ORLANDO, FL, Feb 23, 2012 - Executives from three of the nation's leading cellulosic biofuel companies acknowledged today that their industry needs to start producing some real commercial results soon or face the possible loss of federal support.
Bill Brady, president and CEO of Mascoma Corporation, a Massachusetts-based renewable fuels company; Jim Imbler, president and CEO of ZeaChem, an Oregon-based biofuels and biochemical firm; and Christopher Standlee, executive vice president for Anegoa Bioenergy U.S. Holding Inc., the Missouri-based subsidiary of the Spanish biofuel conglomerate, all acknowledged at the National Ethanol Conference today that their industry suffers from the perception that the production of next-generation biofuel production has failed to meet expectations that seem to diminish with each passing year.
But all said they are close to commercial-scale production that can make meaningful contributions to the nation's fuel supply and urged their corn-ethanol brethren to help them maintain the commitment by Congress to policies and programs that incentivize their ventures.
Of particular concern to the panelists is the push by some in the oil industry and elsewhere to change or even eliminate the federal Renewable Fuels Standard, a provision first adopted in 2005 that mandates a certain amount of the nation's fuel supply come from non-petroleum resources, including 16 billion gallons of cellulosic ethanol by 2022. However, the EPA, which carries out the mandate, has lowered the cellulosic amount required each year by the RFS timetable because of a lack of commercial production.
Refiners are asking EPA to waive the entire 6.6-million-gallon RFS mandate for 2011, claiming they will be forced to pay some $6 million in penalties for failing to blend a product that does not yet exist. But cellulosic advocates argue the blenders have means of meeting the mandate without incurring the fines. Mascoma's Brady points out that the refineries are "willing to spend more than $6 million to get rid of the RFS."
Imbler and Standlee both emphasized that any change to the RFS could open the mandate up to change or dismantling by lawmakers with oil industry constituencies, eliminating a constant and stabilizing incentive that induces investment in the new technology.
The three executives say the industry also needs an extension of a $1.01-per-gallon production tax credit for cellulosic biofuels that is set to expire at the end of the year.
All three said the industry is on the verge of a break-through. "Once we get some plants built, the product will flow and you'll see a major expansion," similar to the explosive growth of the corn ethanol industry in the mid-2000s. Brady said that the expansion of the cellulosic biofuel industry will also "build some intellectual capital," drawing scientists, engineers and other highly-skilled people to the sector.
Imbler and Standlee both said their industry was beset by misperceptions among both policymakers and the public. "Guaranteed loans are not grants," Imbler emphasized, noting the money cellulosic projects received from the government must be paid back.
And, Brady added, despite claims that the sector has produced no product, he said firms around the country are producing significant amounts at "demonstration" levels that go unregistered. "We are not producing 'zero' amounts of advanced biofuel," he said, dismissing the mischaracterization as a ploy by petroleum interests to denigrate the technology.
Abengoa completed $132.4 million loan guarantee from the DOE last September to finance its first biomass ethanol plant in Hugoton, Kansas. The 23-million-gallon-per-year facility is expected to open in 2013, primarily using agricultural waste products such as the stalks of corn or grain sorghum, wheat straw and potentially prairie grasses and wood wastes.
ZeaChem was recently awarded a $232.5 million loan guarantee from USDA to build a biorefinery that will produce biofuel and biochemical from hybrid poplar, short-rotation feedstock. The plant, which is also expected to open next year, will have a capacity of 25 million gallons annually.
Mascoma and investor Valero Energy plan to open late next year a $232-million, 20-million gallon plant in Kinross, Mich., that will convert wood chips into cellulosic ethanol. The plant will be built with the help of $80 million in funding from DOE (along with $20 million in funding received earlier from DOE for research) under a construction cost-sharing agreement with Valero, an oil company looking to diversify its holdings, and the state of Michigan..
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