BIOMASS HUB

It was a big week for biofuels in the United States.  After a few months of lingering uncertainty for the nascent industry, precipitated in part by California’s tough standards laid out in its low carbon fuel standard (LCFS) and expiring biodiesel tax credits, the Obama Administration has delivered a strong endorsement for the industry as a whole.  The Environmental Protection Agency’s (EPA) 2nd take on the renewable fuel standard (RFS2) signaled a commitment to the inclusion of a variety of feedstock sources, including Midwest ethanol, winning broad support in the process.  The announcement has initiated a flurry of activity on the web.  Below is a rundown of the highlights:

Recapping the news…

Obama’s coordinated announcement with the EPA and USDA launched three primary initiatives:

1. The EPA announced its finalized RFS2, which bumped the biofuels mandate up to 36 billion gallons by 2022
2. USDA announced a rule for the Biomass Crop Assistance Program (BCAP) that would increase financing for biomass to bioenergy
3. The Biofuels Interagency Group released its first report: Growing America’s Fuel

and threw in support for carbon capture and storage to fast-track R&D.

Some general reaction…

AgWired reports that overall reaction to the EPA’s release of its final rules is favorable, but all organizations are expressing concern about the EPA’s continued reliance on the unproven theory of indirect land use change (ILUC).

According to Biofuels Digest, 72 percent of biofuels industry leaders indicated in a Biofuels Digest poll that they had a  favorable reaction to this week’s announcements of a shift in Obama Administration policy on biofuels.  50 percent said that they had a “highly favorable” reaction, while 5 percent said they were neutral and 22 percent had an unfavorable or highly unfavorable reaction.

The Algal Biomass Organization (ABO), the leading trade association for the industry, praised Obama for his strong support of the U.S. biofuels industry.  ABO is particularly enthusiastic of the EPA’s finding that algae-based renewable diesel reduce emissions by more than 50 percent compared to petroleum-based diesel.

Greenwire reports that the new biofuels regulations would give ethanol a larger share of the U.S. renewable fuels mix, but not enough to satisfy farm-state lawmakers on Capital Hill.  Despite striking what many feel was a fair compromise between the support for biofuels and the environment, expect lawmakers to keep fighting the rule.  The incorporation of indirect land use change (ILUC) is still based on “dicey science” according to Senators Chuck Grassley (R-IA), John Thune (R-SD), and Mike Johanns (R-NB).  Many lawmakers share the same view and oppose the inclusion of “unreliable methods and unfair standards” according to House Agriculture Chairman Collin Peterson (D-MN).

But the Biotechnology Industry Organization (BIO) has a different take.  In a report commissioned by BIO, U.S. Economic Impact of Advanced Biofuels Production, it was projected that development of advanced biorefineries could create as many as 29,000 jobs over the next few years (report available here).  Even so, BIO pushes for a second wave of advanced biofuel commercialization policy to stimulate job creation, including: revising the risk assessment process for advanced biofuels projects in the current DOE loan guarantee program; double funding for USDA programs deploying cellulosic feedstocks; fund reverse auction for cellulosic biofuels already incorporated in law; and fund development and deployment programs for biobased products and renewable specialty chemicals.

A word from the pessimists…

The Wall Street Journal is less optimistic about the future of biofuels.  Reacting to the EPA’s announcement that the biofuels industry will only produce a fraction of the volume anticipated by Congress:

The announcement suggests that government goals for turning inedible crops into transportation fuel have been unrealistic and too optimistic about the private sector’s ability to advance existing technology and finance new refineries for biofuels.

Eric Holt Gimenez, Executive Director of Food First/Institute for Food and Development Policy, offers sharp criticism for the “biofuels bailout.” Gimenez points out that the U.S. commitment to energy independence means more support for Brazilian ethanol made form sugarcane, which the EPA’s RFS2 says lowers GHG emissions by more than 50%.  He argues that the push will mean big dollars for big companies like Archer Daniels Midland, Shell Oil, and Monsanto, and take biofuels production out of farmers’ hands.  And because biofuels are high-tech and low labor, the push won’t generate the jobs necessary to grow the economy.

The realists…

The Hill reports that General Wesley Clark, co-chairman of Growth Energy, makes no apologies for leading a group that applies bare-knuckled advocacy to advance ethanol production.  The article explains that the EPA’s ruling that corn-based ethanol generally meets GHG standards under EISA was a victory for Growth Energy and Clark, and the aggressive lobbying and public relations they’ve employed over the past year.  Clark asserts that ethanol is good for national security and the economy:

And finally, the optimists…

The Street Authority, an independent guide for profitable investments, believes the biofuel push is good for investors.  The article explains that Obama has been pushing clean energy boldly, but asks, “is the administration actually doing anything about it?  And does it mean anything for investors?”  The answers?: “yes” and “absolutely.”  The RFS2 mandate a growing percentage of cellulosic ethanol (see graph on right), which means “major changes down on the farm.”  This effort will be driven, in part, by BCAP, which will help farmers develop feedstocks for biorefineries.

POET CEO Jeff Broin, speaking at the 2010 RETECH Renewable Energy Conference in Washington, DC, asserts that biofuels could realistically replace the use of gasoline in the U.S. Doing so depends on increasing agricultural yields and commercializing cellulosic ethanol.

Have an opinion?  Your comments are encouraged below.

Image: Flickr/lissalou66