The chief of the Department of Energy’s loan guarantee program told us late last year that biofuels would soon get guarantees through his program. But the next loan guarantee for biofuels is actually coming from the U.S. Department of Agriculture’s loan guarantee program, which was established through the 2008 Farm Bill. This morning INEOS Bio and its joint venture partner, New Planet Energy, announced that they have received a $75 million conditional loan guarantee commitment.
INEOS Bio (which is the biofuel arm of petrochemical giant INEOS) and developer New Planet Energy say they will use the loan guarantee to build the “INEOS BioEnergy Center,” near Vero Beach, Florida, that will produce 8 million gallons of advanced biofuels and 6 MW of biomass power from plant waste and trash per year. The companies say the center will begin producing biofuels and bioenergy in 2012, and will create 175 jobs during the construction process and 50 jobs when the center is completed.
There’s very little next-gen biofuels being produced in the U.S. right now. Basically zero cellulosic ethanol was produced in 2010. The EPA projects that in 2011 five companies — Range Fuels, DuPont Danisco, Fiberight, KL Energy, and KiOR — will only be able to produce 6 million cellulosic ethanol-equivalent gallons.
As I wrote in my biofuel 2010 year in review article, I think so-called trash to energy technology will one day be a massive opportunity, and one that has been under invested in in the U.S. Trash company Waste Management, startup Enerkem, and company Fiberight, have all been pursuing ways to separate waste streams and produce biofuels efficiency and economically, and make progress in 2010.
Loan guarantees are important awards for companies looking to build plants for these next-gen biofuel projects. A loan guarantee essentially is a promise by the government to back a loan if the company can’t pay it, and it enables companies to finance projects with a better interest rate and at a lower cost.
In early 2009, cellulosic ethanol startup Range Fuels announced it had secured one of the first loan guarantees from the USDA for cellulosic ethanol. The loan guarantee was an $80 million commitment to help the company finish construction of its commercial scale plant near Soperton, Georgia.
So when will the DOE’s loan guarantee program back some biofuels projects? DOE loan chief Jonathan Silver told us that the “first couple biofuels deals” will be announced, “shortly,” and that biofuels will likely be among the next several loan guarantees.
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