Details of biofuel appropriations in DOE FY2012 budget request

By Erin Voegele | February 16, 2011

Secretary of Energy Steven Chu detailed President Obama’s $29.5 billion Fiscal Year 2012 budget request for the U.S. DOE this week. The request is part of an administration-wide plan to win the future by out-innovating, out-educating and out-building the rest of the world. “This budget is about winning the future,” Chu said, noting that the energy sector is going to play a key role in the future economic prosperity of countries around the world, including the U.S. “The Department of Energy’s FY2012 budget request is really about making those strategic investments to unleash American innovation and promote economic competitiveness,” Chu continued.

The total $29.5 billion request represents a $3.1 billion increase over the FY2010 budget of $26.4 million. However, tough funding choices have been made by the DOE, with cuts in several program areas. “While we are investing in areas that are critical to our future, we are also rooting out programs that aren’t needed, and making hard choices to tighten our belt,” Chu said. “Additionally, we are improving our management and operations so we function more efficiently and effectively.”

The budget specifically calls for increased spending in the areas of clean energy and efficiency, while drastically reducing spending on many fossil energy programs. For example, the total budget for the Fossil Energy Office has been reduced by 45 percent—or $418 million. According to the DOE, this includes zeroing out several programs, including the Oil and Gas Research and Development Program and the Unconventional Fossil Technology Program. The budget also proposes to reel in subsidies and tax preferences for fossil fuels, saving taxpayers approximately $2.6 billion.

Information published by the DOE’s Office of the Chief Financial Officer provides details of FY2012 funding regarding biomass and biofuel initiatives. A total of $340.5 million has been requested for the department’s Biomass Program under the heading Biomass and Biorefinery Systems RD&D (research, development and demonstration). This is a significant increase over the $216.3 million in FY210 appropriations. Of that $340.5 billion, $16 million has been requested for feedstocks, $117 million for conversion technologies, $25 million for integrated biorefineries, $10 million for analysis and sustainability, $22.5 million for biopower, and $150 million for the cellulosic biofuels reverse auction program.

According to the DOE, the mission of its Biomass Program is designed to develop and transform domestic, renewable, and abundant biomass resources into cost-competitive, high performance biofuels, biopower and bioproducts. This is achieved through targeted planning, research, development and demonstration projects that leverage public and private partnerships.

The requested $16 million budget allocation for feedstocks under the program is a significant reduction when compared to the $36.2 million FY2010 allocation, with nearly $10 million slated for algae and advanced feedstocks, less than $5 million for logistics, and slightly less than $1 million for sustainable production.

However, the $117 million budget request to support the development of conversion technologies has increased from $82.1 million in FY2010 allocations. More than $46 million has been requested for thermochemical processes, and nearly $47.5 for biochemical conversion processes.

No additional FY2012 funding has been requested for algae. According to the information provided by the DOE, this is because ongoing multiyear projects are being completely funded with FY2010 appropriations.

In addition, $25 million has been requested under the heading integrated biorefineries. No FY2010 allocations were made for the program. According to the DOE, the FY2012 budget request supports the continuation of small commercial-scale or demonstration-scale biorefinery projects that were competitively selected for funding in FY2007 and FY2008. “The operational data from these facilities is essential to benchmarking the state of technology in real industrial conditions, validating production costs at scale, and assessing the sustainability of biorefineries,” said the budget request. “Ultimately, these biorefinery projects will encourage private sector investment in future biorefineries.”

While no FY2010 allocations were made to support analysis and sustainability, the DOE is requesting $10 million for the program in FY2012. “The Biomass Program’s Analysis and Sustainability activities play a vital role in supporting decision-making, demonstrating progress towards established goals, directing research activities, and are instrumental in setting the entire biofuel value chain on an environmentally sustainable and economically viable course,” said the DOE.

The proposed budget also requests $150 million for the Cellulosic Biofuels Reverse Auction initiative. No FY2010 allocations were made. According to the DOE, the Energy Policy Act of 2005 calls for the establishment of an incentive program for the production of cellulosic biofuels. “A reverse auction will help defray the cost of cellulosic biofuel production and serve as an important incentive and financial benefit to show the investment community they have a cash flow to reduce risk,” the budget request states. “Incentives such as the reverse auction are critical to the financing of ‘first-of-a-kind’ or ‘pioneer’ plants. In 2008, the Biomass Program published a rule making to establish the framework for implementing this reverse auction.”

Documentation of the DOE’s budget request states that the Biomass Program issued a Notice of Program Intent in July 2010 to request documents for precertification as required by the rulemaking. “The Biomass Program is now proposing to hold an expanded Cellulosic Biofuels Reverse Auction, open to both cellulosic ethanol and other advanced biofuels, as defined in EISA 2007,” the budget proposal states, noting that a reverse auction would solicit bids from potential producers of cellulosic biofuels, and those producers submitting the lowest bids would be awarded the production incentives.

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