ABW addresses current market challenges

By Erin Voegele | June 03, 2009
Report posted June 15, 2009, at 9:25 p.m. CST

BBI International hosted the Advanced Biofuels Workshop June 15 at the Colorado Convention Center in Denver. The event, which drew 168 attendees, featured information on a variety of topics currently affecting the advanced biofuels industry. Approximately 20 speakers shared their experiences and insights in the areas of new technology, emerging research, financing, project development and current market conditions.

According to Will Thurmond, managing principle at Emerging Markets Online, there are six key factors driving global biofuels market growth, including government mandates, tax incentives, energy independence, economic security, national security and environmental security. With the U.S. EPA's recent release of the proposed rule for the second stage of the renewable fuel standard (RFS2), the domestic biofuels market is poised to see some changes.

In addition to drastically increasing the mandated volumes for biofuels, the RFS2 specifies four categories of renewable fuels, each with its own respective mandate. According to Thurmond, since the RFS2 now specifies the category of cellulosic biofuel - rather than cellulosic ethanol - the market has been opened to other alternatives. In addition, Thurmond said that algae technologies now have a role to play in meeting the targets for advanced biofuels.

While many ABW speakers approached the idea of advanced biofuels from a technology standpoint, Thomas Dries, vice president of business development and marketing at Gevo Inc., approached the topic from a marketing standpoint. Dries' company is developing a technology in which existing ethanol plants can be retrofitted to produce isobutanol and other high value chemicals that have higher profit margins than ethanol.

According to Dries, his company's technology requires a relatively low capital investment and can be competed in a short timeframe. In addition, an ethanol plant does not need to be idled to complete the retrofit, and can be easily returned to ethanol production in the future. Gevo is currently developing a demonstration-scale plant, and expects to be producing on a commercial scale by early 2011.

John Herrick, senior counsel with Brownstein Hyatt, Farber and Shreck, spoke to attendees about trends and developments in federal financing of advanced biofuels projects. "I've been dealing with project financing, especially in the renewable sector for almost 25 years," he said. "But, I've seen a drastic change in the last three or four years, and in the last eight months, an even steeper change where old models of project financing just aren't in place." Herrick said these changes can be largely attributed to the recession and political changes. However, he said that federal sources of funding, such as the stimulus package, are filling the gap caused by a reduction in the traditional sources of funding. "I've never seen anything like what was in the American Recovery and Reinvestment Act," Herrick said. "It's amazing."

"Right now we are in a very challenging period for biofuels," Thurmond said. "A lot of ethanol plants and biodiesel plants are going out of business, and we're in transition in the meantime from first generation biofuels to second generation biofuels." Thurman encouraged workshop attendees to see these challenges as an opportunity. "These are opportunities to entrepreneurs, investors, and inventors to help bridge the gap from where we are today, to where we want to go tomorrow," he said.