The song remains the same: Bioenergy producers plea for US help on finance; feedstock stability a key; solutions in the student loan response?

You don't need a weatherman to know which way the wind blows

In Washington, USDA Agriculture Undersecretary Dallas Tonsager said in congressional testimony that the credit crunch for advanced biofuels developers has much to do with lender disaffection with first-generation ethanol following the VeraSun bankruptcy, and the upside down economics of the 2008-09 feedstock and fuel markets. He also said that, while two more USDA loan guarantees were pending for advanced biofuels, many applicants for loans are rejected because they are unable to line up lenders.

Domestic Fuel has an excellent short summary of testimony on Capitol Hill by Osage Bio Energy president Craig Shealy, Mascoma chairman Bruce Jamerson, Algal Biomass Association executive director Mary Rosenthal, Coskata President Bill Roe, and BP Biofuels North American VP Susan Ellerbusch. Weakness of the loan guarantee programs, feedstock and fuel neutrality in legislation, the E10 blend wall and extension of the cellulosic production tax credit were on the industry shopping list. Bill Roe said that financing delays are a prominent reason that US cellulosic ethanol makers will not make the 100 million gallon cellulosic ethanol target in the Renewable Fuel Standard in 2010.

USDA Undersecretary for research Rajiv Shah made the fatal connection between concerns over first generation ethanol and advanced biofuels. “We’re not there yet in the dedicated feedstocks that would be required to do this,” said Shah, as reported in Reuters.

Lender conditions also tightened up in the past few years — as a result of the financial shock in the securitized asset markets — for student loans. The program revived through a combination of congressional and government moves in response to lender disaffection and systemic stress. In 2008, Ben S. Bernanke, chairman of the Federal Reserve Board linked subsidy cuts enacted by Congress in 2007 to an exodus of lenders from the student-loan field.

In response to the crisis, Congress passed the Ensuring Continued Access to Student Loans Act, which allowed lenders to sell their new loans directly to the Department of Education rather than attempt to securitize and market the loans in a collapsed market.

According to Justin Draeger, vice president of planning for the National Association of Student Financial Aid Administrators, in a report in LIBN.com, the bill “stopped a mass exodus of lenders, who had been leaving in droves. We saw a stabilization.”

Look out kid It's somethin' you did / God knows when But you're doin' it again / You better duck down the alley way / Lookin' for a new friend / The man in the coon-skip cap / In the big pen / Wants eleven dollar bills / You only got ten.

Benjamins for Biofuels: "The man in the coon-skip cap In the big pen / Wants eleven dollar bills / You only got ten." (From 'Subterranean Homesick Blues' - Bob Dylan)

A similar scheme was proposed in Part V of Benjamins for Biofuels: Concepts for a way forward

Meanwhile, DOE Secretary of Energy Steve Chu was writing in the Huffington Post on weatherization investments and opportunities, as winter nears in the US amidst a looming winter of discontent for US bioenergy development. “So far, we are on track to cut our utility bills by about half compared to the previous owner, but we are doing more,” wrote Dr. Chu regarding his own home-based weatherization efforts.

One area of bioenergy finance that did show some movement yesterday was distress finance: Otter Tail Ag Enterprises, operators of the 55 Mgy Fergus Falls ethanol plant, filed Chapter 11 bankruptcy Friday after stating that it had reached an agreement with its senior lenders on reorganization of the company. In January, Otter Tail Ag Enterprises defaulted on its $31 million master loan with Agstar Financial Services.

[Extra! — some of the songs mentioned or alluded to in this article: Here's Archie Bell and the Drells, performing that weatherization classic [?] Tighten Up , Led Zeppelin performing The Song Remains the Same, Bob Dylan performing Subterranean Homesick Blues, and the Flying Lizards performing Money (That’s What I Want)]

Free Subscription to the Daily Biofuels Digest e-newsletter

Subscribe FREE to the world's most-widely read biofuels daily. Enter your email in the box below,

The song remains the same: Bioenergy producers plea for US help on finance; feedstock stability a key; solutions in the student loan response?

Free Subscription to the Daily Biofuels Digest e-newsletter

Related Stories

Hot Topics

Entry Information

Post a Comment | Trackback URL