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Can We Talk?

Turmoil in the Middle East, rising fuel prices—the time to act is now
By Michael McAdams | March 18, 2011

Many of you might recall Joan Rivers substituting for Johnny Carson on the original Tonight Show, and her distinctive delivery as she looked straight into the camera after the punch line, sarcastically asking the audience, “Can we talk?” I was reminded of this the other day as I prepared for an interview on a national radio show and the reporter asked if I could bring my discussion about the advanced biofuels industry and the policy and political landscape in Washington down a couple notches so listeners could understand.

The reporter’s request got me thinking. The advanced biofuels industry, along with pretty much everyone in Washington, continues to feel its way through the change in the balance of power and policy priorities as a result of last year’s election. But during this mercurial time in D.C., have we got so caught up in a complicated labyrinth of acronyms, formulating our policy arguments based on millions of gallons here and there, renewable feedstocks and other industry jargon and technical information that we’ve lost the ability to effectively talk as everyday Americans and not policy robots?

Our industry is at a crucial point as to whether the transition to clean, renewable energy alternatives will successfully happen. When Washington is frenetic as ever while industry and interest groups argue their own merits, we must effectively communicate the complexities and economic and environmental benefits of advanced biofuels to lawmakers—most of whom don’t have time or resources to get fully up to speed on the nuances.

We are continuing to see results from our progress last year, coalescing industry stakeholders around the idea that one voice is stronger than numerous competing ones. Last month, the Advanced Biofuels Association invited and was joined by the Biotechnology Industry Organization and the Algal Biomass Organization for a joint industry meeting on where we stand in Washington, and what the road ahead looks like.

At this meeting we repeatedly heard that, this year, $6 billion will be spent on biofuels tax credits, but less than 1 percent will go to next-generation biofuels. Collaboration must begin in earnest if we are to build the next generation of biofuels. Most of Congress’ attention in the biofuels space is directed to what to do with the ethanol tax credit of 45 cents a gallon. Some in the corn ethanol industry would like to redirect the $6 billion-plus to building blenders pumps and perhaps shift the blender credit to a production tax credit like the one for cellulosics. Others prefer to hold the current number, or take a small haircut given the current situation concerning commodity prices. 

But for the advanced biofuels industry, whether that’s companies developing drop-in fuels, cellulosic ethanol or algae, the challenge is finding capital to build their first commercial facilities. The tax code can provide real certainty to the financial system, and that promise must be fulfilled. There is no question that the winds have changed in the House Ways and Means Committee and talk is clearly of how to rewrite the existing tax code including biofuels. The current discussion is exploring ways to broaden the overall tax payer base, lower rates and eliminate specific provisions granting credits or exemptions to pay for the changes, leaving the biofuels industry at somewhat of a crossroads.

We certainly want to protect what we have built to date, and it seems reasonable to consider diverting some of the resources flowing for the past 25 years to advanced biofuels technology platforms seeking to build the next generation of plants and fuels. This will be a challenge in an atmosphere of reduced federal money across the board. 

But there is no better time to make this investment in the future, as the Middle East is in turmoil and fuel prices are rising. The time is now. We must talk about not only infrastructure investments for one type of biofuel, but also about technology investments to modify existing assets to make fungible fuels that don’t require infrastructure investments, fuels that could reduce taxpayer costs and deliver more energy value to the driving consumer. We must recognize that a sound advanced biofuels policy will utilize a broad range of feedstocks requiring a diverse range of technology platforms, if the U.S. is to deliver on the promise of 36 billion gallons called for under RFS2.

That means the biofuels industry has to play nice in the sandbox and share the available resources.  

Lastly, we cannot allow these technologies to be researched and developed here in the good ol’ U.S. of A. and exported around the world to our economic competitors. This is a time when our industry can create solid, well-paying jobs for our future. My hat’s off to first-generation biofuels, now it’s time for us all to create a plan to deploy the next generation. 
So Joan Rivers was right, we can and should talk, if we are to survive as a robust, state-of-the-art industry helping strengthen our nation’s economy, one other countries will jump to emulate.

Author: Michael McAdams
President, Advanced Biofuels Association
(202) 469-5140
Michael.McAdams@hklaw.com

 

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