US advance biofuels need government help - sources

29 October 2009 23:04  [Source: ICIS news]

HOUSTON (ICIS news)--The heads of the biofuels industry told a Congressional subcommittee on Thursday that the federal government would have to strengthen its ties to the renewable fuels sector if the US wanted to meet its advance biofuels production targets.

The heads of five companies researching and producing advance biofuels - ethanol and biodiesel made from raw materials other than food materials - and two government researchers told members of the House Agricultural Committee that the technology for large-scale production was available.

However, building commercial-scale refineries and making the advance fuel available to motorists around the country would require more support from the federal government, especially in helping to secure financing, they said.

“The biggest hurdle we face as an industry is the lack of project finance to start building early-stage facilities,” said William Roe, whose Illinois-based Coskata refines garbage and wood mass into ethanol. “The issue is no longer that advanced biofuels are 5-10 years away from being cost competitive. They are competitive today, but we need help getting the first facilities off the ground in the face of difficult capital markets.”

The updated US renewable fuel standard (RFS2) calls for 36bn gal (136bn litres) of biofuel by 2022. Of that, 21bn gal are to be from ethanol made from non-food feedstocks.

Representatives of advance biofuels companies told the committee that the biggest stumbling block was securing financing for commercial-scale projects, even with federal loan guarantees.

Susan Ellerbusch, president of BP Biofuels North America , told committee members that the recession and the unfamiliar technology used in advance biofuels production had made banks ambivalent about lending.

BP Biofuels blended more than 1bn of ethanol with gasoline in 2008, and has invested in technology to produce biobutanol as a fuel, Ellerbusch said.   

“The banking sector does not yet view the advance biofuels value chains as proven and reliable,” Ellerbusch said. “Even though government initiatives ... are in place to stimulate and mitigate the risk of investments, the banking industry still does not see them as low enough risks.”

If the US plans to meet its biofuels goals, the government would have to play a more active part in helping advance biofuels companies secure capital and dependable feedstock sources, government researcher Raj Shah said.

“If we are to reach our target of 36bn gal of biofuels by 2022, we will need to change the way we do business,” Shah said. “There has been little effective integration of ... efforts across government research agencies, and there has not been a focus of partnering with public and private resources to develop biofuels supply chains capable for achieving Congress’s goals.”

Doris de Guzman examines alternative processing, new technology, R&D and other sustainability initiatives in Green Chemistry
For more information on biofuels, visit ICIS chemical intelligence
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By: Ben Lefebvre
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