St. LOUIS (ResourceInvestor.com) -- Ethanol, biodiesel, solar and wind power are attempting to make a further leap into the energy sector. Today in St. Louis the U.S. Department of Energy and the U.S Department of Agriculture hosted the 2006 conference, Advancing Renewable Energy: An American Rural Renaissance.
Mike Johanns, Secretary of the U.S. Department of Agriculture, and Samuel Bodman, Secretary of the U.S. Department of energy said today that nearly $17.5 million in grants would be devoted for 17 biomass research, development, and demonstration projects in an attempt to reduce America’s dependency on foreign oil. About $12.7 million of the total is funded by the USDA for FY06’, while the remaining $4.7 million will be funded by the DOE for cellulosic biomass from 2006 through 2008.
Johanns said that when oil prices rise we look for an alternative, however when the price normalizes, interest in renewable fuels declines. But, according to the U.S. Department of Agriculture, we have more reasons now than ever to support renewable energy. Judging by oil’s recent $78 high, hovering $60 prices now, and looming prices at the pump it may not be a bad idea, at least for the majority of consumers.
“This funding will spur new scientific innovation that will help us kick our over-reliance on oil,” Bodman said, “By investing in our nations promising researchers we are closer to making clean, affordable alternative sources of energy a reality.”
The joint venture between the USDA and the DOE was established in 2000 and reauthorized in 2005 in the comprehensive Energy Policy Act. A number of private companies and government agencies were attending the conference, including Chevron, CBOT, the USDA, the DOE and more.
Johanns, appeared to be steadfast in his desire to get renewable energies rolling on a level that is competitive economically and practically.
“Six years ago there were 54 plants in operation, which could produce a combined total of less than 2 billion gallons per year,” Johanns said. “Today those numbers have doubled. More than 100 plants now produce a combined total of close to five billion gallons each year.”
Johanns also said that biodiesel has multiplied more than 8-fold during the last six years – from 10 plants in 2000 to 86 plants today.
According to Johanns, there are a number of economic, technological and market signals that indicate now is an optimal period to devote more resources towards renewable energy development.
Economically, Johanns said that the benefits of renewables are recognized and appreciated. They are environmentally friendly, reduce our dependence on foreign oil and are a source of income in rural areas.
Technologically, renewables have the potential to be more efficient and decrease pollution. And of course along the ever important market side of the matter, there is a great deal of interest in renewable energy investment; pointing to the significant increases in ethanol and biodiesel plants within the last few years.
Naysayers
Johanns responded to a number of opposing points in the ethanol argument, which range from questions on ethanol subsidies to having enough biomass to produce it.
Johanns said that current government subsidies for ethanol permit a tax credit of up to 51 cents per gallon of ethanol until 2010. Johanns said that on average, it cost $1.10 to produce a gallon of ethanol, while in 2006 the average wholesale gasoline price is $2.04.
Johanns said ethanol will still be competitive when gas is $2.00/gallon and will continue to be so as long as oil remains above $30 a barrel and the DOE said that prices will level out in the long run at a per barrel price of over $50. Currently, the $50 mark even seems a bit low looking at crude prices from the summer and still hanging on the upside into the fall.
In regards to worries of not producing enough corn, Johanns said that “those who make that statement haven’t met the same farmers whom I have,” pointing out the level of efficiency of farmers and the existence of a great deal of available farm land. Johanns also said there are no plans to rely solely on corn, and pointed to cellulosic biomass, which has potential to create a significantly greater amount of energy than corn.
Cellulosic Biomass
“Things like pecan shells, woodchips and switch grass,” said Johanns, are significant to renewables, abundant and readily available, although further scientific developments are needed- but much of the DOE and USDA funding is geared towards cellulosic biomass development.
“In reality, the cellulose in biomass has the potential to create a great deal more energy than corn. And, with each passing day, we come closer to a cost-effective technique for releasing that energy on a broader scale,” Johanns said.
Energy Secretary Bodman said “The challenge is finding cost effective ways of breaking down the tough cell walls so that the material can be converted to energy.” Bodman said that the cure for this will likely involve using microbes- and then finding the most efficient match between plant and microbe.
Bodman also said that renewable fuel development is not solely focused on ethanol, but the two agencies are also busy sponsoring research and development for biodiesel, aviation biofuel, hydrogen, solar and wind power.
Funding
Secretary Bodman pointed out a number of investment drives by the DOE including two new bioenergy research centers with $250 million in funding over five years devoted to research in renewable energy (with two centers with $25 million per year, per center) and devoted to funding high risk/high return technologies for biofuels and other renewables.
Last February, Bodman also announced a $160 million cost-sharing program for the construction of up to three biodiesel refineries during the next three years.
Much of the talk was focused on cellulosic biomass, essentially portions of the plant such as the stalks and leaves which cannot be consumed, coming in a number of forms. Bodman said that it will take the right microbe to break down the right plant, both of which may require genetic modifications.
“We are encouraging universities, national laboratories, nonprofit agencies, private investors and industry to apply singly ... or as consortia to compete for this funding,” Bodman said.
Outlook
Both the Secretary of Agriculture and the Secretary of Energy appeared to be steadfast in their promotion of renewables.
“We have started down the path of a bright future – a future in which we buy our energy by the bushel and not by the barrel,” Johanns said, adding that the resources are available, there is market interest, and the government is committed.
President Bush is expected to attend the conference tomorrow to address a number of clean energy initiatives.
