When looking at ways to reduce our energy dependence on foreign countries, biofuels are one solution. In an attempt to learn more about biofuels, I subscribe to and receive a daily newsletter about the biofuels industry. In early 2011, I found out about the Advanced Biofuels Leadership Conference in April. I figured I would go to this conference and learn about what biofuels were. The scope of this conference ended up being way beyond the basics, spending most of its time over my head. So, hopefully I can condense and recount what was presented, despite a much less “advanced” understanding of the products and practices of the biofuels industry.
Day 1: Government and Biofuels
The very first panel at this conference was full of government employees working in the different sectors most affected by the idea of oil replacement. The USDA, DOE, DOD, and other D-groups were here at this conference to talk about what had to be done to get to where we needed to be. The first thing mentioned was the shortcomings of the current biofuel push. We are not currently developing at a fast enough rate to live up to the expectations of legislation that is supporting biofuels. Worse than that is the connotation that “biofuels” today means ethanol, resulting in a surging effort to replace only the gasoline fraction of the barrel of crude oil. While gas is important, a barrel of crude oil also is used to make diesel, higher end fuels, materials for plastic, chemicals, and a whole host of other things that are needed for our current way of life. From this point, more emphasis was made about how biofuels don’t just effect those of us using them, but additionally they are possible rural development boon. A domestic production of biofuels (growing feedstocks and providing other biofuel support services) could lead to a large amount of positive economic development. This lead into the topic of the “RFS,” or Renewable Fuel Standard. From there “EISA” was brought up (Energy Independence and Security Act). Everyone understood that both the RFS and EISA were partly responsible for the existence of this industry, and that for it to move forward, these would need to be two pieces of policy that needed updating and sustaining.
The last speaker in the early session was a military representative. He showed how the fuel issue is as much a security issue as well as a way of life concern. Our armed forces use a tremendous amount of fuel in many varying types. Aviation fuel is their big need, which is the opposite of the general need for transportation fuels in the commercial market. This being the case, and being as big an issue to them as it was, they had already begun to partner with some biofuel creators to test the capability of the fuels. For them, it wasn’t a question of matching commercial demand with quantity. They wanted to make sure the quality was there. Through some demonstrations, it seemed that a drop-in fuel replacement for fuel oil and diesel had been developed in partnership and they were able to get equivalent energy production out of this non-petroleum substitute. His parting thought were about the Navy “Green Fleet” goal of running an entire battle group off of renewable sources.
The big take away from the first part of the conference was the role of government in the biofuels industry. At this point you might feel you don’t want your tax dollars going to support some new industry. You might be thinking that the industry should stand on its own, and if it can’t, you don’t want it to happen. This flies in the face of the untold wealth of money that have been spent on technological innovation for the good of this country. The most obvious example was the government assistance with the massive infrastructure that currently exists to receive, refine, and distribute the petroleum products that our current society runs on.
One of the big points everyone agrees on is a need for consistency. As it stands now, biofuels and renewable energy related programs seem to fluctuate depending on 1) who is controlling the government and 2) the price of oil. Whether its grants, loan assistance, or even just loan guarantees, the biofuels industry just wants consistent ground to build with future sector predictability. The next panel (said to represent 90% of the current 200+ economic providers) echoed this sentiment. The plan is to make biofuels to replace dependency on foreign oil and to support rural development. They discussed how biofuels didn’t just mean algae or drop-ins or ethanol, but it was a larger picture of a larger sector. The question was how is it possible to work together as an industry to move forward? What were the commonalities? The biggest agreement was the on the importance of the RFS and a push to have policy that supports innovation and development. The technology needs to be adaptable to different feedstocks and able to make different final products, since we need all different types of technology to replace the “whole barrel.” The buzz-phrase of the day was “feedstock agnostic,” meaning you can put a wider range of materials in to get the desirable fuels out.
The next question was “How do we get building today?” The biofuels industry right now lacks stability and consistency from the government in terms of grant programs and R&D supported legislation. Yes, there was some repetition from session to session. To overcome this, there is a need for 10 companies with 7-8 ideas about funding/ finance each. Predictability of the future policy makes long term, large scale support possible, something that is desperately needed to move forward. It appears that oil credits/incentives have become permanently entrenched in the tax code, hampering competition. A similar behavior towards biofuels would give long term assistance, but creative financing options in the immediate term can partly substitute. Even solar and wind seem to have advantages in development, since they don’t have to qualify for the investment tax credit. There needs to be a technologically neutral footing. At this point the market is so entrenched in oil, that it will not fix itself and needs to be forced into change. As prices rise, this looks like it will get closer to reality, but price volatility derails consistent progress today. Long-term off-take contracts would go a long way to seeing this happen. The farmers in this process are adaptable. They just need the market to materialize and be stable.