Advanced Biofuels at End of Obama Administration

Source: By Michael McAdams, Biomass Magazine • Posted: Thursday, August 25, 2016

For advanced biofuels under the Obama administration, what started out with a boom in 2008 ended with a whimper in 2016. When the president was elected, the economy was flat on its back in the midst of the Great Recession, and the administration burst onto the scene with the American Recovery and Reinvestment Act, providing $38 billion to the U.S. DOE to develop sustainable energy resources. A small portion of that money was specifically dedicated to the advanced biofuels industry, which was essentially in its infancy.

As the nascent industry began to develop, companies hoping to deliver the next generation of biofuels came to Washington intending to participate in this push for renewable energy. In particular, these companies focused on the biorefining grants offered by the DOE’s Bioenergy Technologies Office. At great expense, dozens of companies sought these grants: hiring counsel, putting together a myriad of paper submissions, and lining up political support for their projects. By 2010, BETO had awarded approximately 19 grants, ranging from $25 million to $50 million and totaling approximately $564 million of government investment in these pilot and demonstration plants for groundbreaking technologies. Furthermore, the DOE awarded several billion dollars of loan guarantees to help build commercial facilities and utilized the Advanced Research Projects Agency-Energy to make long-term investments in high-risk, high-reward technologies.

Simultaneously, the U.S. EPA was working furiously to complete the regulations to implement the renewable fuel standard 2 program. Although the program was established in 2007 by the Bush administration, the EPA was still proceeding through the rulemaking progress to draft and implement these regulations. The 2007 program called for 36 billion gallons by 2022, with 21 billion of these gallons meant to be advanced and cellulosic fuels. The final rules were released in July 2010, and the program began in full stride.

The industry and the administration have learned much in the past eight years about what has been successful, and the challenges that remain for this sector of the biofuels industry. Clearly, the industry needs more certainty from federal programs to be successful moving forward. While the federal government’s efforts to support the financing of pilot projects and commercial facilities in 2009 and 2010 created significant momentum for the advanced biofuels industry, a large portion of this momentum was lost when the renewable volume obligations (RVO) were not set in a timely matter for almost three years. The industry has also been hurt by the legislative uncertainty facing the tax code. Short-term extenders, which are on and off, are simply not enough to give capital markets the confidence necessary to encourage capital improvements for existing industries, much less the development of an industry at its outset. Moreover, the federal government can and should do more to improve the terms of federal loan guarantees.

All of these are critical lessons for the next president and the next Congress. Before examining the specifics of existing programs, however, the new administration and our country must first recognize the benefit and true need of advanced biofuels moving forward. The government and the American people have played a critical role in the development of every new energy source for the world. We must continue to lead the investment and development of advanced biofuels to help our country and countries around the world have fossil fuel alternatives that reduce greenhouse gas emissions and provide us with a balanced energy portfolio.

As we come to the end of the Obama administration, do not forget to push hard to make sure the EPA completes its final RVO, ensuring that the RFS is back on track. Impress upon members of Congress the need to extend the blenders credit for biodiesel and the alternative fuels and second-generation credits. Encourage the EPA to get its biointermediate regulation out before the fall. While there is much to be done, it seems like so little relative to where we began eight years ago.

Finally, as we enter the final two months of this election season, I urge you to get involved. Make sure you tell politicians of your investments to date. Make sure you tell them how many jobs you have created. Make sure you tell them how lengthy and difficult the process has been just to get to this point. Make sure you tell them how these fuels are absolutely essential for the world moving forward: for reducing CO2 emissions and creating a more sustainable environment; to power our airplanes, large ocean vessels, big trucks and engines; and for developing new feedstocks and utilizing and reducing municipal waste.

By Michael McAdams, President, Advanced Biofuels Association