Obama $510M 'Blueprint' advanced biofuels program: industry reaction

August 17, 2011 |

In Washington, President Obama announced that the U.S. Departments of Agriculture, Energy and Navy will invest up to $510 million during the next three years in partnership with the private sector to produce advanced drop-in aviation and marine biofuels to power military and commercial transportation.

Reaction from industry was swift and generally enthusiastic. In today’s Digest, we include a round-up of industry reaction from trade groups and producers.

Michael McAdams, president of the Advanced Biofuels Association

“The Obama Administration should be commended for demonstrating great foresight as it continues to make smarter investments in drop-in advanced biofuels, investments that will ultimately strengthen America’s economic and national security.  Advanced biofuels will deliver ready to use replacement fuels for jetfighters, battleships, as well as commercial airliners and cars on the road today.  No waiting for the day when costly changes are made on car assembly lines or gas stations.”

“The Administration’s investment in commercializing advanced biofuels is a matter of national security.  Here are the facts.  The U.S. Defense Department is a one of the world’s largest consumers of fuel, representing close to 2 percent of annual U.S. petroleum use.   In 2008, DOD purchased $16 billion worth of fuel, using 119 million barrels of petroleum.  Together, with the private commercial airline industry, DOD uses 1.5 million barrels (63 million gallons) of jet fuel per day. Armed with just these few facts, you can see that our nation’s defense is at the mercy of the market just as much as we are when we pull up to the gas station.”

“As we see new biorefineries going online it is essential that Washington continue to recognize not only the need, but also the promise and desire to see advanced and cellulosic replacement fuels come to the market.”

Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section

“The White House Biofuels Interagency Work Group has done a thoughtful job of recognizing how important biofuels production is for national defense. Energy independence is indeed a national security issue. Our nation’s military is as much at the mercy of high oil and gasoline prices as the average consumer. In addition, it is imperative that our services have access to domestically produced fuel in order to avoid supply disruptions. Drop in advanced biofuels produced in small, strategically located biorefineries can be an important ‘force multiplier’ by increasing the military’s ability to operate where needed and reducing the costs and the number of combat forces necessary to protect energy supply lines.

“The Navy and Air Force have already worked with biofuel producers to test and certify that advanced biofuels meet the exacting requirements for performance and cost established by the military. By sharing the costs of building or retrofitting biorefineries to produce advanced biofuels, using existing funding and acquisition authorities, the USDA, DOE and the Navy can help accelerate their commercial development and ensure availability for military purposes. The military’s leadership can drive the costs down and increase availability for the commercial sector. This action will help move forward the commercialization of advanced biofuels and will further help develop the biofuels market. We need a basket of policy options to get the advanced biofuels industry to a large scale, and this joint effort is one more step in the right direction.”

Brooke Coleman, Executive Director, Advanced Ethanol Council

The White House and the U.S. military should be commended for publicly recognizing the strategic vulnerabilities of remaining dependent on petroleum sources of fuel. The economic and strategic risks of oil dependence are enormous, and this is the type of public/private partnership that needs to happen on a wider scale across multiple fuel pathways and end uses. The statements issued by the U.S. Navy are applicable to the entire U.S. energy sector and the economy as a whole. The U.S. government has invested in oil for the better part of a century. That investment is no longer paying dividends for U.S. consumers. It is time to leverage new economic opportunities and demand markets. The joint plan issued by the U.S. Departments of Agriculture and Energy, and the U.S. Navy is a good start.

Tom Buis, CEO, Growth Energy

“Development of next generation biofuels for use in aviation and by the military demonstrates that President Obama is committed to reducing our dependence on foreign oil, strengthening our national security and creating jobs that can’t be outsourced through the use of homegrown renewable fuels,” said Growth Energy CEO Tom Buis. “We urge the Administration to do everything it can for first generation ethanol, which is currently providing ten percent of our nation’s fuel and has the capacity and efficiency to do more if barriers to the market are removed. Greater access to the fuels market can be achieved through the full implementation of E15 and an investment in Flex Fuel pumps and Flex Fuel vehicles.”

Lee Edwards, CEO, Virent; past chairman, Advanced Biofuels Association

“I see yesterday’s joint announcement as a positive and promising step forward to commercialize ‘drop-in’ biofuel technologies, like Virent.  After much anticipation, the leadership in collaboration between three agencies combined with strong private sector participation and customer off-take help mitigate risks that have limited true ‘drop in’ scale up investments in the United States so far.  Early success in pioneer deployments will in turn attract accelerated private sector deployment funding of multiple plants.   Virent looks forward to competing for the announced funds as soon as details of the solicitation are available, and contributing to increased energy security, domestic job growth, productivity of existing infrastructure and lower carbon intensity.  What’s not to like, the program is a very good fit with Virent’s competitive advantages.

Daniel Oh, President & COO, Renewable Energy Group

“There is hardly a more strategic issue for the U.S. than energy security.  As a national producer and marketer of advanced biofuel, we applaud this intra-agency initiative in making homegrown, sustainable fuels more readily available.

“For more than a decade, we have provided high quality biodiesel to large diesel fleets, including military bases. One of our key strategies is to accelerate our advanced biofuels technologies beyond our current biodiesel platform.  We plan to continue to build partnerships throughout the defense logistics chain by supplying the military and commercial markets with replacement fuels derived from renewable resources”.

Mary Rosenthal, Executive Director, Algal Biomass Organization

“The Algal Biomass Organization applauds the departments of the Navy, Energy and Agriculture for their historic initiative to accelerate the commercialization of domestically-produced renewable fuels with specific focus on the development of advanced biofuels.  At a time when millions of Americans are looking for employment, after a summer of record high gas prices, and with a need for a long-term, predicable access to fuel, the time is now to step up support for the next generation of fuels made from sustainable sources like algae.

“We hope this initiative will increase confidence in the private investment community and continue to unleash the promise of the algae industry.”

John Plaza, CEO, Imperium Renewables

“We are extremely pleased with the leadership that the President, the Navy and the departments of Agriculture and Energy have shown by announcing this strong commitment to the biofuels industry. This is a momentous day for the biofuels industry and helps put America on the path of success for our nation’s security and economic recovery.

“The administration’s significant commitment to developing renewable drop-in aviation and marine biofuels in partnership with the private sector will allow companies like Imperium to continue to grow, create domestic jobs and provide operational security for our country’s national defense by the increased production of advanced renewable fuels.

“This announcement will create jobs in rural America where they are needed most, spur technical innovation, and most importantly, help create new advancements in clean technology to assist in leading our country out of this economic recession.”

Advanced Biofuels USA: Are they Serious?

Over at Advanced Biofuels USA, the 501c3 education group, the mood was grim.

“Do the people who approved this proposal really think that $510 million over three years is really enough money to build the infrastructure needed to meet a significant portion of the Navy’s demand for drop-in jet and diesel biofuels?” writes Advanced Biofuels USA member Robert Kozak.

“Do the people who approved this proposal really think the biofuel industry can get $510 million in credit?” writes Kozak. “Look at the abysmal results of the DOE biofuel refinery loan guarantee program. So, if we take the White House’s word that they are serious about quickly producing large quantities of drop-in biofuels for the US military and commercial markets, then we would recommend that they implement a serious program.”

Kozak suggested a four-point program as an alternative.

1. If the production of drop-in biofuels is an important National Security need, than treat it as one.
2. Increase the available funding to a level that realistically matches the quantities of biofuels that are needed.
3. Do not require any cash matching funds.
4. Streamline the management of these projects.

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