Biofuels financing revives (slightly); “food vs fuel” returns (somewhat)

The US economic stimulus bill, and attractive assets at fire-sale prices, are lifting investment prospects for the US-based renewable energy business, including the biofuels sector. The New York Times is reporting on the success of the stimulus bill in reviving project finance via the US Treasury.

Previously, the industry relied on the investment tax credit for project finance, which in turn relied on large profits at banks that created the opportunity to offset profits with investments in renewables to reduce taxes. With the banking sector collapse, project finance disappeared.

Hudson Clean Energy managing partner Neil Auerbach told reporters that previously, projects would solicit from “currency traders in the financial institutional community that charge tremendous transaction costs to access their tax capacity.  Instead you go to the federal government, specifically the Department of Treasury, and you hand in your tax credit and you get 100 cents on the dollar supposedly within 60 days of a satisfactory application.”

However, just as the financing frostmelt gains momentum, returning again is the “food vs. fuel” debate courtesy of criticism from environmentalists of the planned Interstate 5 “Eco-Corridor” that the governors of Washington, Oregon and California plan to line with renewable energy fueling stations.

A biofuels critic at Gristmill awarded “dunce caps” to Governors Schwartzenegger, Gregoire and Kulongoski and added “God save us from our politicians and the dolts advising them,” for supporting the establishment of biofuels and hydrogen refueling stations.

The critic pointed to a comprehensive collection of anti-biofuels studies and data.

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