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Published September 02, 2011, 10:32 AM

ENERGY: Biofuels policy supported, but more needs to be done

Many industry leaders support a biofuels policy, but also believe that more things can be done to help address any deficiencies in a national policy.

By: Alan Van Ormer, Prairie Business Magazine

Hunter Roberts, State Energy Policy Director for South Dakota, believes that Congress should rethink the biofuels policy. “There are a lot of good things going on right now through the stimulus package that includes research dollars and loan guarantee programs funneling down to support beginning and mid-stage biofuels programs,” he states. “The federal government on the demand side has been lacking. If we’re to increase production, we need more demand for fuel.”

Alan Anderson, the Commissioner for the North Dakota Department of Commerce, says getting everyone to agree on a policy is the best course of action. “It’s really about educating each other and then working jointly to find solutions and generate results,” he states.

Rodney Larkins, Special Project Director of the Initiative for Renewable Energy and the Environment at the University of Minnesota, says there are existing and near-term technologies available which look to have the ability to dramatically improve the profitability, carbon footprint, and regional impact of ethanol plants and turn them into true bio-refineries.

“Unfortunately, it is currently very difficult to secure the investment capital necessary to fund these innovations or transformations,” he states. “Policy which strengthens the industry, encourages investment, and promotes energy independence on a local, regional, and national basis is critically needed.”

Biofuels are developed from biomass. It is considered carbon neutral, as the biomass absorbs roughly the same amount of carbon dioxide during growth, as when burnt. Some biofuels currently in use are biobutanol, biodiesel, bioethanol, biogas, and even vegetable oil.

Doug Tiffany, Assistant Extension Professor at the University of Minnesota, who specializes in renewable energy economics and technologies, says government subsidies were formulated to protect the ethanol industry from the fate experienced by the small ethanol plants that came on line in the 1980s.

“The small plants were run out of business when crude oil prices dropped in the mid-1980s,” he says.

Tiffany comments that the nation is not meeting the targets for the advanced biofuels and cellulosic ethanol made from things other than corn starch. “The government identified targets in the 2007 bill, but there have been challenges in technology and bigger challenges in raising the capital needed to build those plants,” he states. “Many start-ups spent considerable time waiting for federal loan guarantees.”

In addition, Tiffany believes that plants have to be built and operating for at least three years before there is much hope of enticing private investors. “I expect some more modifications for these targets,” Tiffany states. “Dry-grind ethanol plants using corn represent technology that works reliably and has been improved considerably in recent years in terms of water usage, energy usage, and reduction of Greenhouse Gases. There are a number of ways to improve the environmental performance of the existing plants by using biomass to provide process heat and electricity or perform extraction chemistry on the by-product, distillers dried grain and solubles (DDGS). Infrastructure is in place to transport corn to the ethanol plants and then move the ethanol to get it blended into all the gasoline in America. With a poor economy and reduced consumption of gasoline, less ethanol is needed to be blended at current levels, which are scheduled to be increased in the near future.”

Many believe that biofuels can help with energy security, as well as providing a substantial availability of fuel for the nation.

North Dakota officials believe that they have a model that could be used as part of a national policy. The North Dakota EmPower program was launched in 2007. Leaders from nearly every major traditional and renewable energy company in North Dakota meet regularly to share insights and ideas about all types of energy including biofuels in the state.

The EmPower policy supports doubling North Dakota’s energy production by 2025 and also supports the nation’s increasing renewable energy 25 percent by 2025.

“The beauty of what we do at EmPower is to bring individuals from traditional and renewable energy together all at the same table,” Anderson explains. “Our goal is simple. We need to create a very cohesive and synchronized energy development plan for the state of North Dakota and biofuels is a vital part of that process. The nation really needs to look, learn, and listen to what we have done in North Dakota.”

In South Dakota, ethanol is the major biofuel being produced and used. There is a cellulosic ethanol pilot project that POET is running in Scotland, SD, that is expected to produce 20,000 gallons per year. In addition, there is a biodiesel plant near Alexandria, SD, that could provide 6 million to 9 million gallons.

The three-state region is focusing on blender pumps now that the new policy is supportive for that infrastructure. More than half of the nation’s blender pumps are located within the three-state region. South Dakota was the first state to allow blender pumps.

North Dakota has installed 155 pumps and has another 115 in progress. South Dakota has funded around 70 blender pumps. South Dakota will have $3.5 million over the next five years to provide incentives for ethanol blender pumps and other infrastructure; approximately $1 million of that amount is available in 2011.

“Our state’s and country’s biofuels needs requires all players in the industry to be engaged in the process together,” Anderson says. “We need to work collectively to develop policies to overcome obstacles, eliminate barriers and economic growth in the biofuels sector.”

Tiffany believes the country needs consistent policies in order to foster biofuels investments or crude oil prices above $80 per barrel. “Another policy that would help the biofuels industry would be policies or taxes (permit fees) on Greenhouse Gases,” he states. “That would provide the incentive to improve the existing corn ethanol plants and encourage the use of cellulosic crops or residues to produce biofuels as well as process heat and renewable energy.”

Alan Van Ormer - avanormer@prairiebizmag.com

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