Leveling the playing field for algae-based fuels

March 31, 2011 |

ABO executive director Mary Rosenthal

By Biofuels Digest columnist Mary Rosenthal
executive director, Algal Biomass Organization

At a time of rising gas prices and all-too-high unemployment, policy makers in Washington should be focused on advancing policies that create jobs, expand our nation’s domestic supply of renewable fuels, and decrease our dependence on imported petroleum. Instead, some in Congress have chosen to take a penny wise, pound foolish approach to supporting the commercial deployment of promising energy technologies.

While we can debate whether the government should be focused on setting outcomes, as opposed to picking winners and losers in the technology marketplace, the reality is that current biofuels policy, and especially policy focused on algae, does just that: it creates an unlevel playing field.

Algae-based fuels not afforded the same incentives as other renewable fuels

Our federal tax policy actually discourages the production of low-carbon, renewable algae-based fuels, including drop-in gasoline, diesel, and jet fuel, as well as ethanol, by failing to provide them the same incentives accorded to other advanced biofuel feedstocks.

For example, the Renewable Fuel Standard, an essential tool in our nation’s efforts to develop a domestic biofuels industry, currently excludes algae-based biofuels from nearly 80% of the advanced biofuels mandate. None of the major tax incentives for the production of advanced biofuels clearly and fully apply to the production of most-algae based fuels.

This lack of parity, where some feedstocks are favored and others like algae go unrecognized, acts as a significant impediment to the industry’s growth. Instead, the government should encourage the development of the algae industry, given how algae can be grown on non-agricultural land using salt water or wastewater, consume carbon dioxide as they grow, and produce oil more efficiently than any other known process, making them a highly scalable and productive feedstock.

Instead, the current legislative regime deters the algae industry’s growth by making it difficult to attract the private capital required to construct commercial-scale production facilities.

This unlevel playing field is mostly the result of timing. When the Renewable Fuels Standard and renewable fuel production tax credits were first established, the algae-to-biofuels industry was still nascent and algae-based fuels were not included.

100 algae-to-biofuels companies

But times have changed.  Between 2005 and 2009, the number of algae-to-biofuels startups more than tripled, there are now more than 100 companies across the value chain in the United States and several demonstration- and commercial-scale facilities breaking ground this year. That is why it is essential these promising technologies be integrated into the existing policy framework.

The Bilbray Bill levels the playing field

Fortunately, a bipartisan group of lawmakers are focused on addressing this challenge. Legislation introduced last week by Rep. Brian Bilbray (R-CA.) would take an important step towards achieving a technology neutral biofuels policy. The bill, H.R. 1149, would expand the $1.01 per gallon cellulosic biofuels tax credit to algae-based biofuels.  It would also amend the Clean Air Act by adding algae- based biofuels to the definition of cellulosic biofuels, so that algae-based fuels can help meet the 16 billion gallon carve-out for cellulosic biofuels in the Renewable Fuel Standard.

Bi-partisan support

Congressman Bilbray’s bill  has strong bipartisan support from Reps. Roscoe Bartlett (R-MD), Mary Bono Mack (R-CA), Russ Carnahan (D-MO), Susan Davis (D-CA) David Dreier (R-CA), Duncan Hunter (R-CA) and Jay Inslee (D-WA), reflecting  algae’s appeal as a promising energy crop that can bolster America’s energy security.  H.R. 1149 is also an instructive example of how members of Congress can work across the aisle to craft modest, targeted legislation that provides a technology-neutral policy environment. In doing so, Congress can further accelerate the commercial development of next-generation biofuels, including those derived from algae.

Headlines coming out of Washington D.C. too often highlight sharp bipartisan disagreement over America’s energy future, so let’s make sure we don’t overlook these bipartisan and proactive attempts happening everyday to foster the energy technologies of the future.

Mary Rosenthal is the Executive Director of the Algal Biomass Organization. Follow her on Twitter at www.twitter.com/AlgaeExec, or e-mail her at [email protected]

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