U.S. Offers Biofuel Refinery Grants

By IAN TALLEY
WASHINGTON -- The Department of Energy on Monday said it is making available as much as $200 million for advanced biofuel pilot refineries and expects to make awards to between five and 12 projects over the next six years.
The department said that if deployed on a large scale, the commercial facilities could produce volumes that would contribute significantly to the new national renewable-fuels mandate.
"This funding opportunity will look for the most promising technologies that can advance the potential of renewable biomass as a resource for second-generation transportation biofuels," said John Mizroch, acting assistant secretary for energy efficiency and renewable energy.
"The Department of Energy will select breakthrough integrated biorefinery projects that have technical and economic performance data at the bench or pilot scale to prove they are ready to move a step closer toward commercial readiness," he said.
The Energy Department intends for the projects to come online within three to four years of each funding award. The biofuels project is part of the effort to reduce emissions while increasing security of the energy supply and weaning the U.S. off its dependence on energy imports.
Last week, the Energy Information Administration said it believed the country would fall short of being able to produce the 36 billion gallons of biofuels required by 2022 under the mandate. Of that, 21 billion gallons are required to come from advanced fuels such as cellulosic ethanols, bio-butanol and "green gasoline."
The EIA expressed doubt that the technological advancements necessary to meet the more than tripling of current output would come online soon enough to meet the required expansion schedules.
Ethanol stocks have recently been hit hard by a storm of negative factors, including overproduction, restrictions in blending infrastructure and financial woes.
In the wake of a credit crisis that has all but dried up lending liquidity and the current ethanol challenges, many venture projects have found funding more difficult, and the Energy Department awards are likely to be warmly received by the industry.
Government support of advanced biofuels is expected to accelerate under President-elect Barack Obama's nominee for energy secretary, Steven Chu, who is a strong proponent of cellulosic ethanol.
Write to Ian Talley at ian.talley@dowjones.com