Biofuels groups ask President Obama, Congress to reform DOE's Renewable Energy Loan Guarantee program, which has issued no loan guarantees for biorefineries; groups say reform needed to secure construction funding

Rachel Carter

WASHINGTON , September 22, 2010 (press release) – The DOE’s Renewable Energy Loan Guarantee Program to date has not issued loan guarantees for biorefinery projects. The Biotechnology Industry Organization (BIO), Advanced BioFuels Association, and Algal Biomass Organization today asked President Obama to work with Congress to make significant statutory and regulatory reforms to the program, allowing biorefineries deploying advanced technology to secure construction funding.

The letter to President Obama signed by the groups says, “As currently administered, the program essentially forecloses eligibility of advanced biofuels and other biorefinery projects… If appropriate reforms are imposed, the first pioneer biorefineries will be built, paving the way for a material shift toward sustainable low-carbon transportation fuels, chemicals and products. Without such changes, our global lead in these vital market segments could quickly falter. Moreover, Congressional intent to ensure near-term commercialization – and associated petroleum displacement – of advanced biofuels and other biobased chemicals and products would be thwarted.”

The groups proposed the following steps for both the administration and Congress to pursue in reforming the DOE’s Renewable Energy Loan Guarantee Program:

1. Clarify Loan Eligibility Criteria
Issue formal guidance to DOE clarifying that the Renewable Fuel Standard provides advanced biofuel producers sufficient long-term market certainty so that they can demonstrate a “reasonable prospect of repayment” of loans.

2. Extend the Program Timeline
Ask Congress to extend the Sept. 30, 2011 deadline for commencement of projects, allowing advanced biorefinery technologies additional time to participate.

3. Restore Funding
Ask Congress to restore the $3.5 billion diverted from the loan guarantee program to other budget priorities, and establish a dedicated pool of money for advanced biofuel, biochemical and bioproduct projects.

Brent Erickson, executive vice president of BIO’s Industrial & Environmental Section, said, “Entrepreneurial companies are ready to scale up advanced biotechnology solutions for biofuels, biochemicals and biobased products, but institutional lenders are reluctant to fund new technologies. Congress established this loan guarantee program and extended it through the American Recovery and Reinvestment Act to help companies with cutting-edge energy and manufacturing technologies secure necessary private financing. While the program has worked for some energy generators, it has not worked for advanced biofuel and biorefineries. Though Congress’ intent was to reduce reliance on foreign petroleum, the rules it established for the program are not promoting biofuels, which are the most promising technology for displacing oil.”

“While we appreciate the significant financial support given by the federal government to advance research in the field of algae, the reality is that there are a number of algae companies who are past the initial research phase and ready to begin commercialization efforts,” said Mary Rosenthal, executive director of ABO. “These commercialization efforts are expected to create hundreds of thousands of jobs in the next decade, including in parts of the country hardest hit by the recession. The sooner we can get these projects funded, the quicker we can put people to work.”

ABFA President Michael McAdams noted, “We must have a government that not only has good intentions but can also successfully execute and deliver on the original objectives of programs developed by Congress. The companies we represent are at a critical juncture in their ability to deploy commercial gallons and the loan guarantee programs, both at the Department of Energy and the Department of Agriculture, can play a significant role in making a vision become a reality. We are pleased to work with the Biotechnology Industry Organization as well as the Algal Biomass Organization in an industry-wide effort to work with policy makers and deliver on the promise of the loan guarantee programs.”

About BIO

BIO represents more than 1,100 biotechnology companies, academic institutions, state biotechnology centers and related organizations across the United States and in more than 30 other nations. BIO members are involved in the research and development of innovative healthcare, agricultural, industrial and environmental biotechnology products. BIO also produces the BIO International Convention, the world’s largest gathering of the biotechnology industry, along with industry-leading investor and partnering meetings held around the world. BIO produces BIOtech Now, an online portal and monthly newsletter chronicling “innovations transforming our world.” Subscribe to BIOtech Now.

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