Advanced BioFuels USA

by Jim Lane (Biofuels Digest)  …Those momentum killers. Company wreckers. The investor flight-inducing crevasses along the route to the top – that take away a level playing field, remove your access to markets, delay a counted-on early-stage customer, or frighten the bejeezus out of your expected strategic partner.
What are they? 6 policy crevasses. Fall into one, could affect your fortunes materially. Fall into all 6 – who could bear such a load?
Issue #1: RFS2 waivers and restructuring.    Why a Crevasse and not a no-brainer: The Renewable Fuel Standard (also, RFS or, more simply, “Rufus”) has a group of determined enemies. Libertarians who resent anything shaped like a government mandate. Cattle, poultry and dairy interests who blame RFS2 for rising feed prices (or would simply like to see them fall). Food manufacturers who see a convenient scapegoat when raising consumer prices. Some environmental interests who worry about monoculture agriculture, or NGOs concerned about grain prices for developing countries. Oil refiners who see biofuels mandates cutting into their business. Boat and small-machine owners who dislike ethanol. …
Issue #2: Tax credits.    Why a Crevasse and not a no-brainer: Federal tax credits can trip up legislators pledged to a “no new taxes” policy, and can get expensive if popular. …Plus, besides the opposition to biofuels tax credits in principle, from some – others disagree on whether the industry needs production tax credits or investment tax credits. … And, a hot one that has gained currency – accelerated depreciation. It exists in the world of fossil fuels – so, goes under the rubric of “tax credit parity”. Biofuels developers seek access to the same depreciation advantages as developers of fossil fuels capacity enjoy. …
Issue #3: E15, ATJ and new fuels certification.    Why a Crevasse and not a no-brainer: Though it is the most-tested new fuel spec in history, 15 percent ethanol blends (E15) have faced a storm of opposition. …There’s a 100 percent drop-in aviation fuel spec, and an alcohol to jet fuel certification program. There is work underway to expand biodiesel blends. Also, one day, to qualify new fuel molecules such as Incitor’s Alestron. …
Issue #4: Tax Code and Farm Bill Parity.     Why a Crevasse and not a no-brainer: Here, it is the newer molecules and feedstocks that are generally shut out in a lot of legislation that didn’t contemplate the opportunities in renewable chemicals, or algae. As supporters point out – it doesn’t really matter whether you start with fuels or chemicals, replacing oil is replacing oil – so why are the tax credits and mandates generally written in support of fuels? …One mantra – give the biofuels industry the same tax treatment as the oil industry.
Issue #5: Aviation and military markets.   Why a Crevasse and not a no-brainer: Though aviation and military interests are crying out for advanced biofuels — primarily, for locally-produced and carbon-friendly jet fuel — it has been tough to raise money to serve these markets owing to technology risk and, critically, the risk of financing capacity construction over 15 year terms when fuel contracts are less than a year long.   To help, the Obama Administration invoked the Defense Production Act…
Issue #6: The Farm Bill.    Why a Crevasse and not a no-brainer:  … The final House bill is expected to have little if anything in an Energy title – that is, support for energy-related farm programs. The Senate was far more interested in continuing to support the development of biofuels.   READ MORE