WASHINGTON (Dow Jones)--The U.S. Department of Energy on Monday said it was making available up to $200 million for advanced biofuel pilot refineries, expecting to award five to a dozen projects over the next six years.
The DOE 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 DOE intends the projects to come online within three to four years of each funding award. The biofuels produced from the projects are part of the effort to cut emissions while increasing security of supply and weaning the country off energy import dependence.
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 doubted 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 over-production, 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 DOE 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, Stephen Chu, who is a strong proponent of cellulosic ethanol.
-By Ian Talley, Dow Jones Newswires; 202-862-9285; ian.talley@dowjones.com