An Open Letter to President Biden on Competition for Climate Change Reduction Businesses

by Bob Kozak, Atlantic Biomass, LLC

July 21, 2021 

President Josepr R. Biden Jr. 

The White House

1600 Pennsylvania Avenue N.W. 

Washington, DC 20500 

Dear President Biden,

For someone who says competition is the key to American economic success,

“A fair, open, and competitive marketplace has long been a cornerstone of the American economy, while excessive market concentration threatens basic economic liberties, democratic accountability, and the welfare of workers, farmers, small businesses, startups, and consumers.”
Executive Order on Promoting Competition in the American Economy, July 9, 2021

Who says it is important for the success of entrepreneurs and consumers,” 

For entrepreneurs, it provides space to experiment, innovate, and pursue the new ideas that have for centuries powered the American economy and improved our quality of life.  And for consumers, it means more choices, better service, and lower prices. 

Executive Order on Promoting Competition in the American Economy, July 9, 2021

And who has formed a Cabinet level Council to promote Competition,

“(a)  There is established a White House Competition Council (Council) within the Executive Office of the President.
(b) The Council shall coordinate, promote, and advance Federal Government efforts to address overconcentration, monopolization, and unfair competition in or directly affecting the American economy” 

Executive Order on Promoting Competition in the American Economy, July 9, 2021

I find it very unsettling that you have excluded climate change control technologies, specifically biofuels and electric vehicles (EVs), from your call for more competition. 

Even more unsettling, your Administration is in fact pushing in the opposite direction — to eliminate competition and build monopolies in those industries. For example, your Administration is considering cutting back on current biofuel commitments and proposals, https://advancedbiofuelsusa.info/biden-weighs-small-cut-to-biofuel-targets-in-nod-to-refiners/ and also ending Trump proposals to expand biofuel use. https://www.bloomberg.com/news/articles/2021-01-15/trump-aims-to-end-ethanol-warning-labels-in-biofuel-policy-blitz, while at the same time, it is planning to keep current EV subsidies in place and devote virtually all proposed transportation climate change money to subsidizing electric vehicles. The current bipartisan infrastructure bill appears to have $15 billion for EV infrastructure but nothing for biofuel research or implementation. 

Why does this writer think these government actions are anti-competitive, pro-monopoly, and ultimately inefficient? Let’s look at the status of these two GHG reduction sectors.

The biofuel industry is composed primarily of co-op biofuel refineries and entrepreneurial conversion technology startups. No one dominates the industry enough to set prices. The industry has been operating without subsidies since they were ended by the Obama Administration in 2012. Despite the lack of funding and government support great strides in GHGs reductions have been made. USDA released a study in 2019 showing that 1^st generation corn ethanol already reduces GHGs by 43 percent as compared to gasoline. And as USDA and DOE research has also shown, reductions of up 90-100 percent will be possible with improved lower nutrient/higher yield feedstocks and improved conversion systems. 

The centralized electrical production sector is by contrast dominated by a few electrical consortia and grids that are able to set selling and purchase prices and restrict renewable initiatives such as time-of-day payment to small producers. The EV production world is dominated by subsidies where a leading manufacturer, Tesla, reports that their profit (Q1 2021) comes primarily from emission credit sales ($518 million), currency manipulation ($101 million Bitcoin sales), and not vehicle sales ($15 million). https://www.autoweek.com/news/green-cars/a36266393/tesla-made-more-money-selling-credits-and-bitcoin-than-cars/

How are they doing on GHG reductions? Despite over a decade of EV tax credits of up to $7,500/vehicle and numerous government programs to increase wind and solar power, EV vehicles currently or in the next decade are not going to make a noticeable impact on GHG emissions. US EV sales are about 2.5 percent of annual US sales. At their prices, which are higher than for comparable internal combustion engine equipped cars, it will take decades for them to have any impact on vehicle population. Furthermore, most US grids have low percentages of installed renewable production and do not have plans for major conversions. For instance, the PJM grid, which serves Washington DC and much of the Mid-Atlantic and Northeast region, lists about 7 percent as renewable. 

Mr. President, from the looks of your spending plans for transportation GHG reductions, it seems very clear that you are favoring a future run by an inefficient monopoly over a very competitive, technology driven one that is already reducing GHGs. Or as people will say in the future using words from your Executive Order

“Federal Government inaction has contributed to these problems, with workers, farmers, small businesses, and consumers paying the price.”

Mr. President, we aren’t asking for subsidies just to increase our profits as some in the EV industry are. Instead, Mr. President we’re asking for a level playing field to compete with the EV/electrical production consortia to quickly reduce GHG emissions. If it were to mean no subsidies for all of us… well, that would be better than just subsidies for one sector.

Respectfully,

Bob Kozak

Pesident, Atlantic Biomass, LLC

*Robert Kozak is the founder and President of Atlantic Biomass, LLC, and a co-founder of Advanced Biofuels USA. After working for about 40 years in the transportation, energy, environmental, and government relations industries, he is now focusing on the development of enzyme systems to convert low cost feedstocks into biofuels. He can be reached at atlanticbiomass @ aol.com