Market access for biofuels stressed

Source: Joseph Morton • WORLD-HERALD BUREAU  • Posted: Monday, February 20, 2012

Other than the Blair plant, Novozymes is focusing future expansion efforts overseas because of uncertainty about the direction of U.S. energy policy

WASHINGTON — Lawmakers are looking for ways to boost production of ethanol and other biofuels in the absence of federal subsidies that expired at the end of last year.

As Congress moves toward assembling a new farm bill, the conversation at a recent meeting of the Senate Agriculture Committee turned repeatedly to the need to improve the country’s infrastructure for biofuels.

Sen. Tom Harkin, D-Iowa, cited a new $200 million plant that Novozymes will open later this year in Blair, Neb. It will produce enzymes that make corn-based ethanol production more efficient and other enzymes that break down materials such as crop residue and switch grass.

Other than the Blair plant, Novozymes is focusing future expansion efforts overseas because of uncertainty about the direction of U.S. energy policy, Bloomberg News reported Friday.

“I don’t think it comes down to whether or not we need much financial support,” Harkin said at the hearing. “What we need is market access.”

Harkin said getting that market access depends on three things: more flex-fuel vehicles that run on higher blends of ethanol; more blender pumps at gasoline stations to distribute the higher blends; and a dedicated pipeline that will move the fuels from the Midwest, where they are mostly produced, to the East, where there is greater demand.

Fifty percent of all gasoline stations need to have one blender pump each by 2020. The pipeline will likely need some form of loan guarantee by the government to move forward.

“You do those things, we don’t have any worries,” Harkin said. “These biofuel plants are going to be built all over.”

Agriculture Secretary Tom Vilsack, who testified before the committee, agreed that market access is important. He told Harkin that his department will push blender pump distribution through its existing programs.

Sen. Ben Nelson, D-Neb., said expanding the source material for ethanol will be necessary in order to reach the existing renewable fuel standard, which calls for 36 billion gallons of production by 2022.

“We know that in order to do that we’re going to have a greater diversification of feedstocks,” Nelson said.

Vilsack said his department is doing research on how to use feedstocks more efficiently.

“We’re also providing assistance to buy refineries in all parts of the country that use different feedstocks so we can determine what is commercially feasible,” the former Iowa governor said.

He also said the government needs to examine how it supports the credit needs of companies that are exploring cutting-edge methods of biofuels production.

Government tends to assist companies at the outset and the private sector steps in once the enterprise has proven to be commercially viable, Vilsack said, but Congress should consider ways to bridge the “credit gap” between those two stages.