US biofuels makers await White House energy policy announcement

03 February 2010 17:53  [Source: ICIS news]

HOUSTON (ICIS news)--As the Obama administration prepares to outline its biofuels energy policy on Wednesday, the mood in the biofuels industry ranged from optimism to disgust regarding government interaction with the market.

Administration officials are expected to discuss how they will measure carbon dioxide emissions from biofuels, which will determine which renewable fuels are considered clean enough to enter the nation’s gasoline and diesel supply.

While the Obama administration has heavily promoted biofuels as a way to create jobs in the US and move the country away from foreign fuel sources, the government has been too slow to implement biofuels usage regulations or even clarify which fuels and which feedstocks will be considered adequate, industry sources said. 

Others have said the administration is ignoring producers currently in operation in favour of next-generation projects that will use non-food feedstocks.

"The EPA is clueless on what this industry truly needs,” one ethanol producer said.

Not all producers were as disgruntled. Renewable Fuels Association (RFA) president Bob Dinneen said from what he understood of the administration’s intentions, the government would strike a balance between supporting current and future renewable fuels refining methods.

"This plan combines an appropriate appreciation for the importance of the existing biofuels industry with an understandable excitement for new technologies near fruition,” Dinneen said.

US biodiesel and ethanol producers are also anxious to hear the status of the US Environmental Protection Agency's (EPA) updated renewable fuel standards (RFS2), which would call for more than 15bn gal/year of biofuels be blended into the country’s fuel supply by 2012.  

EPA officials declined to say whether RFS2 would be discussed during today’s announcement. A White House press official did not immediately return calls for comment. 

On the biodiesel side, industry sources said the administration’s long-term goals for renewable fuels were welcomed, but that Congress was where the more immediate problems lay.

Senators have delayed a vote to extend a $1/gal blending tax credit that expired on 31 December that biodiesel producers considered crucial to make their product price-competitive with traditional diesel.  

Renewable Energy Group (REG), which owns and oversees about 300m gal/year of biodiesel refining capacity, said layoffs earlier this week at two plants it manages in Iowa were directly linked to the lack of the tax credit.

“We still have things on the table that we need moved in the short term before we start talking about long-term programmes,” said REG spokeswoman Alicia Clancey.

Additional reporting by William Lemos

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By: Ben Lefebvre
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