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Hammering the RFS point

The effort continues to keep some advanced biofuels incentives in place and to protect the renewable fuels standard. Last week, BP Biofuels, Novozymes and DuPont executives held a joint news conference to keep hammering their point.
By Susanne Retka Schill | May 07, 2012

The effort continues to keep some advanced biofuels/cellulosic ethanol incentives in place and to protect the renewable fuels standard. Last week, BP Biofuels, Novozymes and DuPont executives held a joint news conference to keep hammering their point. 

Sue Ellerbusch, president of BP Biofuels North America, said that modifying or eliminating the RFS would not only scare off outside investors, but could squash the efforts of some industry players putting big bucks into their own projects. The three players in the press conference, BP, Novozymes and DuPont, have each put hundreds of millions of dollars into developing second generation technologies. And, in these three cases, with very little, or no, federal backing via grants or loan guarantees.

Their point was well demonstrated just a couple days earlier when Iogen Energy, a JV between Shell and Iogen Corp., announced that over half the employees at the cellulosic ethanol demonstration and research facility were being laid off – 150 people were losing their jobs.  Also, they are shelving plans to develop a large, commercial-scale cellulosic ethanol plant, first proposed for Saskatchewan and in the past year being considered for a Manitoba location. A contact close to the project says the issue wasn’t the technology, but business concerns.

As an oil company with deep pockets, the issue for Shell isn’t the problem of raising money from investors. (As it may have been for Enerkem, which withdrew its IPO recently. Although the company said there was interest from key investors and pointed to unfavorable market conditions as the reason, the question remains if there was overall lackluster investor interest.)

The problem is with the uncertainty created with the demise of the blenders credit. The corn ethanol industry conceded, and accepted its loss. While the first generation ethanol industry thinks it will survive, the collateral loss of incentives for advanced biofuels, biodiesel and cellulosic ethanol hurts badly. The possible loss of the energy title programs in the Farm Bill will hurt, too. But even more so, the talk of opening the renewable fuels standard to modifications is concerning, given the “just say no to everything” attitude among some in Washington.

Mike Bryan, the cofounder of BBI International where I work on Ethanol Producer Magazine, often points out the entire history of ethanol in the U.S. has been an uphill climb. The pessimist in me wants to say how can the next generation of biofuels ever make it out of the starting gate with such odds against it? The optimist in me wants to say, yes, it will be uphill battle, but it’s doable and the cause is worth it.

Building a solid base of renewable fuels to increasingly replace depleting, finite fossil fuels is a worthy cause. It is worth noting many retired military brass stress homegrown renewable fuels are necessary for our country’s national security. And, there are many more good arguments in favor of ethanol and renewable fuels.

Making those arguments heard is the work of the ethanol industry, from writers like me to small town ethanol producers, farmers and the many other ethanol supporters. A week of news like this past one underscores a growing sense of urgency.