USDA, Navy, DOE efforts offer over $130 million for biofuels

By Anna Simet | July 02, 2012

For the first time in history, the USDA, U.S. DOE and the Navy will collaborate on a multi-faceted plan to make headway on development of the country’s advanced drop-in biofuel industry, a strategy that involves over $130 million in new funding opportunities.

 Heather Zichal, deputy assistant to the president for energy and climate change, began a July 2 conference call by depicting the positive impacts that efforts made to date have had on the U.S. renewable energy economy, emphasizing that U.S. oil imports are the lowest level in 16 years. During that time, she added, the U.S. has doubled its energy from renewable resources.

 Zichal said later today the DOE will announce $20 million in funding for earlier-stage research and development projects to support pilot- and demonstration-scale biorefineries. These projects will produce renewable biofuels meeting military fuel specifications using a variety of nonfood biomass feedstocks, waste-based materials and algae.

 The DOE will announce an additional $12 million to support up to eight projects focused on researching ways to develop bio-based transportation fuels and products using synthetic biological processing, a strategy that parallels a two-phase Funding Opportunity Availability introduced by Secretary of the Navy Ray Mabus.

 The $30 million FOA must be matched on a per dollar basis with private industry, he said, and companies interested should respond immediately to learn what is required in terms of a business plan and technology. Companies chosen in phase one will have an opportunity to participate in phase two, which offers a $70 million FOA from the Defense Production Act to move into actual production. “Stage two is open to everyone, however companies chosen in phase one will have more experience and be completely vetted for phase two,” Mabus said.

 Every time the price of oil rises by one dollar, it costs the Navy an additional $30 million in fuel, according to Mabus, and this year it has already faced five such spikes. “We give countries that produce oil too much of an input on whether our ships sail, aircrafts fly and service vehicles operate…we don’t want to be in a position that trades readiness fuel; it’s a trade that’s unacceptable, and a military vulnerability.”

 Mabus emphasized several times that the funding opportunities would help ensure the resulting fuels will be competitively priced. When asked about congressional efforts to strip the Navy of its ability to use biofuels and how that might affect these efforts, Mabus seemed doubtful it would happen and twice stated that there’s a lot of support for these efforts in Congress. Funding for phase 1 and 2 is already covered with 2012 money, he added.

 Following Mabus, Vilsack briefly discussed USDA’s role in the collaboration, which will be using Commodity Credit Corporation resources to ensure fuel purchased from the biorefineries will be cost-competitive.  This will be done through existing USDA programs such as the Biomass Crop Assistance Program, and through mutual research programs with the DOE and USDA loan guarantees, he said.

Commenting on today's news, Advanced Biofuels Association President Michael McAdams said this is a moment when Washington can sidestep the back-and-forth of political theater by making smart investments that don’t sacrifice one energy sector for another and deliver the best results for tax-payer dollars spent. "America’s domestic biofuels industry is no longer assessing hypotheticals of ifs or when, instead today we are now asking, how much do you need?," he said. "Moving from the beaker to the barrel, all in record time, without a lifetime of federally subsidized handouts.  We are already delivering advanced replacement fuels today that meet on the road standards with the promise of much more to come."

For more information on the FOA, click here.