struggle within the ethanol industry, which supporters say is largely a result of the U.S. Environmental Protection Agency and petroleum interests undermining investor and consumer confidence.

The EPA had proposed cuts this past summer to the latest Renewable Fuel Standard, which sent ethanol investors running. On Monday, the EPA issued its finalized RFS requirements and announced that it had eased off on the proposed cuts it had made in June.

Renewable fuel requirements for 2016 are up 11 percent from 2014, but ethanol proponents say it’s a far cry from the original 2007 requirement which they and investors had been banking on.

Related HWT story: EPA calls for more ethanol in the nation’s fuel supply