This Year Could Be a Game Changer

Full funding of $510 million government commitment, renewed tax support still needed
By Michael McAdams | January 09, 2012

Elections have consequences—an old but true adage in Washington. America’s domestic biofuels industry experienced firsthand diminishing support for the entire renewable energy sector as a consequence of the 2010 election. A quick look at recent national polls and you’ll find support for renewable energy decreasing, although it remains above 50 percent. The coming year will see a debate between candidates of all sizes, shapes, parties and views, a milestone opportunity for the greater renewables industry. An opportunity that demands pulling together of resources across the board to make sure candidates and voters understand the importance of America building and maintaining a broad renewables portfolio approach to our nation’s energy, economic and national security policies. There are no silver bullets in the traditional hydrocarbon or renewable sectors. As I have continued to write, we all must work together and provide a balanced approach to the fuels we will use.

Significant accomplishments in the advanced biofuels sector were seen in 2011. The Dynamic Fuels plant in Louisiana has fully powered up, the impetus to the U.S. Navy’s December announcement of placing the world’s largest advanced biofuel order, 425,000 gallons. The military has flown its most sophisticated, powerful jet fighters on biojet, from the F-16 and F-18, and the first cross-country commercial flight occurred from Seattle to Washington, D.C.’s, Reagan National Airport. We’ve also seen a number of companies break ground for commercial plants or announce agreements to do so.

But this is just the beginning, the tip of the iceberg for what we can do long-term for the nation in the area of liquid transportation fuels.  The cornerstone of the U.S. effort starts with the renewable fuel standard (RFS) and the federal government’s commitment to mandate the use of more than 15 billion gallons in today’s marketplace. Not bad for a law that was just signed in 2007 and implemented in 2010. But the key to delivering on the promise of advanced biofuels is staying the course. It is providing a stable, predictable public policy framework. It cannot be a politically motivated, mercurial policy that ebbs and flows. It is only with this stable regulatory framework that investors will make the choice to enter into the commercial funding of these projects that will operate for years to come. We must continue to actively work with both federal and state governments to build this future. We can ill afford to see other countries around the globe outspend and deploy the innovative technologies developed in the U.S., rather than deploying them ourselves.

So as we say goodbye to 2011 and hello to 2012, there are a number of outstanding items that could make that future more likely here at home. The most significant is the full funding of the MOU between the U.S. Departments of Defense, Energy and Agriculture to spend $510 million to build first-of-its-kind, commercial, advanced drop-in renewable fuel plants. At deadline both defense and energy pieces for FY 2012 needed funding. Under the best circumstances this would mean some funds might be forthcoming by year’s end.

A second set of issues involves the tax code. I suspect when Congress adjourns, no fewer than four of the provisions that provided tax credits to the renewable fuels industry will have expired.  That will mean we are exactly where we were in 2010 for a number of producers in the advanced biofuels pool. Obviously, we will need to have a serious effort to create support for tax support for this industry, particularly if the incumbent industries are afforded support. Our national energy policy should address each of the portfolio pieces by recognizing their state of commercial development.

Last, we managed to preserve a small amount of money to be continued under the energy title of the Farm Bill. This area will also need continued support if we are to have any type of significant support in the growing of energy crops and their use in biomass conversion technologies.

As you can see, there is a lot on the line and many moving parts. Be it Republican or Democrat, these are not partisan programs for the future of renewable energy in the U.S. We should be a world leader in this space and everyone from Oklahoma to Maine ought to openly discuss and support building the advanced biofuels space. But you, the reader, also have to be engaged by talking to all types of candidates about your support for this industry, and the policies that support it.

Here’s to the new year and our success!

Author: Michael McAdams
President, Advanced Biofuels Association
(202) 469-5140