Unleashing the USDA

Vilsack leads the administration in supporting the biofuels industry.
By Kris Bevill | February 15, 2011

It would appear as though the biofuels industry has no greater supporter than Secretary of Agriculture Tom Vilsack. And, at least for now, the Obama administration is allowing the USDA to do everything it can to advance and nurture the industry as it struggles to keep up with the technological advances required by the renewable fuel standard. Under his direction, the USDA approved three massive loan guarantees for cellulosic ethanol projects in January—a feat the U.S. DOE has yet to accomplish. The agency is also reportedly working on a rewrite to its loan guarantee requirements, which will eliminate outdated language and make it a little easier for cellulosic projects to be financed. Additionally, the agency recently made good on its late-2010 declaration to make payments to producers of advanced biofuels under Section 9005 of the 2008 Farm Bill and to provide funding for feasibility studies for biofuels production in all areas of the country.

“We believe it’s critical and crucial to develop renewable energy from feedstocks in rural America,” Vilsack said shortly before announcing the approved loan guarantees. “We have this vision for a strong economic future that relies on homegrown energy and we look forward to these projects and many more as time goes on.”

The USDA loan guarantees have had an immediate impact on at least one of the projects that received approval. Ineos Bio’s joint venture, Ineos Bio New Planet Energy, received a $75 million conditional commitment from the USDA for its 8 MMgy waste-to-ethanol project near Vero Beach, Fla. The plant will also produce 6 megawatts of electricity when operating at full capacity. Total project costs are expected to be $150 million. The project previously received a $50 million U.S. DOE grant and so, with the backing of the USDA, the company was able to complete financing and break ground on its project in early February. The facility is expected to be complete and operational next year.

Coskata Inc. received the largest of the USDA’s three initial loan guarantees, garnering a letter of intent for $250 million. The company is planning a 55 MMgy woody biomass-to-ethanol plant in west-central Alabama’s Green County. The company said the USDA loan guarantee will enable it to focus on the completion of financing for the plant. “This, along with the other announced loan guarantees, is a clear demonstration of the administration’s long-term commitment to advanced biofuels,” Wes Bolsen, Coskata’s chief marketing officer and vice president of government affairs, says.

Quebec-based Enerkem Inc. received the third loan guarantee for its subsidiary’s 10 MMgy municipal solid waste-to-ethanol project in Pontotoc, Miss. The $80 million USDA commitment will be added to the $50 million DOE grant the project received previously and should help the company meet its goal of breaking ground later this year.

As part of the Farm Bill’s Bioenergy Program for Advanced Biofuels, the USDA distributed more than $15 million to biofuels producers in January. The financial boost was divvied up among producers based on the amount of advanced biofuels produced from basically any biomass feedstock other than corn kernel starch. Several corn ethanol producers made the list of recipients, but were paid only for the fuel they produced from something other than corn, according to the USDA, such as milo-based ethanol. The agency said the one-time payments are meant to provide a financial incentive to biorefineries, which will play a necessary step towards meeting future renewable fuel standard targets. Future installments of the program will depend on changes to the 2008 Farm Bill as well as the 2012 Farm Bill, an agency spokesman said. Ethanol producers that received payments included:

•    Pinal Energy LLC, Ariz. - $943,335.07
•    Western Plains Energy LLC, Kan. - $598,783.49
•    Prairie Horizon Agri-Energy LLC, Kan. - $581, 640.12
•    Kansas Ethanol LLC, Kan. - $486,701.08
•    Arkalon Ethanol LLC, Kan. - $467,792.37
•    Bonanza Bioenergy LLC, Kan. - $187,789.02
•    Reeve Agri Energy Inc., Kan. - $106,073.10
•    Nesika Energy LLC, Kan. - $73,422.90
•    East Kansas Agri-Energy LLC, Kan. - $24,332.67
•    Corn Plus LP, Minn. - $128,658.66
•    Chippewa Valley Ethanol Cooperative LLP, Minn. - $6,037.27
•    Abengoa Bioenergy Corp., Mo. - $213,891.03
•    Chief Ethanol Fuels Inc., Neb. - $949,018.35
•    White Energy Inc., Texas - $1,022,026.02
•    Levelland/Hockley County Ethanol LLC, Texas - $304,897.19

—Kris Bevill