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7/2/2010

Biofuels Industry: Friendlier Policies Needed to Displace Oil
ARLINGTON, Va. — The country has lofty goals for the production and use of biofuels, but questions remain as to who will make it, where and for whom.

The Defense Department — particularly the Navy and Air Force — has been outspoken in its desire to be one of the first and biggest consumers. The Navy’s energy strategy, which includes deploying a “green” carrier strike group by 2016, depends on the availability of biofuels.

So do the goals of the country as laid out in the Energy Independence and Security Act of 2007.

Renewable energy standards mandate that by 2022 the American fuel supply include 36 billion gallons of biofuel.

“If we’re going to get 36 billion gallons by 2022, we have got to get started very soon,” the Navy’s Operational Energy Director Chris Tindal told farmers and other stakeholders this week at the 25 x ’25 Summit.

The summit is so named because its organizers want to have 25 percent of this country’s energy come from renewable sources that would be produced on America’s farms, forests and ranches by 2025.

The event attracted a variety of groups, including Operation Free, a coalition of veterans who have traveled in a bus around the country damning America’s use of petroleum.

Speakers at the conference repeatedly said that dependency on foreign oil threatens U.S. national security and leads to deaths of American men and women in some of the most foreboding places on earth.

At least three slide presentations in two days included the same image of a line of fuel tankers snaking along the Khyber Pass on the mountainous border of Afghanistan and Pakistan. This remote scene plays out every few days as American troops and civilians transport oil to the front lines.

“That’s an ambusher’s dream,” retired Navy Vice Adm. Dennis McGinn said, noting that someone gets killed for every 25 fuel convoys that take place in Afghanistan.

“We tend to get paralyzed sometimes, certainly at the political level in this country, about not wanting to do anything that adds cost to anything," McGinn said. "And the fact of the matter is we are already paying the cost for our dependence on fossil fuel.”

The price to wean America off petroleum is steep too. The United States doesn’t have the infrastructure in place to produce the biofuels it needs to meet the 2022 mandate, and a mish-mash of policies seem to contradict each other, leaving those who would produce the alternative energy scratching their heads.

The country needs to build 527 biorefineries at a cost of $168 billion, said William F. Hagy, special assistant for alternative energy policy at the Agriculture Department.

The department last week released a “roadmap” that outlines biofuel-related goals to be met by 2022. The document breaks down plans for specific regions of the country and what feedstocks would produce the most gallons. Corn starch ethanol is expected to produce 15 billion of the 36 billion gallons needed. Switchgrass, energy cane and biomass sorghum will produce another 13.4 billion gallons, according to the June 23 report.

Current policies, though, run counter to the spirit of the 36 billion gallon mandate. For instance, no more than 10 percent of ethanol can be blended with gasoline. The Environmental Protection Agency is considering an increase to 15 percent, but its decision has been delayed partly because corn-based ethanol has been criticized for not saving energy and for driving up the cost of food supplies.

That ties the hands of companies such as POET, the nation’s leading producer of corn ethanol. Policies currently aren’t lining up with the goals, said Doug Berven, corporate affairs director at the South Dakota-based company.

“Show us the market, and we’ll build you the plant,” Berven said.

While the Defense Department may want to take the lead and help create demand for biofuels, there are kinks there too. The Defense Energy Support Center, which buys oil for the branches of the military, can only award contracts for up to five years to purchase fuel, Tindal said.

That won’t do, those in the agricultural community say.

“We have to figure out how we can get a bankable program for at least 20 years,” said Jackie Theriot, who sits on the board of the American Sugar Cane League and Louisiana Farm Bureau Federation. His state has some of the highest biomass production in the country, he said, but those efforts will go nowhere without long-term agreements with the government.

“We have been working to get legislation where we can extend that purchasing power and actually get into a contract of maybe 15 years,” Tindal said.

Lenders and venture capitalists won’t be interested without long-term contracts, Hagy added.

The Agriculture Department has begun programs to help fund biofuel creation at every stage, from the planting of crops to the delivery of fuels. A loan guarantee program will help finance construction of some of the hundreds of refineries needed by 2022.

So far, the department has made two major financial commitments — $54.5 million to Sapphire Energy in San Diego and $80 million to Colorado-based Range Fuels for a plant near Soperton, Ga. Another loan for more than $200 million is under review.

Efforts across the board need to pick up if the country and the defense sector want to meet their “green” goals. Jeremy Martin of the Union of Concerned Scientists noted that the United States will miss the first billion-gallon milestone by four years at the current industry pace.

At that rate, he said, the country will fall 10 billion gallons short of the ultimate goal come 2022.
Posted at 9:50 AM by Eric Beidel | Permalink | Email this Post | Comments (0)

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