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Biofuels Update

March 28, 2009
By: Jeanne Bernick, Top Producer Editor

Stimulus package includes biofuels

The $787 billion economic stimulus bill signed into law by President Barack Obama this winter includes several biofuel-related provisions.

Most importantly, the bill contains an expansion of the Alternative Fuel Vehicle Refueling Property tax credit, which allows gasoline station owners to claim a 30% tax credit (for up to $30,000) for the cost of installing alternative fuel pumps, such as those that dispense E85.  

The National Ethanol Vehicle Coalition (NEVC) and similar groups applaud the tax credit as a way to help establish new fueling systems. Lack of fueling infrastructure remains the major impediment to using high-level blends of ethanol, says Bernie Punt, chairman of NEVC and general manager of Siouxland Energy.

The stimulus bill also provides:

¡ $150 million for loan guarantees and grants administered under USDA's Business and Industry Guaranteed Loan program to support business opportunities and employment expansion in rural areas, with the loan guarantee portion expected to amount to $2.99 billion.

¡ Funds for leading-edge biofuel production plants—up to $500 million for loan guarantees and $5 million in lending for pilot or demonstration-scale biofuel projects that the Department of Energy (DOE) believes are likely to become commercial technologies and substantially reduce greenhouse gas emissions.

¡ No less than $800 million for a range of DOE biomass-related activities, likely to focus on grants for deployment of advanced biorefineries.


Biofuels Will Be a Factor in Spring Acreage Battle

It's a projection game as to how many acres will be planted to corn this spring, but biofuels demand is sure to play a part in the decisions, says Darrel Good, University of Illinois Extension marketing specialist.

Under current low energy prices and tight margins for ethanol producers, it is believed that the Renewable Fuels Standard (RFS) will  determine the level of biofuels production and, therefore, demand for corn for ethanol, Good says. The standard calls for 10.5 billion gallons of renewable biofuels use in 2009 and 12 billion gallons in 2010, with an increase to 15 billion gallons by 2015.

If the RFS is maintained, there will be large increases in the use of corn for ethanol production during the next two years and beyond, Good says. USDA projects use during the current marketing year at 3.6 billion bushels.

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FEATURED IN: Farm Journal - Early Spring 2009

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