Biofuel Companies Poised to Benefit from Recent Government Policies

The U.S. Government may have raised the debt ceiling, with the promise of massive cuts to government spending; but luckily one area where the government is increasing spending is in the development of biofuels. On August 16, the USDA, DOE, and Navy pledged to invest $510 million over the next three years to help spur the next-generation of biofuels. This policy, in addition to the Renewable Fuel Standard 2, which calls for 36 billion gallons of renewable fuel to be blended as transportation fuel by 2022, should help biofuel companies scale-up and compete with petroleum giants such as Exxon Mobil and B.P.

A majority of today’s biofuels are comprised of ethanol produced from corn and sugarcane, but next-generation biofuels would be produced using cellulosic ethanol from inedible plant material such as switchgrass and wood trimmings. These feedstocks are more economically stable and do not compete with food supply like today’s corn-based biofuels. Another source of biofuels would come from algae, grown in continuous batches under optimum conditions and harvested for oil. These next generation biofuels are still in the R&D phase, but with favorable government policies they could become commercially viable in the not-so-distant future.

Several companies are poised to benefit from the government’s recent actions including Amyris Biotechnologies, a company that uses cellulosic material to produce farnesene, a chemical intermediate that can be used to produce a variety of fuels. Amyris recently commissioned their third plant – the first in the United States – to help increase their production. Solazyme, a company that went public only a few months ago, uses microalgae to produce “drop-in” oils for the fuel, health, and petrochemical industries. These are just a couple examples of the companies that are looking ahead to the day when the last oil well runs dry, and America’s industrial economy requires an alternative fuel.

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