Advanced Biofuels Workshop explores emerging market

By Erin Voegele | July 08, 2009
The second Advanced Biofuels Workshop, hosted by BBI International, was held June 15 at the Colorado Convention Center in Denver. The one-day event, which drew 168 attendees, was co-located with the International Fuel Ethanol Workshop and Expo.

With the U.S. EPA's recent release of the proposed rule for the second stage of the renewable fuels standard (RFS2), the domestic market for advanced biofuels is poised to rapidly expand. The need to quickly and efficiently move the advanced biofuels industry from the research and development stage to commercial production was reflected in the presentations of nearly all 20 speakers at the event.

According to Will Thurmond, managing principle at Emerging Markets Online, there are six key factors driving global biofuels market growth. These factors include government mandates, tax incentives, the goal of energy independence, economic security factors, national security concerns and the need for environmental security.

The RFS2 is one such factor that is expected to be a primary driving force behind domestic market growth for advanced biofuels in the near term. However, the RFS2 does more than simply increase the volumes mandates for biofuels use. It also specifies four categories of renewable fuels, each with its own definition and mandate. According to Thurmond, since the RFS2 now specifies one of these four categories as cellulosic biofuel - rather than cellulosic ethanol - the market has been opened to allow the introduction of other alternative fuels. More specifically, Thurman said that various algae technologies will now be able to play a larger role in meeting the RFS2 mandate for advanced biofuels. "There are many alternative pathways to get the 36 billion gallon RFS criteria, and we should start thinking about evolution in the markets," he continued.

One key component in the commercialization of any advanced biofuel technology is the ability to secure funding. John Herrick, senior counsel with Brownstein Hyatt, Farber and Shreck, spoke to attendees about trends and developments in the financing options for advanced biofuels projects. "I've been dealing with project financing, especially in the renewable sector, for almost 25 years," he said. "But, I've seen a drastic change in the past three or four yearsand in the past eight months, an even steeper change where old models of project financing just aren't in place."

According to Herrick, these changes are largely attributable to two factors: the recession and political changes. While traditional sources of private funding have been reduced, federal funding sources, such as the stimulus package, are filling the gap. "I've never seen anything like what was in the American Recovery and Reinvestment Act," Herrick said. "It's amazing it is changing the nature of how things are being financed right now."

"Right now we are in a very challenging period for biofuels," said Thurmond. "A lot of ethanol plants and biodiesel plants are going out of business, and we're in a transition in the meantime from first-generation biofuels to second-generation biofuels." According to Thurmond, it is important that those in the biofuels industry see these challenges as opportunities. "These are opportunities to entrepreneurs, investors, and inventors to help bridge the gap from where we are todayto where we want to go tomorrow," he said.