A discussion of biorefining policy at Houston event
It is clear that political sentiment has changed significantly over the past few years, and the biofuels arena has not been immune. During the closing presentation of the International Biorefining Conference & Trade Show in Houston, three industry leaders discussed the current state of biofuels policy during a session titled “Defining the Political Winds: Examining the Biorefining Industry’s Efforts and Progress in Washington D.C.”
Michael McAdams, president of the Advanced Biofuels Association, open the discussion by describing political climate in Washington, the difference between policy and regulation, and how organizations like the ABFA are working to overcome political barriers. “We don’t make the law,” he said. “We work with the people that do. We don’t make the regulations. We work with the people that do. We understand they are separate [and] distinct processes.” A lot f variables related to these two elements are currently afloat, he said, which creates certainty problems for the business community relative to financing and other factors.
According to McAdams, his organization and others representing the biorefining industry have been diligently working to remove barriers to cooperation that exist between groups, whether those differences exist between the biofuels and refining industries, the first generation and advanced biofuels industries, or between the cellulosic and advanced industries.
Wes Bolsen, chief marketing officer and vice president of public affairs at Coskata Inc., pointed out that we may have too many voices speaking for the industry, and the most important messages might be getting lost. “Honestly, we’ve got too many associations, probably,” he said, noting that each group is supporting a different piece of the industry as a whole. He also pointed out that the biofuels industry, which used to receive support from some environmental associations, is often now a target of these groups. There is a lot of misinformation and disinformation out there, he said.
While there are some subsets of the biofuels industry that would like to see alterations made to the RFS2, Bolsen stresses that would be a misstep in the current political environment. “The underpinning of this industry is the renewable fuels standard,” he said. “We will do everything it takes to maintain the renewable fuels standard. There are groups even within the associations that want to open it up…and someday when it does open up, we are all for algae parity; we are all for consistent definitions and feedstock neutrality, but right now what we need to do is maintain the base, and have certainty and predictability…Certainty and predictability is what gets financing into this industry, and if we start messing around tweaking or trying to open up the RFS right now, there is a massive risk that would go against us in this political environment.”
While the RFS2 is obviously integral to building demand for biofuels, Bolsen also noted California’s Low Carbon Fuel Standard could become even more important. “As California goes, so does the country,” he said. “The [LCFS] may do more for getting biofuels into the [market] than the [RFS] because it actually has teeth in it. It says if you don’t reduce carbon intensity…for your fuel coming into the state of California, you don’t sell fuel there. That is a massive risk [for obligated parties].”
McAdams also spoke about declining political support for biofuels, noting it seemed to peak a couple of years ago, but has since tapered off. “We had this tremendous run up [of support] brought to [the industry] by a lot of good lawmaking, a lot of good public education, and a fairly decent commercialization experience by the biodiesel and ethanol industries,” he said. “What you are now seeing is an absolute drop off the cliff since January of this year.”
According to McAdams, many lawmakers aren’t even willing to discuss the importance of biofuels. “Some of these Tea Party folks just don’t want the government to be involved in any promotion of clean energy bills at all. Period,” he said. “They are not even open to having the conversation…They fundamentally don’t believe there is a role at all for government in helping these [technologies] move into the private sector. That is their philosophy. It makes it much more difficult for guys like me who are trying to have a partnership in expediting commercial deployment of new technology.”
To build support for biofuel policy, such as the extension of tax credits, McAdams notes the conversation is going to have to focus on return on investment. “If we ask for something for the advanced biofuels and cellulosic industry, then we are going to have to spell out what the return on investment for the American taxpayers is going to be,” he said. The industry is going to have to offer hard numbers on the amount of jobs we can create, how the environment will be improved, how many barrels of imported crude are being backed out, and what the security benefits will be.
Bolsen notes that it is unlikely VEETC will be extended at the end of the year, but said he is optimistic the cellulosic credit could be extended beyond 2012. Both Bolsen and McAdams agree that tax policy is going to be a main focus in the next election. “We will have a national conversation about whether or not our tax policy is just a bunch of special interest loopholes, or whether it is aligned with policy objectives that are in the best interest of our nation,” McAdams said.
However, policy concerns related to biofuels go far beyond tax policy. Roger Conway, senior partner at Rosslyn Advisors, also took part in the discussion, primarily talking about the state of the Energy Title of the Farm Bill—most specifically the Biomass Crop Assistance Program. “This is a program which is in dire trouble right now,” he said.
The U.S. House of Representatives voted to zero out funding for BCAP, however the Senate has moved to provide funding. This means the legislation will go to conference committee. In order to help move lawmakers to support the program, Conway said the industry’s messaging needs to be about jobs. “I think what they are looking for on the Hill is how does this contribute to green jobs,” he said. “If you can show there are real benefits from the industry in terms of economics—and especially on green jobs—that will be influential with them…It’s all about economics, and we are rising against the tide where everyone wants to cut budgets.”