Big Steps in Biofuels: ACORE’s Renewable Energy Policy Forum ‘13

By Joshua Rathod (Advanced Biofuels USA) Thinking about the back and forth on EPA’s cellulosic fuel mandates in the last month, the press on the harmful effects of diverting food crops for fuel processing in certain cases, and the general unease surrounding reoccurring challenges of the Renewable Fuels Standard (RFS), I walked into the caucus room of the Cannon House Offices with sober expectations for the update I would get at ACORE’s Policy forum last Wednesday. What I DID get, however, was a strong sense of focus from public officials and companies alike on the value and future of clean, renewable fuel initiatives.

Jeff Laut, CEO of POET (world leader in ethanol production), decided to devote his first words to outlining some positive aspects of the industry. In great support of our national security, in the past few years we have gone from importing nearly two thirds of our oil from potentially hostile nations, to importing just under 50%, largely because of locally produced biofuels (10% of our liquid fuels currently come from these sources). In a time of economic uncertainty, the biofuels industry has also helped combat unemployment in rural America, which has been economically stable where other regions have been in decline.

When asked how the government can help continue these positive changes, Laut said that first of all, the RFS is one of the “single most successful piece of energy policy that [he] has seen in [his] lifetime,” and to remove this standard would be to jeopardize the progress it’s helped create since 2005. Petroleum company affiliates have lobbied against the RFS and other biofuel mandates, but for the good of the country, Laut insists: leave them be.

A second comment was made on future legislation, saying that it would need to consider issues of market access. Support for infrastructure (blender pumps) and design of engines that run on these biofuels are two such issues that biofuel producers have struggled with for the last decade, which could be addressed in future policy. Although these comments were made in the slightly chagrined tone I’ve begun to expect from biofuel policy advocates, we would see later that there may be reason to hope for more cooperation in DC.

Where some may be disillusioned that renewable energy is still a grass roots movement, the fact is an industry of more than $1 trillion exists worldwide (including wind and solar power). The point that ACORE panelists stressed was this: from solar to biofuels, companies and investors just want to see stable policy.

Jeffrey Holzschuh, Chairman of the Institutional Securities Group at Morgan Stanley, expressed that from the financing perspective, there doesn’t need to be large subsidies or tax credits.To be comfortable, investors just need Washington to have a long term policy on renewable energy. He eloquently summed up the situation by saying that Congress could even have, “bad policy; we will figure out how to help [companies] make money. Just give us a policy.”

One of the most encouraging speeches of the day came from keynote speaker and Assistant Secretary of Defense for Operational Energy Plans and Programs, Sharon Burke. It was encouraging because, with the DOD being one of the largest consumers of fuel and energy in the world, her comprehensive explanation showed why biofuel utilization by the military would be obvious when considering future national and international policy, and could provide the impetus for a rapid upscale in renewable jet fuel and diesel production.

Burke mentioned that, between jets, “big mover” vehicles, and other machinery (diesel outpost generators, etc.) the DOD consumed 4.3 billion gallons of petroleum in 2012 and had a gas bill of $20 billion. With projections of the IEA stating Saudi Arabia will change its status as petroleum exporter to an importer within the next 30 years, the increasingly aggressive Iranian military activity in the Strait of Hormuz (representing the possibility of preventing transit of 20% of the global oil supply), and intensifying conflict over potentially oil rich territories (China vs. Japan), it would be precarious to rely on petroleum based fuels when the international market will inevitably be a volatile one.

My take away from this policy forum is that the grounds are set for rapid biofuels growth. There will inevitably be roadblocks provided by competitors in the fuels industry and legislation in this laughably bipartisan Congress has been less than reliable in recent years. However, there are some key players in place: investors are eager to invest, the massive DOD funding machine has expressed its backing, and in the most recent State of the Union Address, President Barack Obama enthusiastically stated that it is in this country’s best interest to completely change the way it does transportation by phasing out transport reliant upon petroleum based fuels. These developments shed a very exciting and substantial glow on the potential growth we’ll see in the biofuels industry over the next decade, and I for one will be vigilantly looking forward to the first bud.