Biofuels Digest, BIO Launch Spring 2011 Bioenergy Business Outlook Survey

Biofuels Digest and the Biotechnology Industry Organization (BIO) invite the industry to take part in the Spring 2011 Bioenergy Business Outlook Survey.

The survey examines growth expectations and opportunities from a company, national and organizational point of view. It also examines the role of research, government policy, finance, and research and market partners in creating opportunities or barriers to the growth of green jobs, energy security and reductions in greenhouse gas emissions.

The survey is open to organizations in all sectors of the industry – including producers, research and teaching organizations, associations, equipment suppliers, offtake partners and suppliers of services to the industry.

Respondents to the 21 question survey will receive a detailed summary of the survey’s findings and commentary on trends from the Biofuels Digest editorial team. Summarized results will be published in Biofuels Digest, but the customized, in-depth summary will be available only to respondents.

The Winter 2010 Bioenergy Business Outlook Survey conducted in December drew responses from companies representing an estimated 4,200 green jobs and more than $3 billion in annual sales. That survey showed that 80 percent of bioenergy executives were more optimistic both about their organization’s prospects for growth and industry growth, than 12 months prior. It also showed that confidence about industry growth prospects had jumped 11 percentage points in the final quarter of 2010.

Follow this link to go straight to the 2011 Spring Bioenergy Business Outlook Survey.

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Ways and Means Should Include Job Creation of Advanced Biofuels and Bioproducts in Green Jobs Leg

On Wednesday, April 14 the House Ways and Means Committee will hold a hearing on Energy Tax Incentives Driving the Green Job Economy. The focus of the hearing is to examine the effectiveness of current energy tax policy and identify additional steps that the Committee can take to ensure continued job growth in this area while at the same time advancing national energy policy focus on a discussion of current and proposed energy tax incentives. Witnesses for this hearing have not been announced and we do not know how much of the hearing will focus on transportation fuels however, energy tax incentives for biofuels and biobased products should be a significant area of focus for this round of green jobs legislation. These technologies are ready to deploy and create near term job opportunities.

Industrial biotechnology is the key enabling technology for producing biofuels and biobased products like bioplastics and renewable chemicals to aid in reducing our dependence on foreign sources of oil, thereby reducing greenhouse gas emissions. They also have the ability to crate jobs, jobs that are currently moving overseas due to their reliance on petroleum as a feedstock or more favorable economic or political environments.

The United States has invested considerable amounts of taxpayer dollars to try to revive our economy. Too often, though, the resulting jobs are being created overseas, as other countries invest in green technology deployment. As a result, the opportunity to improve our economic competitiveness is lost. The United States is a leader in the research and development of green technologies, but to maintain that lead we must invest in the companies that are putting that green technology to work in our economy. These industries have shed hundreds of thousands of domestic jobs over the past two decades, as petroleum producing countries have attracted more capital investment. For example, U.S. chemical and plastics companies have increased capital investment outside the United States by 32 percent over the past decade, while increasing investment within U.S. borders by only 2 percent.

The Renewable Fuel Standard (RFS) enacted as part of the Energy Independence and Security Act of 2007 sets the minimum level of renewable fuel that must be produced and blended into the US transportation fuel supply at 36 billion gallons by 2022. 21 billion gallons of that requirement must be cellulosic or advanced biofuels. Direct job creation from the advanced and cellulosic biofuels volumes in the RFS could reach 29,000 by 2010, rising to 190,000 by 2022. Total job creation could reach 123,000 in 2010 and 807,000 by 2022. Jobs will be across many sectors of the economy. Some projected job creation sectors are: labor/freight, mixing and blending machine operators, shopping/receiving/traffic clerks, truck drivers, chemical equipment/technicians, chemical plant/system operators/electrical, sales etc.

The Ways and Means Committee can aid in accelerating this job creation by incentivizing biorefinery construction here in the United States. In 2008 Congress enacted a cellulosic biofuels production tax credit and enhanced depreciation for advanced biofuels facilities as part of the 2008 Farm Bill, both of which are scheduled to expire on December 31, 2012. Due to an overall downturn in the worldwide economy, this tax credit has not yet been utilized by cellulosic biofuels producers. This credit needs to be extended now in order to signal to investors that a plant being constructed this year, will have certainty in the availability of that tax credit once the plant begins to produce the advanced biofuel. A tax credit that expires before or shortly after production begins, does not create economic security for a yet to be built advanced biofuel biorefinery looking for funding. Furthermore, capital costs for construction of next generation biorefineries, which utilize renewable biomass to produce next generation biofuels and biobased products, are a substantial barrier to commercialization. Congress should provide an investment tax credit to help accelerate construction of next generation biorefineries and speed deployment of next generation fuels, chemicals and products.

Historically, the U.S. chemicals and plastics industry was the envy of the world. At its peak in the 1950s, the industry was responsible for over 5 million domestic jobs and a $20 billion positive trade balance for the United States. Jobs associated with the industry were typically among the highest paid in U.S. manufacturing. However, the petro-chemicals and plastics industries are now hemorrhaging jobs overseas. Conversely, biobased products and chemicals production, like domestically produced biofuels, will stay in the U.S., in close proximity to their biomass feedstocks. Total US employment in the chemicals industry declined by over 20% in the last two decades and is projected to decrease further. The US is a world leader in industrial biotechnology with a wide range of companies pioneering new, renewable pathways to traditional petroleum-based chemicals and plastics.

The potential job creation from bio-products is immense. Consider that the nascent biobased products industry employed over 5,700 Americans at 159 facilities in 2007 and every new job in the chemical industry creates 5.5 additional jobs elsewhere in the economy. Currently the biobased products portion represents only about 4 percent of all sales for the industry. Congress should create targeted production tax credits that can help them to expand their share of the market and grow additional domestic jobs. With an industry with the potential to grow by over 50% per year, bio-products can form the basis for a strong employment growth engine for the US.

Clearly commercializing the advanced biofuels and biobased products industries is an integral solution to creating high caliber domestic green jobs in the United States that will catapult this country to be a leader in successful high tech, sustainable technologies. BIO will be urging the Ways and Means Committee through written comments to recognize that innovations such as these are some of the most promising sources of green jobs and economic growth for the future.

Weekly Industrial and Environmental Bio Blog Roundup

This week we start off with a little Road Music, From Bluegrass to Switchgrass, from our colleagues at the Biofuels Center of North Carolina. They’ve put together a nice set of bluegrass pieces. To listen visit their web site.

Gas2.0 announces this week that BP could start selling biofuels in 2010, writing that,

“BP has partnered with Verenium to bring a commercial-scale cellulosic ethanol facility online next year to start bringing alternative fuels to a gas”

Wednesday, according to the Government Monitor,Tom Vilsack announced,

“the publication of nine additional BioPreferred product categories which will now be eligible for Federal procurement preference.”

Making, “more Than 1,000 Biobased Products Eligible For Federal Procurement,” the Monitor reports.

You can find USDA biopreferred on Twitter, http://twitter.com/BioPreferred and on the Web at: www.biopreferred.gov.

So what’s the deal with this conversation on whether or not biofuels are carbon friendly? We at BIO have certainly have had a lot to say on the matter and you can find all our opinions on our biofuels page.

However, our opinions aside, the folks at the journal Science, where the initial study and follow-up policy paper were published say that they are giving us the inside story, by holding a moderated conversation between Tim Searchinger and John Sheehan—kind of interesting, take a look for yourself.

That’s all for this week. See you next week!

Webinars for Reporters: Pacific Rim Summit to Host Forums on Algae, Cellulosic Biofuels and Renewable Chemicals

BIO will host three webinars from the Pacific Rim Summit on Industrial Biotechnology and Bioenergy in Honolulu, featuring companies, researchers, and policy makers at the forefront of efforts to commercialize algae applications, cellulosic biofuels, and renewable chemicals.

1.International Developments in Algae Commercialization
Valerie Reed, U.S. Department of Energy;
Patrick McGinn, Institute of Marine Biosciences, National Research Council, Canada;
Ravi Shrivastava, Defence Research Development Organization, India.
Monday Nov. 9, 3:00 p.m. to 4:30 p.m. EST
(12:00 p.m. to 1:30 p.m. PST
10:00 a.m to 11:30 a.m HST)

2.Meeting the Challenges of Commercializing Cellulosic Ethanol
William Baum, Verenium Corporation, http://www.verenium.com;
Kevin Gray, Qteros, http://www.qteros.com;
James Imbler, ZeaChem, Inc., http://www.zeachem.com.
Tuesday Nov. 10, 2:30 p.m. to 4:00 p.m. EST
(11:30 a.m. to 1:00 p.m. PST
9:30 a.m. to 11:00 a.m. HST)

3.Commercialization of Renewable Chemicals
Christophe Schilling, Genomatica, http://www.genomatica.com;
Steven J. Gatto, Myriant Technologies, LLC, http://www.myriant.com;
Bhima Vijayendran, Battelle Memorial Institute, http://www.battelle.org.
Wednesday Nov. 11, 2:00 p.m. to 3:30 p.m. EST
(11:00 a.m. to 12:30 p.m. PST
9:00 a.m to 10:30 a.m HST)

RSVP: A password will be required to participate in each webinar. The webinars will be available at https://biotechnology.webex.com/biotechnology. To reserve space and receive password instructions, please contact Paul Winters, Communications Director, BIO at 202-962-9237 or pwinters@bio.org.
These sessions are presented live from the 2009 Pacific Rim Summit on Industrial Biotechnology and Bioenergy, being held Nov. 8-11, 2009 in Honolulu. The Pacific Rim Summit is the only global conference dedicated to building innovative collaborations in industrial biotechnology across the Pacific. http://www.bio.org/pacrim/.

Environmentalists Want to “Stick” It to Farmers

Jason Hill of the University of Minnesota’s Institute on the Environment wrote recently in the St. Paul Pioneer Press, asking why the Waxman-Markey climate change bill should treat agricultural emissions differently from energy and transportation emissions, with a “carrot-and-stick approach, one in which fossil fuels suffer the stick while agriculture feasts upon the carrot.” Hill’s primary objection to the bill is the amendments added by Rep. Collin Peterson (D-Minn.), which exempt agriculture and forestry from carbon caps but provide credits for carbon sequestration that farmers can trade on the market. They also would postpone implementation of the EPA’s analysis of international land use change.

Writes Hill, “Peterson’s amendment is essentially nothing more than a slick accounting trick, one meant to portray biofuels produced in this nation in a better light while making the carbon footprint of agriculture in developing countries look worse.”

This is a bizarre statement, turning even the theory of indirect land use change on its ear. The original calculation of indirect land use change put forward by Searchinger et al held that “when farmers use today’s good cropland to produce food, they help to avert greenhouse gasses from land use change.” Further, in the context of international negotiations for a climate change treaty to replace the Kyoto Protocol, the ILUC theory is clearly an attempt to shift accounting of carbon emissions in developing countries onto U.S. biofuels.

Calculations of land use change by current models are completely contradicted by agricultural trade and production numbers, making the models appear to be nothing more than accounting tricks. The model projections look nothing like real outcomes because they rely on several false premises and double count certain sources of emissions. The greatest fallacy of the ILUC theory is that worldwide agricultural productivity has already reached a natural limit and cannot respond to increased demand in any other way than clearing of rainforests. The main premise of the theory – that biofuels have been introduced into a static worldwide agricultural system and therefore are the primary cause of shifting agricultural production – is an assumption that can’t be supported by data.

Using USDA’s modest assumption for growth in yields of U.S. corn over the life of the Renewable Fuel Standard, a simple calculation shows that corn productivity can keep up with demand to produce the conventional biofuel portion of the RFS. This assumes continuation of 2016 to 2018 USDA projections for 2022 – constant total planted acreage of 90.5 million acres, increase of 75 million bushels per year for fuel ethanol, and increase of 1.8 bushel per acre per year yield improvement:

Overall harvested acreage for corn production is projected to remain stable due to continued yield productivity gains

In fact, USDA currently projects a corn yield of 159.5 bushels per acre for this year. And USDA projections from January 2009 show that inclusion of biofuels will stabilize land use, in terms of the acres planted to the eight major crops:

U.S. land planted to eight major crops.

Beyond this, and despite a report) that deforestation in Brazil increased in June, the deforestation rate in Brazil continues to decline. Responding to the Agence France-Presse report, Mongabay noted, “Deforestation in the Brazilian Amazon typically peaks during the June-August dry season when ranchers and farmers burn forest to clear land for development.”

A group of scholars – that includes Hill – recently called for a focus on real solutions to climate change. The world needs economic growth, energy and food. We should not premise our search for solutions on the false notion that these three necessities are in direct competition with each other.

Why ILUC Theory Bears No Resemblance to Reality

Iowa State’s Bruce Babcock has written a defense of the current economic equilibrium models used by the EPA and California Air Resources Board, in light of the fact that the models’ assumptions about soybean production and acreage have turned out wrong. Babcock frames the debate over international land use change as “whether the models used by CARB and EPA are accurate enough to support regulations.” There is, however, a larger question over whether the models are the appropriate ones to use in the first place.

Economic equilibrium models by definition measure the demand for biofuel feedstocks as a shock to the worldwide agricultural system. As Babcock explains, economists estimate a baseline measure of the agricultural system “under a set of assumptions about future macroeconomic growth, growing conditions, crop yields, exchange rates, and government policies,” and then rerun their model with a higher amount of biofuel production while holding all other factors constant. The difference in model outcomes is intended to isolate the effect of biofuels on the system.

It has been noted that the outcomes are highly sensitive to the assumptions for the factors that are held constant. For instance, authors at Iowa State have explored the sensitivity of the model to the variable of crop yield. But the underlying problem with the model is that it presents the worldwide agricultural system with only one possible reaction to the “shock” of U.S. biofuels — land use change. And it does so by assuming that worldwide land use is at a point of equilibrium. “Expansion of U.S. biofuels will result in more land being devoted to crop production on an aggregate worldwide basis,” Babcock writes.

Worldwide agricultural land use is shifting and has shifted over time as other countries compete with the U.S. for agricultural markets. The USDA Economic Research Service’s “Agricultural Projections to 2018” shows that U.S. agricultural land devoted to the eight major crops has shrunk since 1980, but is expected to remain stable through the next decade due in part to biofuels. While this model and its outcomes are also based on and sensitive to assumptions, they are designed to measure the interplay of worldwide economic growth, population growth, the value of the U.S. dollar, and oil prices in addition to U.S. agricultural policies and biofuels.

Babcock notes that the variables plugged into the models being used by EPA and CARB “are ripe ground for aggrieved parties.” It should also be noted that the choice of models by EPA and CARB were also political decisions influenced by the input of environmental and other interests. The fact that these models are used by EPA and CARB only to measure the effects of biofuels, while different models are used for petroleum, is likewise a political decision. Perhaps certain parties would not be so aggrieved if the outcome of the “analyses” by EPA and CARB had not been predetermined in such a way.

The Facts of Life on Waxman-Markey

You take the good, you take the bad, you take them both and there you have … the Peterson amendment to the Waxman-Markey bill, formally known as H.R. 2454, the American Clean Energy and Security Act (ACES). According to Grist contributor Meredith Niles, there are a number of positive inclusions in the amendment that were advocated by environmental groups.

The good aspects, according to Niles, are those that will encourage improved agricultural practices. The bad part of the amendment is that the USDA – the agency whose mission is to promote both domestic agriculture (to keep it from moving overseas) and food safety – will oversee the implementation of these positive aspects.

Niles laments that “industrial agriculture interests are overtaking environmental interests in a bill that, again, is fundamentally meant to reduce greenhouse gas emissions.” No doubt, the agricultural interests have a similar lament about implementation of the Renewable Fuel Standard, which was intended to reduce reliance on oil. There is an interesting comment to Niles’ article by ecoplasm, who says, “Selecting ‘scientific’ analytical tools to meet some influence group’s desired result was a hallmark of the past administration’s EPA, hopefully not this one’s.”

A Scientific American assessment of the Waxman-Markey (Peterson) bill shows how much the “science” of indirect land use change has been affected by the rhetoric from environmental NGOs. The article asks, “Should Domestic Ethanol Producers Pay for Deforestation Abroad?,” and states plainly, “the question is not whether there are indirect impacts but rather how big they are.” The reality is that this assumption about indirect land use change – that it will inevitably occur – is built into the model EPA uses to measure it. It’s a perfect example of selecting a ‘scientific’ analytical tool to achieve an influence group’s desired result.

The Peterson amendment proposes a study by the National Academies on indirect land use change. No doubt, another example of carefully selecting an analytical tool. The 2007 EISA bill also contains a provision for the National Academies to study the issue, though funding for the study has never been authorized.

The science on indirect land use change will continue to develop (is currently continuing to develop). The real issues will be whether there are any positive moves toward reducing greenhouse gas emissions once all the politics are done.