New Ideas for Funding Sustainable Biofuels

Joanna Schroeder

If you did a survey among the biofuels industry and asked if the funding programs for biofuels research and development were working, most would say no. Actually, many outside of the industry would say no. As the country continues forward on the federal goals set out in the Renewable Fuels Standard (RFS) things will need to change if we’re going to achieve them claims Advanced Biofuels USA. The organization recently passed a resolution to introduce new ideas to generate federal funding and investments in the development of sustainable biofuels.

The answer: the Highway Trust fund along with an increase in the transportation fuel user fee.

As part of this resolution, Advanced Biofuels USA provides a summary analysis of the “causes of the failure to surmount technical challenges, to obtain adequate financing, and to assure demand for biofuels consistent with the expectation expressed in the RFS.” It also provides suggestions to reverse these issues. In a nutshell the group states that for a successful future of biofuels, the oversight should belong in the US Department of Transportation (DOT) and removed from the Department of Energy (DOE) and Department of Agriculture (USDA).

The overarching idea is that a dedicated funding source to be used only for advanced biofuel (meeting RFS and beyond) commercial deployment should be established as part of the Transportation Trust Fund. It would be funded by a $.01/gallon user fee (between $850 million and $1billion/year) and a similar fee on electricity used for plug-in vehicles.

Should an idea like this take effect…the current fee for gas would increase from $.184/gallon ($.244.gallon for diesel) to $.442/gallon. This number is based on the percentage of increase of the last gas tax increase in 1993 of 16.6 percent. This isn’t a new idea, The Surface Transportation Extension Act of 2004, Part V (STEA 04-V) redirected the gasohol (E10) tax to the Highway Trust Fund from October 1, 2003 through September 30, 2004.

If an idea like this were to take hold, Advanced Biofuels USA states that the funds should be used for demonstration projects for advanced biofuel production and distribution technologies, installation of more “flexible” ethanol dispensing systems (E85), and development of more efficient flex-fuel engines. You can read the full resolution here.

Biodiesel, biofuels, Cellulosic, Ethanol