The U.S. Department of Agriculture is embarking on a revised biorefinery-finance program that it hopes will boost the amount of cellulosic-bio fuel production in the country.
The USDA seeks to make the advanced-biofuels industry more attractive to private investors, who so far have been averse about pledging money to what they view as untested technology. The lack of investment forced the Environmental Protection Agency to waive its plan to have 250 million gallons of cellulosic ethanol blended into the fuel supply by 2011 and seriously jeopardizes its goal of 1 billion gallons by 2013.
Public comment on the revisions ended Friday, with the new rules expected to be officially implemented in early summer. The new guidelines cut previous stipulations that made many advanced biorefineries ineligible for USDA-sponsored loan guarantees and thus unattractive to investors.
Among the jettisoned requirements were those stipulating that biorefineries needed to be in a rural area and at least 51 percent U.S.-owned to qualify for the program. The updated guidelines slash many of the fees entrepreneurs had to pay just to apply to the program and also allows banks to securitize a larger portion of the loan debt and sell it in the bond market.
Cellulosic ethanol is made from wood chips, algae and other nonfood items, so it bypasses the "food versus fuel" controversy surrounding corn-based ethanol. The new regulations should help cellulosic refineries to at least get out of the planning stage and into operation, said Kevin Book of the energy-finance-research firm Clear View Energy Partners LLC.
