House votes to restore loan guarantee funding

By Erin Voegele | December 09, 2009
Report posted Dec. 22, 2009, at 4:01 p.m. CST

On Dec. 16 the U.S. House of Representatives voted to pass legislation that would restore $2 billion in funding to a U.S. DOE loan guarantee program. The funding was borrowed from the program in July 2009, and used to extend the Consumer Assistance to Recycle and Save Program-more commonly known as Cash for Clunkers. (See "Cash for Clunkers siphons from loan guarantee")

In response to the legislation, the Renewable Fuels Association said it was pleased to see the House vote to return those funds. "It's an important step and one the Senate should replicate as soon as possible," RFA President Bob Dinneen said. "Restoring these funds is just the first step. Making sure the shovel-ready advanced biofuel projects can gain access to these loan guarantees is vital for them to begin construction and production commercial volumes of next generation renewable fuels."

The RFA also pointed out that it is the responsibility of the Obama Administration to ensure that this funding is spent on a program that will meet the nation's energy, economic and environmental goals, and said the administration is lagging behind on initiatives that could be helping to reduce U.S. greenhouse gas (GHG) emissions today.

According to the RFA, the DOE's loan guarantee program is flawed in that it weighs the applications of emerging technology projects, such as cellulosic ethanol, using the same criteria used to evaluate more mature technologies, such as wind and solar. In a letter sent to the DOE in October, the RFA said that the challenges facing next generation biofuels are much different than the challenges facing the renewable power sector.

On Dec. 15, Vice President Joe Biden issued a memo to President Barack Obama that outlined the energy progress and goals of the administration. In that memo, Biden said that through the Recovery Act and the more effective use of programs already in existence, the administration is taking the steps to transform the U.S. into a global clean energy leader.

According to the memo, the energy components of the Recovery Act represent the largest single investment in clean energy in American history. The act's investment of $80 billion for clean energy could produce as much as $150 billion in clean energy projects, while existing investment programs could produce up to $90 billion in additional clean energy projects. In the memo, Biden states that these investments are jump-starting a transformation in our energy system, including unprecedented grown in advanced vehicle and fuel technologies.

The memo states that Recovery Act investments will provide the next generation of biofuels. "Over $600 million in Recovery Act grants - expected to be matched more than dollar for dollar by private funds - along with federal loan guarantees, will support 19 pilot, demonstration, and commercial-scale biorefineries," said Biden in the memo. "These facilities will convert various forms of biomass into fuels and chemicals that otherwise would be produced from oil, while creating jobs and raising farm incomes in rural communities across the U.S. Before these investments, the development of an advanced biofuels industry was at a virtual standstill as numerous facilities at the pilot stage had faltered during the economic downturn as credit markets tightened."