Advanced biofuels industry: Policy instability hurts

By Sue Retka Schill | August 29, 2012

Calls for a waiver to the renewable fuels standard (RFS) are not helpful to the nascent advanced biofuels sector, according to industry representatives who participated in an Aug. 28 press conference organized by the Biotechnology Industry Organization.

“We’re at the point where a couple of plants will be producing cellulosic biofuels in commercial quantities next month,” said Brent Erickson, executive vice president of BIO’s industrial and environmental section. “These companies rely on the RFS to insure they are not shut out of the market by larger, traditional fossil fuel companies. A change in the policy to address the current situation would disrupt the progress made in advanced biofuels made to date.”

The impact of an RFS waiver on the advanced biofuels industry isn’t being considered by those pushing for the waiver, he said. “The advanced biofuel is not the economic powerhouse in any state, of course, but it is providing some key economic benefits and is poised to provide more going forward.”  Calling it a great irony, he added the emerging industry is creating new, long-term careers, both white collar and blue collar, even in the states that are petitioning for the waiver.

“This drought is hurting all of us,” said Adam Monroe, president of Novozymes North America. “We don’t need to make it tougher on any American with a job, especially not those Americans producing biofuels and reducing our dependence on foreign sources of oil.”  He added that in future droughts, an advanced biofuel sector could make use of the badly damaged crops. “Instead of plowing it under, we can use that cellulosic material to make the fuels and biobased materials.” For his global company, he said the waiver requests sends instability signals, and as the board considers its investments around the world they ask, “whether the United States is going to stay the course.”  He pointed to the over $1 billion investments on advanced biofuels development the company has made, including $200 million for a new enzyme plant employing about 100 people now in Nebraska.

Looking at advanced biofuels is a long term play, stressed Steve Hartig, vice president, bioenergy for enzyme maker DSM. “We think it’s important you don’t confuse short-term issues, even huge short-term issues like the drought, with the need for long term strategy and long term regulatory stability.” He listed a number of the benefits the U.S. will see from the growth of renewable fuels supported by the RFS: It will add diversity to the country’s energy mix for cost control, for energy security, and in situations like now when Hurricane Isaac shuts down oil production in the Gulf, for diversified supply chains. Companies are making investments benefitting the economy, plus there is an added value stream for farmers and rural employment. Also, advanced biofuels support the environment with at least a 60 percent reduction in greenhouse gas emissions.  Addressing critics of subsidies, Hartig pointed out a company like his wouldn’t invest in something requiring a subsidy forever. “But, it’s fair to say all new energy technologies did need government support to get going. For petroleum over the years, and even fracking for natural gas, a lot of government dollars and studies were needed to get those industries up and running.”  

Larry Ward, senior vice president of project development for Poet-DSM Advanced Biofuels, brought the argument closer to the field. Poet is now partnering with DSM in building a 20 MMgy cellulosic ethanol plant in Emmetsburg, Iowa. “Besides the investment of millions of dollars to commercialize this technology over the past five years, Project Liberty has touched thousands of people,” he said, mentioning those working on research and development, the manufacturers of enzymes as well as those involved in harvesting and handling the corn stover needed to feed the plant. “Most importantly it’s been a collaboration with farmers; farmers who are leading an effort that will revolutionize agriculture,” Ward said. The stover harvest, which will cover 85,000 acres this year and 300,000 when the plant is operating, is stimulating new business in Emmetsburg with a new equipment dealership opening and others gearing up to offer custom services.

“The impact we’re seeing in Emmetsburg is a model for what cellulosic ethanol will mean in every state,” Ward said. “The implications, frankly, are incredible. People have been planning for the future because they believe in the vision that Congress had when it initially passed the renewable fuel standard—that the American farmer would lead the charge in changing our energy landscape, from one based on oil to one based on renewable resources.”

For farmers who face the gamble of weather every year, waiving the RFS adds more risk. If that scale-up of biomass supplies is going to happen, he said, “the farmers need confidence that America is committed to a renewable energy future and waiving the RFS will erode that confidence and add a significant hurdle to commercialization efforts.”