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More bucks for advanced biofuels?

By Steven Mufson

What is a "subsidy" to an industry that truly needs and deserves it? An "incentive."

That's what would-be makers of cellulosic ethanol are seeking in a letter sent Wednesday to the chairmen and ranking Republicans of the Senate Finance and House Ways and Means committees. As it happens, the letter - signed by 37 companies and trade groups -- will need to be resubmitted because Ways and Means is under new management, with its chairman Rep. Charles B. Rangel (D-N.Y.) temporarily stepping aside.

In any case, the letter is noteworthy for two reasons. One, the companies say that because of the weak economy, they need "additional incentives," and they ask for a 30 percent investment tax credit similar to one given to renewable energy electricity projects. The companies currently are entitled to a 30 percent production tax credit - but there's no production. Two, the companies attach some pricey cost numbers to cellulosic ethanol plants, approvingly quoting a number from the National Renewable Energy Lab.

Here's what the group has to say about costs:

"To be clear, cellulosic technology deployment is currently an expensive proposition. The total project investment for a 50 million gallon per year advanced cellulosic biofuel refinery is estimated by the National Renewable Energy Lab to be $250 million, compared with a total project investment of only $76 million for the same sized corn starch ethanol plant. The conversion technology in an advanced or cellulosic biofuel refinery is pre-commercial, which makes commercial financing virtually impossible in the current economy, even though the projected improvement over the long-term results in robust economics."

Just a little while ago, in 2007, Congress was so confident in American know-how that it set ambitious production targets for cellulosic ethanol - 21 billion gallons of advanced and cellulosic biofuels by 2022 with interim targets. The companies now say that won't be possible without additional help.

Here's what the companies have to say about those mandates.

"Although the law requires the use of these fuels beginning in 2010, no commercial cellulosic biorefineries are anticipated to be commissioned before 2011 at the earliest. The principal cause of this delay in commercialization is lack of funding caused by the severe downturn in the U.S. economy. Just as Congress responded to the impact of this downturn on the renewable electricity industry by allowing a 30% investment tax credit in new facilities that can be monetized through a federal Treasury grant program, we believe additional tax incentives are needed for advanced biofuel refineries."

The letter was sent by many of the big names in the business including the Renewable Fuels Association, the Advanced Biofuels Association, BlueFire Ethanol Fuels, Mascoma, DuPont Danisco Cellulosic Ethanol, Novozymes, Verenium, Qteros, Solazyme and many others. It was sent to Sens. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, and Charles Grassley (R-Iowa), the ranking Republican, as well as Rangel and Rep. Dave Camp (R-Mich.), the ranking Republican on House Ways and Means.


Mike Shepard

 |  March 4, 2010; 8:00 AM ET Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   StumbleUpon   Technorati  
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Posted by: titkonlyyou | March 4, 2010 10:55 PM
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Indeed, madness. Ethanol was by far the poorest choice for a biofuel on a national scale. Electricity is still the best bet. Ethanol as a biofuel takes food from the hungry to feed automobiles. How very Un-American.

Posted by: Watermann | March 4, 2010 10:13 AM
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How many more billions will taxpayers have to poor down this fraudulent rathole to fund artificial industries? How many poor people will have to starve as food prices soar so rich countries can "feel good" about using biofuels instead of oil and gas?

This is madness.

Posted by: silencedogoodreturns | March 4, 2010 8:51 AM
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