In Washington, 34 cleantech CEOs, are trying to make sure the DOE doesn't drop its loan guarantee program despite threats of budget cuts from Congress. Signatories to the letter include Abengoa Bioenergy EVP Christopher G. Standlee, Frontier Renewable Resources CEO Steve Hicks, Rentech CEO Hunt Ramsbottom, KiOR CEO Fred Cannon, Fulcrum Bioenergy CEO Jim Macias, and POET CEO Jeff Broin.

“This program has already proven its ability to deliver,” the CEOs write in the letter. “It has committed more than $26 billion in loans and loan guarantees to projects that represent $42 billion in investment in our still- struggling U.S. economy. These investments represent an estimated 58,000 direct and indirect jobs across 19 states.”

“The projects for which our companies have applied,” the letter continues, “all of which are ready to begin construction between now and September 30th of this year — represent over $13.3 billion of investment in 28 states and will generate 15,600 construction jobs and 10,200 permanent operating jobs as well as thousands of additional jobs for equipment and services provided by suppliers.”

“Any man who falls behind is left behind”

In the letter the CEOs raise the specter of the United States falling behind in clean energy investment and deployment, if the DOE Loan Guarantee program is defunded. Perhaps not coincidentally, a report arrived from PEW yesterday on clean energy sector investment.

PEW concluded that “China attracted a record $54.4 billion in clean energy investments in 2010–a 39 percent increase over 2009 and equal to total global investment in 2004. Germany saw private investments double to $41.2 billion and was second in the G-20, up from third last year. The United States, which had maintained the top spot until 2008, fell another rung in 2010 to third with $34 billion in private clean energy investments.”

The CEOs write: “We are deeply concerned that eliminating funding for this critical program will not only destroy thousands of pending jobs and hinder the growth of critically-needed U.S. domestic energy production, but also defeat America?s effort to compete with China, Germany and others in the clean technology marketplace.

Fixes Proposed to the DOE Loan Guarantee Program

The CEOs proposed a structural remedy for the program, the ability to transfer “viable Section 1705 project applications” into the Section 1703 program.

Why? Well, several reasons, but primarily because the Section 1705 program requires projects that receive loan guarantees under Section 1705 to commence construction before September 30, 2011. In addition, 1705 is aimed at support of “commercial technologies,” whereas Section 1703 is aimed at the support of projects that utilize “new or significantly improved technologies.”

The Spreading the Love Factor

The CEOs write that “each federal dollar of loan guarantees leverages $13 in private capital investment.” So why isn’t everyone in love with the DOE Loan Program, and why aren’t there more signatories on the latter to save the DOE Loan Guarantee program

There’s that “haven’t invested much in advanced biofuels” factor. Though the DOE Loan Guarantee program has supported 23 projects since 2009, representing more than $26 billion in project cost and creating (or saving) 58,000 jobs across 19 states, the five-year old Section 1705 program has not yet closed a loan guarantee in biofuels, advanced or otherwise.

The closest they have come, yet, is a conditional commitment for a $241 million loan guarantee for the 137 million gallon Diamond Green renewable diesel project in Louisiana. If that loan closes, it would represent just under 1 percent of the total clean energy loan guarantee financing.

Says the DOE: the projects are not financeable according to the program rules. Says the advanced biofuels industry. Something is wonky with the rules.

Slow Train Coming

Most of the criticism of the DOE Loan Guarantee program picks up on the slooooow progress, stringent conditions, and the winner-picking that is inherent in the process. The fact that the Solyndra solar project has run into so many problems since picking up its $535 million loan guarantee has dimmed confidence that the drawn out review process, and the intense outlay of time and money by the applicants, has resulted in a material advancement in the quality of projects selected.

Sink, Sank, Sunk

Which brings us to a uniting factor for the signatories of the latter. “As part of our applications, our companies have already spent tens of millions of dollars to meet the government’s stringent requirements for a loan guarantee,” the CEOs write. “Our companies have hired engineers, acquired land, complied with environmental reviews, and negotiated power purchase or other off-take agreements. Eliminating funding at this late stage would literally pull out the rug from under our projects, just when we are about to break ground.”

Jerking Around the Business Community

Well, there’s a point. How are government programs going to engender confidence in the future if they get defunded after the applicants spend millions on the application process, but before the review is complete. That’s different than having projects rejected for reasons of quality. That has the ring of jerking the business community around, and driving them to foreign shores.

President Pledges More Support for Advanced Biofuels

Not exactly in response to the letter but last Wednesday, President Obama gave an address at Georgetown University in which he called for a goal of reducing U.S. oil imports by one-third by 2025, with increased support for technologies that can assist in that transition, including advanced biofuels.

“We meet here at a tumultuous time for the world,” the President said, noting the situation in Japan, Libya, and Syria. “One big area of concern has been the cost and security of our energy…Families feel the pinch when they fill up their tank.  For Americans already struggling to get by, a hike in gas prices hurts.”

“But here’s the thing – we’ve been down this road before.  Remember, it was just three years ago that gas prices topped $4 a gallon…We cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again.  The United States of America cannot afford to bet our long-term prosperity and security on a resource that will eventually run out.  Even before we run out, the prices will be too high.”

And with that, the President turned to an unveiling of his clean energy policy, the Blueprint for a Secure Energy Future. It’s an ambitious 44-page outline of an ambitious program, which includes investments in smart grid electric infrastructure, highways, high-speed rail, public transit, expanded oil & gas exploration, as well as  biofuels-related measures including advanced biofuels R&D, blender pumps and increased flex-fuel car purchases.

Highlights from the Blueprint

Continuing investments in R&D will be critical to the deployment of new technology and meeting the transportation needs of Americans. Recovery Act and prior year investments are already making progress on advanced technology vehicles through research initiatives like an ARPA-E grant with the goal of developing a battery that will go 300 miles on a single charge or cost-competitive biofuels that are direct substitutes for gasoline.

The FY 2012 Budget request will significantly broaden R&D investments in advanced biofuels and batteries and electric drive technologies – including an over 30% increase in support for vehicle technology R&D and a new Energy Innovation Hub devoted to improving battery energy storage for vehicles.

Corn ethanol is already making a significant contribution to reducing our oil dependence, but going a lot further will depend on taking promising cellulosic and advanced biofuels technologies to scale. To help advance the commercialization process, the Administration has set a goal of breaking ground on at least four commercial-scale cellulosic or advanced bio-refineries over the next two years.

In addition, the President has challenged his Secretaries of Agriculture, Energy and the Navy to investigate how they can work together to speed the development of “drop-in” biofuels substitutes for diesel and jet fuel. Competitively-priced drop-in biofuels could help meet the fuel needs of the Navy, as well as the commercial aviation and shipping sectors.

The United States has worked with international partners to promote the benefits of sustainable modern bioenergy. In the Western Hemisphere, the United States collaborates with Brazil to help a number of countries develop bioenergy programs that promote economic development and energy security. In the Asia Pacific Economic Cooperation (APEC) organization, the United States has led work to identify sustainable biofuel development practices, resource potential, and employment potential.

In addition, as an active member of the Global Bioenergy Partnership, the United States worked with multiple nations and UN international organizations to develop indicators that will enable developing countries can use to ensure that are developing bioenergy in a sustainable manner.

The FY 2012 Budget also marks a ground breaking commitment to expand transit options for Americans and return transit systems to a state of good repair. The Administration supports these commitments with the aim of making public transit systems accessible to more people, and to ensure that these systems are more reliable, efficient, and safe for the millions of travelers who use them every day. These investments will ultimately provide Americans with affordable transportation options that help reduce dependence on gasoline.

The Digest’s Take

The headline, of course, is reducing oil imports by one-third by 2025. The speech, while highly welcome in tone and outlook, was a little short on new specifics, and sounded more like a rah-rah to build support for the 2012 Budget, showcasing existing measures in support of the 2025 goal.

However, fair to say that no President has, by a long shot, done as much to design a comprehensive national energy policy. So kudos to the White House team but the trick is not figuring out what to do – there have been dozens of studies and proposals from private foundations, NGOs and pressure groups. The trick is assembling a political coalition that gets the job done. That’s what separates an FDR from a Hoover on addressing the Great Depression, or a Kennedy/Johnson from an Eisenhower on addressing space exploration, or Reagan from Carter on ending the cold war.

We don’t yet see the grand coalition forming, but we do note the evolution of the President’s vision, since 2008, to include more emphasis on energy independence and less on carbon, more emphasis on domestic fossil fuel and nuclear production than in the past. What we begin to see is supply-side energy economics, instead of simply a reform of the means of production.

The President has embraced an American “more” over a European “better”, and “more” offers the kind of opportunities that can build support in the Congress. Of course, the President’s “more” is a “better more,” because of the emphasis on clean energy.

But in the “better vs. more” equation, the President has finally figured it out. To build the economy, he better have more, no matter how much better.

Quibbles?

We are left to guess whether “we’ll help entrepreneurs break ground on four next-generation biorefineries,” refers to existing commitments, or new ones. Probably the former, kind of a double dip on publicity.

We did not see commitments from the President on mandating the manufacture of flex-fuel cars, or proposed investments in ethanol pipelines. Clearly, the President’s strategy is based around growth in advanced biofuels, particularly drop-in biofuels. He’s getting behind blender pumps, but leaving other investments in infrastructure to the private sector.

Things To Admire

We are impressed by the fact that the White House “gets it” that we are not experiencing volatile oil prices — we are experiencing a real ceiling to growth, as too many economies are chasing too little oil, and economic growth pushes up energy prices too fast to sustain economic expansion.

We were impressed by the President’s goal of making the US federal government auto fleet purchasing 100 percent renewables, by 2015. It can only help spur usage and acceptance of flex-fuel cars, hybrids and plug-in electrics, and reduce dependence on imported oil.

The President clearly linked an investment in electric cars to investments in wind, solar, biomass, nuclear, and clean coal (if there really is clean coal, we’re not quite sure how clean it can get on an affordable basis, though it’s a laudable goal). Electric cars without renewable power simply change the mix of fossil fuels used for transport from petroleum to, basically, coal and nuclear – domestically produced, but not carbon darlings.

 

Jim Lane is editor and publisher of Biofuels Digest.

This article was originally published by the Biofuels Digest and was reprinted with permission.