Finally, finally…USDA Loan Guarantees Open to Renewable Chemicals 

May 18, 2015 |

USDABy Corinne Young and Michele Jalbert, special to the Digest

Any day now, the final rules governing implementation of the USDA 9003 biorefinery loan guarantee program will be issued. Years of advocacy have led to this moment – one to savor. Program changes garnered in the most recent Farm Bill reauthorization have, for the first time, broadened the loan guarantee program to include renewable chemicals and biobased products – even reflected in its new name, The Biorefinery, Renewable Chemical, and Biobased Product Manufacturing Assistance Program.

This represents a fundamental US policy shift that can help catalyze the US development of an exciting sector that is flourishing around the globe. The Renewable Chemicals and Advanced Materials Alliance (re:chem), along with others in the biotech sector, worked hard to advocate and broker the bipartisan compromise that delivered this result.

For the first time, companies seeking to produce high-performance renewable chemicals and biobased products in the US are eligible for loan guarantees to build manufacturing plants. Congressional champions, such as Senators Stabenow and Cochran, along with Representatives Lucas and Peterson, joined in a remarkable demonstration of bipartisan cooperation, not only to shepherd through the Farm Bill, but to also ensure this small provision was retained through the epic legislative battles. We in the renewable chemical industry owe a debt of gratitude to these lawmakers.

The changes to the 9003 biorefinery loan guarantee program aptly reflect the evolution in the viability of the renewable chemical sector from an aspirational green movement to a significant, disruptive driver in the new global economy. Many renewable chemical products remain green, but today they successfully compete with incumbent petroleum-based products on price and performance. From light-weighting of cars to 3-D printing, high performance nylons and next-gen building materials, renewable chemicals are squarely in the middle of an advanced manufacturing renaissance that promises jobs, infrastructure and economic growth.

The rest of the world has been quick to identify the potential of this sector. International competition to site renewable chemical manufacturing facilities has been fierce, and to this point, the US has been significantly disadvantaged. Other countries are offering companies a wide array of incentives to build plants elsewhere, often to manufacture products based technology developed in the U.S.

The updates to the 9003 biorefinery loan guarantee program are an important first step in leveling the playing field so the US can fully realize the multifold economic benefits of this exciting sector. But we are not finished – we need to enact tax and regulatory parity with a renewable chemical production tax credit (PTC) and TSCA reform that eliminates the bias in favor of petrochemical incumbents grandfathered within a woefully outdated TSCA regime. While there is still this work to be done, let’s herald the impending historic first round of 9003 loan guarantees which will be open to renewable chemicals and biomanufacturing, and plow this momentum into enacting a PTC and TSCA befitting a new economy.  These policies are low-hanging fruit – they are achievable and should be enacted quickly. Collectively, they will provide fertile ground for this fast-growing sector to take root and flourish here in the US.

Corinne Young is Chief Advocate and Michele Jalbert is Chief Operating Officer of the Renewable Chemicals and Advanced Materials Alliance (re:chem)

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Category: Thought Leadership

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