Investor Interest in U.S. Biofuel Production Set to Soar

by John Daly (OilPrice.com) ...While it remains to be seen how the joint investments between the U.S. government and private sector will work in practice, the announcement nevertheless represents an unprecedented commitment by several federal departments to stimulate the production of renewable biofuel energy, which is a godsend for many start-up companies which have up to now found it difficult to locate capital to ramp up production.

There are many reasons why production of drop-in biofuels in the United States has been limited up to now. Two of the most significant roadblocks have been a dominant influence of the U.S. bioethanol industry and lobby, which until now has crowded out consideration of other options, as it currently has a hammerlock on issues of importance to farmers, including subsidies and federal crop insurance.

A second inhibiting factor is the sheer diversity of feedstocks, which range all the way from timber milling byproducts to algae. No single biofuel feedstock has as yet emerged as the clear initial winner, although it appears increasingly evident that camelina may soon come so.

And finally, last but certainly not least, the small amounts produced thus far of drop-in biofuels, the majority of which have gone to both civilian airlines and the Department of Defense for evaluation and testing have been labeled “designer” fuels, as their prices are multiples per gallon higher than traditional fossil fuel, which depending on the feedstock, have ranged between $65 and $100 per gallon. Supporters of biofuels argue that the high prices up to now are a factor of limited production rooms and that mass production will lower unit costs, but the fact of the matter remains that the high prices have been a significant impediment to developing full-scale commercial production of drop-in biofuels up to now.

...Wall Street's big money boys, the Carlyle Group and Goldman Sachs, have already begun discreetly investing in biofuel production in the U.S. READ MORE