As the biofuels industry awaits a decision by U.S. EPA on ethanol blend walls, how has the Obama Administration handled biofuels development and funding? During today's OnPoint, Matt Carr, managing director of policy at BIO, explains how the Gulf oil spill is impacting his industry. He also gives his take on the Administration's level of urgency relating to the research and development of biofuels.
Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Matt Carr, managing director of policy at BIO. Matt, thanks for coming on the show.
Matt Carr: Thanks for having me.
Monica Trauzzi: Matt, your industry is pushing EPA to allow gas stations to mix at least 15 percent of ethanol into petroleum fuels. The agency has pushed its decision though, yet again, to the fall. We were supposed to see a decision this summer, now they're saying fall. What's your take on the level of urgency behind biofuels that we're seeing from the Obama administration?
Matt Carr: Well, I think that the challenge really is for investors to have the certainty to invest in the construction of the next generation of biofuels. And with delays from EPA, that just adds to the uncertainty in the environment currently. I think the Obama administration has signaled support for biofuels and we appreciate that the EPA is looking at expanding the blend levels, but in a variety of areas I think we need to see renewed federal support for the industry, especially because of the economic climate that we're currently experiencing.
Monica Trauzzi: Renewed federal support? Be a little more specific, what more would you like to see?
Matt Carr: Sure. Well, in particular, we are asking Congress to consider extending the current tax credit for cellulosic biofuels. What we're seeing right now is just a freeze in investment in a variety of renewables, but it's particularly applicable to cellulosic and other advanced biofuels, to extend the current tax credit for four years and open it up to algae-based fuels, as well, which are quickly gaining commercial reality. And then, finally, offer an investment tax credit option for some of these startup companies that are really having the trouble securing private finance.
Monica Trauzzi: Is there still a lot of uncertainty though associated with some of these technologies and does that then make it less likely that the government will put all this money behind it?
Matt Carr: Well, what we've seen this year is really significant breakthroughs in terms of the technology. We've seen both of the leading enzyme producers, the ones that break down the biomass to produce cellulosic biofuels, report major cost reductions in the cost of enzymes to the point where they're predicting cellulosic biofuel production at under two dollars a gallon next year. We're also seeing breakthroughs in other end molecules through the applications of synthetic biology. So, really, the technology has come to the point where we're ready to get it into the commercial marketplace, but it's these first of a kind plants that investors are not yet willing to take the risk to finance.
Monica Trauzzi: And some of these technologies are getting the backing of oil companies that traditionally have quite a bit of money. With them giving some funding and investment coming from oil companies, is funding from the government still necessary?
Matt Carr: Right, we are seeing many, if not most, of the major energy players, as well as the chemical industry leaders investing in these next-generation biofuels. Many of them are members. But if we want to see a strong and diverse set of technologies, feedstocks and geography we can't simply depend on one industry to support the emerging technologies like this.
Monica Trauzzi: On the heels of the oil spill in the Gulf, is your industry using the incident in any way to your advantage to sort of promote and push biofuels a bit more?
Matt Carr: Well, this is really a tragedy for the nation and it's not something that we look at as an opportunity. But that said, biofuels, renewable chemicals are really the only near-term alternative to petroleum and so we do want to reiterate that at a time when we're looking for alternatives to petroleum, we've really do need to ensure that biofuels and chemicals are part of the mix.
Monica Trauzzi: In terms of numbers, how much oil could we actually replace through biofuels?
Matt Carr: Well, the federal mandate, the renewable fuel standard calls for 36 billion gallons of renewable fuel by 2022. Estimates from a number of circles suggest that anywhere upwards of 30 percent to even half of our nation's fuel supply could come from biofuels. Combine that with efficiencies and hybrid vehicles and you're looking at biofuels as being a substantial alternative.
Monica Trauzzi: Is the industry back on track with meeting the RFS short-term and long-term goals? There were concerns, not too long ago, in particular because of the economic downturn, that some of those goals were not going to be met.
Matt Carr: Right. Well, in the area of cellulosic biofuels in particular and advanced biofuels, we have seen a delay in the deployment of the technology because of the economic climate. I think the traditional biofuel producers are stepping up to the plate and we expect, long-term, that the RFS goals will be met, but there is still a delay in the near-term deployment.
Monica Trauzzi: The new synthetic cells development was seen as a major step in synthetic biology. How could this technology play into the climate and energy debate and what could be impacts eventually be if it comes onto the marketplace?
Matt Carr: Right. Well, synthetic biology is really a tremendous potential tool for the development of fuels and chemicals. It really allows scientists to go beyond the current technology, which requires us using existing micro organisms and maximizing what nature has done for us, the ability to step in and work with the DNA and essentially build the genetic code that we need for the production of fuels and chemicals, opens up the door to production of sort of unknown solutions that go beyond sort of the limits that we are experiencing with the current first generation of fuels.
Monica Trauzzi: We may be opening the door also to some unintended consequences however. How do we prepare for those and how does the government regulate those?
Matt Carr: Well, synthetic biology is already closely regulated by a suite of federal agencies and we're working with those agencies to ensure that the technology is deployed safely and is used to better the interests of the country and not run down any roads that might be a source of trouble.
Monica Trauzzi: OK, we'll end it there. Thanks for coming on the show.
Matt Carr: Thank you.
Monica Trauzzi: And thanks for watching. We'll see back here tomorrow.
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