Four-Star Biofuels: How the Pentagon Is Outpacing Civilians in Gen2 Adoption

In “Four Star Biofuels: How the Pentagon Is Outpacing Civilians in Gen2 Adoption” a special Raymond James look at the military and biofuels demand, Pavel Molchanov writes: “A key differentiator of the next-generation (Gen2) biofuel industry compared to many other areas of clean tech is that the economics of most Gen2 biofuels do not depend on subsidies.

“Gen2 companies that use traditional feedstocks (sugarcane, corn, plant oils) tend to focus on high-value markets such as specialty chemicals – which are never subsidized – while those that are using cellulosic biomass and other low-value feedstocks can compete with petroleum directly on cost.

“Insofar as Washington has been offering policy support, it has mainly been via the Renewable Fuels Standard.  However, the Department of Defense has emerged as a leader in the early adoption of Gen2 biofuels by supporting the industry’s scale-up with increasing (though still pre-commercial) fuel purchases and joint R&D programs.  We estimate that the targets of the Navy and Air Force will create an addressable market of ~650 million gallons by 2020 and ~450 million gallons by 2016, respectively.  For context, we project total domestic Gen2 biofuel production in 2012 of only ~300 million gallons.”

The complete report is available via biofuelsdigest.com.