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Taking It to the Hill

Making the case for advanced biofuels to Congress
By Michael McAdams | May 19, 2011

I recently had the privilege of testifying before the Energy and Power Subcommittee of the U.S. House Committee on Energy and Commerce and share with its members the incredible progress the advanced biofuels industry is making in moving our nation closer to energy independence while creating jobs right here at home. As I wrote in last month’s magazine, I emphasized the importance of providing stable, long-term, common sense public policies that allow the various renewable and alternative energy sources to compete to achieve our national policy goals.

I also urged the government to resist the temptation in their public policy efforts of attempting to pick a winner. Specifically I called for a technology-neutral, feedstock-neutral approach while providing a level playing field in terms of grants, tax credits and loan guarantees.

I told the members of the House Committee that recent developments in advanced biofuels technologies enable our companies to make significant contributions in diversifying our transportation fuels pool. One of the most noteworthy developments I recounted was the ability of many of our companies to manufacture gasoline, jet, diesel, heating oil and crude oil from renewable sources. It is essential that lawmakers know these “drop-in fuels” are fungible in today’s planes, trains, boats and automobiles. No changes to the current infrastructure or transportation fleets are required and they provide economically competitive alternatives with current products on the market.

I thought you would be interested in reading other points I shared with lawmakers as I have been writing about the vital role all of us play in helping educate Washington on our progress as an industry and the work ahead of us.

I told the Committee, there are some who would like Washington to believe that advanced and cellulosic biofuels are a long way off, but nothing could be further from the truth. These fuels are being commercially produced today, with many more gallons on the way. In fact, Dynamic Fuels, a joint venture between Tyson Foods of Arkansas and Syntroleum of Oklahoma, is currently producing 75 million gallons of renewable diesel and jet fuel in Louisiana. This plant makes diesel and jet fuels as if they were made in a refinery out of a traditional barrel of oil.

In addition, I am pleased to report that several advanced biofuels companies have recently gone public with great success. Gevo, as a result of its recent $127 million offering, has begun its plans to retrofit a traditional corn ethanol plant to produce 18 million gallons of isobutanol next year. It has also announced plans to develop over 350 million gallons of production by 2015. Similarly, Amyris completed a successful IPO and plans to deploy 75 million gallons of renewable diesel in 2012, while Solazyme and Kior, companies that also plan to produce fungible drop-in fuels also announced their intentions to go public this year. 

Several of our members including Rentech, Kior, Coskata, Sundrop Fuels, Honeywell, and LS9 are currently negotiating financing for future commercial facilities;  while many others, such as BP, DuPont and Virent, are moving forward rapidly in demonstrating their fuels and building or operating their pilot or demonstration plants with commercialization in their future plans. 

These developments would simply not be occurring if it were not for the vision of this committee in the House and the Congress to enact a framework to expedite the development of advanced and cellulosic biofuels.

Our association and member companies strongly believe the current RFS2 is the most important federal policy in supporting the development of a biofuels industry in this country. We would specifically urge this committee and Congress to not tinker with the statute at this time.

As most of you are aware, the chief challenge of the advanced and cellulosic industries has been acquiring the necessary funding to build the next generation of facilities.

One of the primary reasons for the disappointing lack of commercial funding has been our biofuels tax policy. The current code is inconsistent in what it rewards according to the molecule, or feedstock or process used. Advanced and cellulosic biofuels tax policy does not provide parity and in many cases the credit is not in the right form to enable companies to monetize their value.

Depending on your size and scale as a company, many in the advanced or cellulosic industry believe they would have been more successful if they had a similar Investment Tax Credit to the solar and wind industries rather than the production credits afforded under current law.

I told the committee the system of loan guarantees has been challenging at best. However, pulling the plug on the money in the middle of the game for those companies that have expended significant monies to apply was simply wrong.

I urged the Congress to help the industry on the procurement side of the equation by extending the period of time in which the military could purchase advanced biofuels similar to the long-term electric power purchase agreements. This would afford an offtake agreement enhancing the ability to secure financing. 

As the bells rang out loudly calling the members of Congress to cast votes on the House floor, I concluded my remarks by pointing out that a significant amount of progress has been made over the past two years by the advanced biofuels sector. Much more is on the way as these fuels continue to make significant contributions towards diversifying America’s and the world’s transportation fuels in the future.

Author: Michael McAdams
President, Advanced Biofuels Association
(202) 469-5140
Michael.McAdams@hklaw.com

 

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