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U.S. invests $62M in next-generation biofuels

Jul. 2, 2012 - 08:26PM   |   Last Updated: Jul. 2, 2012 - 08:26PM  |  
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The U.S. government announced on Monday its latest effort to spur the development of biofuels through a $62 million investment.

The Obama administration said a key part of the spending was $30 million in federal funding being made available to quicken the development of biofuels to replace diesel and jet fuel consumed by the military and the commercial aviation and shipping sectors.

The White House promoted the investment as the latest step by the administration to reduce the country's dependence on foreign oil and spur the development of biofuels in the United States all of which amounts to a financial boon to states such as Iowa by creating jobs and boosting demand for crops. U.S. Agriculture Secretary Tom Vilsack called the funding announcement a "very positive step forward" for rural America.

"This is a matter of national security. It's a matter of energy security but it's also good news for rural America," said Vilsack. "It opens up great promise for the development of non-food feedstocks as a potential cash crop for farmers, ranchers and producers throughout the United States. The refineries that will be converting this biomass ultimately into fuel will likely be located in rural areas, helping to create jobs."

President Obama announced last August that the U.S. departments of Agriculture and Energy and the Navy will invest up to $510 million during the next three years to produce advanced drop-in aviation and marine biofuels to power military and commercial transportation. The $30 million was part of this commitment.

U.S. Secretary of the Navy Ray Mabus said last year he wants half of the fuel used in Navy ships and aircraft to come from renewable sources by 2020.

The government said individuals seeking funding under Monday's announcement will be required to submit a design and business plan for a commercial-scale biorefinery, identify and secure project sites and take additional required steps. Those who pass the first hurdle will then be asked to submit additional information for the construction or retrofit of a biorefinery.

The government said recipients, who are expected to be announced in October, will be required to match the federal funds they receive.

As part of Monday's announcement, the Department of Energy also said $32 million in new investments would be made in earlier stage biofuels research. About $20 million will be used to support biorefineries that could produce renewable biofuels that meet military specifications for jet fuel and shipboard diesel using a variety of non-food biomass feedstocks, waste-based materials and algae.

The remaining $12 million will be used to support up to eight projects focused on researching ways to develop biobased transportation fuels and products using a process that converts non-food biomass to biofuels in an efficient and cost-effective way. These projects will develop biological processes that can enhance the breakdown of raw biomass feedstocks and assist in converting feedstocks into transportation fuels.

Mabus told reporters every time the price of oil goes up $1 a barrel it costs the Navy an additional $30 million in fuel costs. This year alone he said the Navy has seen price spikes going into "the hundreds of millions of dollars."

"Right now we give countries that produce oil too much of an input on whether our ships sail, our aircraft fly or our surface vehicles operate," said Mabus. "We don't want to have to be in the position of having to trade readiness for fuel. That's simply a trade that is unacceptable and it's a vulnerability that we have to address and this will help to address it."

A federal renewable fuel standard mandates the use of 13.2 billion gallons of alternative fuels in 2012, with most of it coming from corn. Federal laws require that by 2022, half of the 36 billion gallons of ethanol come from non-corn sources such as corn stalks or the tall grasses. But so far the development of the new generation of biofuels from non-corn, which is heavily dependent on federal subsidies, has been costly and slow-going at best.

Iowa's first steps in mass production of biomass energy from wood chips, corn stover or grasses will be through the construction of two ethanol plants, by DuPont at Nevada and Poet at Emmetsburg, that will use corn leaves and stalks as feedstock. Poet broke ground on the $250 million cellulosic ethanol plant earlier this year, and it is expected to be completed in 2013.

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