Obama unveils an “all-out, all of the above” energy strategy. But is it really “all of the below”? Just election talk? Is ginning up a bioeconomy shelved for a year, or just a week?
Meanwhile, hopeful news from Novozymes and the World Economic Forum.
In Washington, President Barack Obama gave his State of the Union speech, and dashed hopes and expectations of a revival strategy for US industry through encouraging growth of the bioeconomy. His annual presidential address became the first in a number of years to avoid any mention of biofuels, ethanol, the bioeconomy, or biotechnology.
In a speech which mentioned jobs 32 times, the high-export, high-productivity US agriculture sector also failed to score a single mention. The closest the president came to mentioning biofuels was in touting that US oil imports were at their lowest point in 16 years – without mentioning that the key factor in that import achievement was the rise in domestic biofuels production.
Instead, the president proceeded to embrace an “all out, all of the above” energy strategy – focusing on an intense increase in domestic oil and natural gas production, and borrowing the “all of the above” phrase which, until recently, was most closely associated with conservative Texas Republican, Gov. Rick Perry.
The centerpiece of his strategy? Natural gas. “We have a supply of natural gas that can last America nearly 100 years. And my administration will take every possible action to safely develop this energy. Experts believe this will support more than 600,000 jobs by the end of the decade,” the president said.
Clean energy? The president opted to give up on hopes for legislation (except for a one-line exhortation for Congress to renew the Section 1603 tax credits that are used for wind and solar development), and focused on authorizing permits for 10 GW of renewable power production on federal land – that’s equivalent to about 1% of US power production capacity.
The focus on oil & gas production was surprising as Obama Administration policy, but unsurprising as re-election strategy: removing a line of attack that the President’s opponents were planning for the 2012 election campaign.
Has the Obama Administration shifted from an “Action News” to an “All Talk” strategy – shifting from policy implementation to framing the election conversation? We think so. We expect to hear a lot more about Mitt Romney’s 14 percent tax rate this year, than about policies and programs to revive manufacturing, or deploy clean energy.
For now, whither goes biofuels? The word from Washington is that the President will unveil his Blueprint for a Bioeconomy next week – we’ll see then what the Administration has in mind for industrial biotechnology.
And now, a word from Davos: “Moving towards a next-generation ethanol economy”.
From Davos, where the World Economic Forum is gather this week, came something a little more weighty and specific than the State of the Union speech.
Bloomberg New Energy Finance launched its report “Moving towards a next-generation ethanol economy”. Commissioned by Novozymes, the report estimates the socioeconomic prospects of deploying advanced biofuels in eight of the highest agricultural-producing regions in the world, i.e. Argentina, Australia, Brazil, China, EU-27, India, Mexico and the USA.
“An estimated 17.5 percent of the agricultural residue produced could be available today as feedstock for advanced biofuels. With this amount, enough advanced biofuels could be produced to replace over 50 percent of the forecasted 2030 gasoline demand,” said Steen Riisgaard, Novozymes’s CEO.
The report shows that the eight regions analyzed have the potential to diversify farmers’ income, generate revenues ranging from $1 trillion to $4.4 trillion between today and 2050 and create millions of jobs. Including 1.4 million jobs in the USA, according to the report.
Why the Obama shift in the State of the Union?
Why the shift towards fossil fuels? The President is aiming for re-election, by appealing to swing state voters with the hope of economic gains from increased domestic oil production. The focus of the President’s speech – which pinned hopes economic growth on a revival of American manufacturing and energy production – generally focused on reducing inequality between rich and poor through revision of the tax code.
The real all-of-the-above: advanced biofuels as it approaches commercial-scale
As an example of all-of-the-above energy development that works, look these eight projects we profiled recently in the Litmus Test. First commercial projects from newly-minted public companies Solazyme, Gevo and KiOR. Two trash-to-biofuels projects from INEOS Bio and Enerkem, located in Florida and Alberta. Europe’s largest biosuccinic acid project, scheduled to be opened by DSM in France. The world’s largest cellulosic ethanol project to date, being readied by Beta Renewables in Italy. And a large-scale renewable diesel project from the Darling-Valero partnership that is expected to be ready just as 2013 gets underway.
Eight different technologies, a range of feedstocks, deployment around the globe. It’s a flowering of innovation.
State of America’s biofuels industry
For even more perspective, this week, leaders some of the top biofuels companies in the country are offering their thoughts on the state of the advanced biofuels industry, in a special episode of the Advanced Biofuels Association’s Better Fuels Moment online video series.
The episode features Joel Velasco, senior vice president of Amyris; Jack Huttner, executive vice president, commercial and public affairs of Gevo; and Michael McAdams, president of the Advanced Biofuels Association, ABFA.
McAdams noted that the special episode emphasizes that, “Washington now has a real opportunity to invest in clean energy fuels, smarter investments based on performance, not a lifetime of subsidized handouts from Washington. This opportunity can strengthen America’s energy security while creating jobs here at home, today.”
The Bottom Line
The good news – the release of the “blueprint for a bioeconomy”, expected next week, may offer more substantiation of an “all of the above” strategy. And, for sure, commercialization is rapidly moving out of the realm of government support and towards the private sector. Note that both KiOR and POET-DSM dropped their DOE loan guarantees, saying they were unnecessary for their projects.
For industry – it is a reminder that Obama Administration is likely to support in the form of purchase rather than development – government-as-customer rather than government-as-investor. Those that get themselves off the government dope may well find themselves with a significant first-mover advantage, not to mention some hefty government contracts for drop-in diesel and renewable jet fuel.