As the cellulosic ethanol industry prepares to emerge from small-scale development projects to full-scale commercialization, producers are eager to make their voices heard in Washington D.C. and on Wall Street. This was the motivation behind the formation earlier this year of the Advanced Ethanol Council. The group, formed in conjunction with the Renewable Fuels Association, is comprised of some of the most well-known cellulosic ethanol project developers, several of whom spoke during a special panel at the International Fuel Ethanol Workshop &amp; Expo on June 29 in Indianapolis.
Panelists included Wes Bolsen, chief marketing officer and vice president of government affairs at Coskata Inc., John McCarthy, president and CEO of Qteros Inc., and Tom Corle, marketing representative for Inbicon A/S. All three stressed the need for long-term policy support in order to spur the advanced biofuels industry forward. The timing of their comments was especially pertinent considering the U.S. EPA&rsquo;s recently announced proposal to again drastically reduce the coming year&rsquo;s cellulosic biofuels volume requirement as part of the renewable fuel standard [RFS]. Panelists said they weren&rsquo;t surprised by the reduction, but stated that it shouldn&rsquo;t deter investors from participating in their industry. &ldquo;We&rsquo;re going to miss it again in 2013, 2014, 2015,&rdquo; Bolsen said. &ldquo;We aren't building plants today. It takes at least two years to build a plant, so we shouldn't be shocked that the EPA is going to waive it this year and the next year and the year after. This is about: we need to start building now.&rdquo; Once plants are built, the industry will prove itself, he said, and the fact that the EPA has had to reduce the cellulosic target should in no way indicate that the overall RFS should be lowered.
McCarthy somewhat defended the EPA&rsquo;s actions and said the agency is only doing what it is required to do. Energy policy begins in the White House and that is where the problem lies, he said. &ldquo;The facilities are getting built, admittedly at a slower pace than any of us would have liked, which is more of a capital markets issue than, but the technology is there and ready to go,&rdquo; he said. &ldquo;In the face of that, we have a continuous minimization of what appears to be the importance of the RFS.&nbsp; If the requirement is put in place to blend 500 million gallons of advanced biofuels into the fuel stock, yet there's only 3 or 4 million gallons available, why? It's not a question of technology; it's not even a question of balance sheets. The major oil companies, the major ag companies, and others will put their money behind this industry if they are required to. This ultimately gets into a very straight-forward energy policy consideration for the country."
McCarthy said the advanced biofuels portion of the RFS should be a mandated requirement, meaning that blenders would have to essentially pay a tax if there is not enough fuel to meet the annual requirement.
McCarthy, whose company formed a strategic partnership early this year with India-based ethanol engineering firm Praj Industries Limited to accelerate the commercialization of cellulosic ethanol, pointed out that the U.S. is quickly falling behind other countries in the development of cellulosic biofuels. The market is growing rapidly outside of the U.S. because it is not as politicized, he said, adding, "These aren't just bucket-shot projects that are getting built. These are very highly qualified, very sophisticated projects with very sophisticated partners."
The lackluster performance of federal loan guarantee programs for biofuels continues to be a significant issue for investors, the panelists said. Long-term tax credits for advanced biofuels are also a necessity to provide assurance for would-be investors. Corle said Inbicon has found that the U.S. programs are very difficult to navigate. &ldquo;We&rsquo;re bringing over loan guarantees from Denmark on power projects because they&rsquo;re easier to work with,&rdquo; he said. &ldquo;Regarding producer tax credits, we need a longer window. A short window &hellip; we can do maybe a project or two, but Washington should be interested in developing an industry and not just a couple projects. All these technology companies are not looking just to do a couple of projects. There are more creative ways to commit suicide out there. We need those [long-term] windows. That stimulation needs to happen in order to kick-start a new industry so that the new ethanol can be flowing and meet those mandates as required.&rdquo;&nbsp;
&nbsp;

Brooke Coleman, left, executive director of the Advanced Ethanol Council, hosts a panel discussion featuring members of the cellulosic ethanol industry during the International Fuel Ethanol Workshop & Expo, held June 27-30, 2011, in Indianapolis.

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Representatives of the cellulosic ethanol industry who spoke during a plenary panel at the International Fuel Ethanol Workshop & Expo on June 29 said a reduced cellulosic RFS target for 2012 shouldn't indicate failure of their industry.

Cellulosic industry not surprised by reduced RFS target

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