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Taking Biofuels to the Next Level

SOURCE: AP/Alan Diaz

Palm tree farmer Dylan Bailey explains the process of growing the jatropha plant in Delray Beach, FL, on June 12, 2009. The jatropha plant is a source of biofuel that can contribute to cut our oil dependence and diversify our energy alternatives.

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President Barack Obama is touring and meeting workers at a POET refining ethanol plant in Macon, Missouri today as part of his trip to Missouri, Iowa, and Illinois. POET is the largest ethanol producer in the United States, and has recently announced plans to produce 3.5 billion gallons of advanced cellulosic biofuels by 2022.

There is no question that the United States must reduce its dependence on oil. One-fifth of the oil consumed in the United States is imported from nations that are “dangerous or unstable” for travelers, according to the State Department. And since surface transportation is responsible for 65 percent of oil use in the United States, this task will require us to meet the challenge of oil use in the transportation sector head-on.

We will need to employ a variety of important measures to reduce oil use, including significantly more efficient fuel economy standards, investments in public transportation and high-speed rail, and smart growth development efforts. The production and use of alternative fuels, including natural gas and advanced biofuels, are also key components of a strategy to diversify our sources of energy for transportation. And each of these steps, taken together, can increase energy independence by reducing oil use by millions of barrels.

President Obama and his administration, including Secretaries Thomas Vilsack and Steven Chu and Environmental Protection Agency Administrator Lisa P. Jackson, have demonstrated great leadership in promoting the production of advanced biofuels in a more innovative and efficient manner, while ensuring that we maintain the existing infrastructure for the current generation of biofuels.

Yet there is still much more work to be done.

The current generation of biofuels producers, the advanced biofuels industry, Congress, and the Obama administration should work together to promote this important energy sector with the following policy goals and recommendations:

Support sustainable biofuels. Bring advanced, cellulosic biofuels—made from agricultural waste, wood chips, or dedicated energy crops such as switchgrass produced in rural America—to commercial scale on as rapid a timetable as possible. Ensure a stable long-term market for advanced biofuels by making investments in the infrastructure needs of the current generation of biofuels.

Push for comprehensive, bipartisan clean energy and climate legislation in Congress that establishes a price on carbon pollution. The biofuels industry must raise its visibility and high-level support for federal clean energy and climate legislation. An economywide price on carbon will help reduce greenhouse gas emissions and reinforce a predictable price signal that will drive innovation and investment to produce cleaner fuels, create jobs, and deliver more renewable energy from rural communities.

Increase support for the current national Renewable Fuel Standard. The RFS II will require better funding and interagency strategic implementation of the program, particularly regarding its emphasis on rewarding biofuels’ performance characteristics. Congress should also ensure that legislative definitions of “renewable biomass” adhere to certifiable environmental and land use safeguards on ecologically valuable and vulnerable public and private lands and provide a means to measure lifecycle greenhouse gas reductions.

Support loan guarantees for the construction and deployment of advanced biofuel refineries. The U.S. Department of Agriculture’s Biomass Crop Assistance Program has in the recent past been the sole federal source of loan guarantees to develop, construct, and retrofit commercial-scale advanced biorefineries attempting to produce cellulosic biofuels at commercial levels, and it should receive an additional $300 million toward this goal. This core funding will allow the program to issue loan guarantees for biorefinery projects established primarily in rural communities.

Provide incentives to farmers to begin growing advanced biofuel crops. The USDA’s Biomass Crop Assistance Program provides funding to producers and farmers of renewable energy crops of up to 75 percent of the cost of establishing the energy crop and annual payments for up to 15 years for crop production, and should receive additional support.

Encourage farmer-owned and farmer-operated biorefinery and biofuel plant cooperatives and biomass enterprise zones. Direct producer payments and other targeted incentives can help farmers engaged in the establishment of farmer and locally owned biorefineries and biofuel facilities, but should be temporary and phased out over a 10-year period, and should have majority local ownership. Farmers will also need technical and financial assistance to encourage them to pool resources and enter into larger biomass enterprise zones that would maximize economies of scale and regional geographic proximity. Biomass enterprise zones could facilitate the co-location of biomass growing, production, and processing. And marketing alliances could encourage collaboration on facility construction, storage, and transportation infrastructure to enable biobased products to enter the retail market efficiently.

Dedicate $300 million for five USDA regional feedstock research centers. These research centers will ensure appropriate biofuel feedstocks and supply chains are available in different regions of the country, and support other Department of Energy bioenergy and biomass programs. Biomass growers are primarily located in rural areas, and the costs of collecting and transporting biomass means that many production facilities are also in these communities, providing jobs and raising regional revenues.

Import tariff phase down. The United States should gradually begin the phase down of the current 54 cent-per-gallon tariff on imported biofuels as Congress and RFS II provide a mandate for the biofuels industry to reach 36 billion gallons by 2022. All countries must take reciprocal action to remove trade restrictions on sustainable biofuels.

Spur consumer demand and retail infrastructure. The United States must create requirements and strong incentives to make biofuel blends reliably available at filling stations by promoting the installation of new blender fuel pumps and distribution infrastructure that allow drivers to choose between traditional 100 percent gasoline blends and 85 percent biofuel blends. It should increase renewable fuel infrastructure grants to $100 million in each fiscal year.

Mobilize government purchasing power. The federal government spends more than $230 billion annually on products and services and is a major consumer of transportation fuels. The United States should fully implement the existing Farm Bill biobased purchasing program to use the government’s purchasing power to increase market demand for biobased fuels and products.

Biofuels and other types of biobased energy are not the only solution to all of the world’s energy and transportation challenges. We also need an array of energy sources from sun, wind, geothermal, and other renewable technologies. Most importantly, we need comprehensive, clean energy and climate legislation that puts a price on carbon pollution, and will allow sustained private and public investment in renewable energy and cleaner fuels.

But with the right safeguards, biofuels can play a direct role in diversifying our energy sources and contribute to cutting our oil dependence, enhancing our national security, and spurring economic growth and development, particularly in rural communities.

Jake Caldwell is the Director of Policy for Agriculture, Trade and Energy at American Progress.

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