CEOs request change in DOE loan guarantee

By | March 16, 2010
Eleven CEOs of the nation's leading cellulosic ethanol companies sent a letter to U.S. DOE Secretary Steven Chu and members of the Senate Energy Committee prior to a Feb. 11 committee hearing acknowledging the support for cellulosic ethanol development through the renewable fuels standard and grant funding, but expressing concern that biofuel developers might have difficulty using the loan guarantee program.

Specifically, the program requires a long-term, fixed-price offtake agreement as a determining factor in evaluating whether a project has a reasonable prospect of repayment as required in the law establishing the loan guarantee. "This approach," the letter states, "drives a systematic bias toward lending for power generation projects that can obtain state-sanctioned, long-term power purchase agreements due to the regulated structure of the electric power industry. By contrast, the liquid fuels marketplace does not operate within such a framework; long-term, fixed-price forward contracting mechanisms, offering assurance of predictable future revenue streams, simply do not exist in our target markets."

Signatories included the CEOs of Abengoa Bioenergy, BlueFire Ethanol, Coskata, Enerkem, Frontier Renewable Resources, Ineos Bio, Iogen, KL Energy, Mascoma, Range Fuels and Verenium. Notably, Abengoa announced in January that it had teamed up with Mid-Kansas Electric Co. LLC to develop a cellulosic ethanol and power plant in Stevens County, Kan., to produce 15 MMgy of ethanol and 75 megawatts of power per year.