Funding offered to develop advanced biofuels projects

Oct 25, 2013

USDA announced last week that it will be offering $181 million to companies to develop commercial-scale biorefineries or retrofit existing facilities with appropriate technology to develop advanced biofuels.

Agriculture Secretary Tom Vilsack said USDA remains focused on carrying out its mission, despite a time of significant budget uncertainty. The announcement is one part of the Department’s efforts to strengthen the rural economy.

“This financing will expand the number of commercial biorefineries in operation in the U.S. that are producing advanced biofuels from non-food sources,” Vilsack said. “US- DA’s Biorefinery Assistance Program is yet another way USDA is hoping to carry out the Obama Administration’s ‘all-of-the-above’ energy strategy to develop every possible source of American-made energy." But the benefits go beyond reducing our dependence on foreign oil, USDA said in its press release. “These biorefineries are also creating lasting job opportunities in rural America and are boosting the rural economy, as well.”

But Valero Energy Corp., the nation’s largest independent refiner, told the San Antonio Business Journal that the $181 million in new federal money to build biofuels refineries would not, on its own, sway it to build more renewable fuels plants.

“When we decide to build something, it’s because of the project’s potential return to investors,” Valero spokesman Bill Day told the Business Journal. “That (federal money) would just be one of many things we’d include in our study of a project.”

The Biorefinery Assistance Program was created through the 2008 Farm Bill and is administered by USDA Rural Development. It provides loan guarantees to viable commercial-scale facilities to develop new and emerging technologies for advanced biofuels. Eligible entities include Indian tribes, state or local governments, corporations, farmer co-ops, agricultural producer associations, higher education institutions, rural electric co-ops, public power entities or consortiums of any of the above.

Sapphire Energy’s “Green Crude Farm” in Columbus, NM, is an example of how this program is supporting the development of advanced biofuels. In 2011, USDA provided Sapphire Energy a $54.5 million loan guarantee to build a refined algae oil commercial facility. In continuous operation since May 2012, the plant is producing renewable algal oil that can be further refined to replace petroleum-derived diesel and jet fuel. According to the company, more than 600 jobs were created throughout the first phase of construction at the facility, and 30 full-time employees currently operate the plant.

The company expects to produce 100 barrels of refined algal oil per day by 2015, and to be at commercial-scale production by 2018. After receiving additional equity from private investors, Sapphire was able to repay the remaining balance on its USDAbacked loan earlier this year.

In 2011, USDA issued a $12.8 million loan guarantee to Fremont Community Digester for construction of an anaerobic digester in Fremont, MI. The digester, which began commercial operations late last year, is the largest commercialscale anaerobic digester in the United States. It has the capacity to process more than 100,000 tons of food waste annually to produce biogas and electricity. Biogas from the digester runs generators that total 2.85 megawatts in capacity. The electricity produced is sold to a local utility and is providing power for about 1,500 local homes.

Applications for biorefinery assistance are due by Jan. 30, 2014. More information about how to apply is available in the Oct. 2, 2013 Federal Register announcement or by contacting the USDA Rural Development National Office.

Since the start of the Obama Administration, the USDA Biorefinery Assistance Program has provided approximately $684 million in assistance to support biofuels projects in eight states.

Secretary Vilsack noted that the funding announcements are another reminder of the importance of USDA programs such as the Biorefinery Assistance Program for rural America. A comprehensive new food, farm and jobs bill would further expand the rural economy, Vilsack added, saying that’s just one reason why Congress must get a food, farm and jobs bill done as soon as possible.

The new biofuels funding follows EPA discussion on scaling back Renewable Fuel Standards (RFS) mandates. — Traci Eatherton, WLJ Editor