Producers of motor fuels from plant waste say they have been left behind in President Barack Obama’s push to fight climate change.
Executives from about two dozen companies that produce advanced biofuels say a proposal to reduce the amount of the cleaner-burning fuel refiners must use in gasoline is crimping investment and shifting assets overseas, according to a letter to Obama Wednesday.
Novozymes A/S, Abengoa SA, and Enerkem Inc. were among companies that signed the letter. The producers of cellulosic ethanol, which is derived from plant sticks and stems, could be stuck with stranded investments if the biofuel mandate is reduced, according to Adam Monroe, president of Americas at Novozymes.
“If you add all that up, you’re close to $14 billion in investments,” Monroe said on a conference call with reporters Wednesday. “Certainly the business model wasn’t to build one plant and you’re done.”
Refiners should use 106 million gallons (402 million liters) of cellulosic ethanol this year, compared to the 3 billion that was targeted in a 2007 law, the Environmental Protection Agency (EPA) proposed in May. The agency cited “limits on the availability” of the fuel in its proposal to amend the 2007 Renewable Fuels Standard and allow oil companies to receive waivers instead of blending cellulosic ethanol into gasoline.
Oil industry advocates have argued there’s not yet enough of the fuel while biofuel producers say customers don’t have easy access to the alternative.
The EPA proposal has created “confusion from European investors,” who consider the 2007 law the “gold standard” for renewable energy policy and Obama a “climate champion,” Monroe said. Industry representatives have held meetings recently with the administration to discuss the proposal, he added.
Abengoa, Ineos Bio and Poet LLC have plants that produce cellulosic ethanol, according to data from the Renewable Fuels Association, a Washington-based trade group. Dupont Co. has scheduled an Oct. 30 opening for a plant in Nevada, Iowa, the company said in an e-mail Wednesday.
Meanwhile, Abengoa plans to open new mills in Brazil and France because of uncertainty over the direction of the U.S. program, Christopher Standlee, an executive vice president at Abengoa said on Wednesday’s call.
Executives on the call, including those from Poet and Enerkem, said it’s disingenuous for the Obama administration to advance policies like the Clean Power Plan, which seeks to reduce the use of coal to produce electricity, while reducing renewable fuel targets.
©2015 Bloomberg News
Lead image credit: Novozymes