Is There Enough Cellulosic Ethanol To Meet 2011 Targets?

The recent projection from the Energy Information Administration (EIA) for cellulosic ethanol production in 2011 is a reminder that more investment and thoughtful policy is required to bring these technologies to commercialization, according to the Renewable Fuels Association (RFA) President and CEO Bob Dinneen.

According to EIA projections, cellulosic ethanol production will be 3.94 million gallons next year, which is 1.36 million gallons below the 5.3 million gallon target as it now stands.  The Environmental Protection Agency (EPA) readjusted the target under the Renewable Fuels Standard in February 2011.

Dinneen pointed to this projection as evidence that more needs to be done to bring these critical technologies to the marketplace, including improvements to existing loan guarantees and key tax policies. Dineen said that the number one issue facing cellulosic commercialization efforts is access to capital.  “These technologies stand at the precipice of commercialization, but have been hampered by a weak economy and failures to appropriately implement key loan guarantee programs,” he said.

The RFA has voiced criticized the DOE’s implementation of its loan guarantee program for several months.  In particular, the RFA recently highlighted areas that DOE needs to address.  These include reforming the offtake requirements that are in place for biofuels companies seeking loans and adjusting the expectation that operational and financial data from a commercial-scale facility be disclosed in order to get a loan.  According to the RFA, “This [second] requirement is particularly ironic and unnecessary, as the purpose of the loan guarantee program, at least as outlined by Congress, is to help transition biofuel technologies from demonstration scale to the commercial market. 

More on the RFA’s criticisms of the DOE loan guarantee program as it relates to biofuels can be found here.

Dinneen said that expanding the cellulosic biofuels producer tax credit to include a broader range of eligible advanced biofuels like algae and giving developers the ability to elect a refundable 30% investment tax credit are other key items that need to be in place for advanced biofuel commercialization.