There is a lot of action in the “Beltway” these days surrounding biofuels. One such conversation is around the fate of the Department of Energy (DOE) Loan Guarantee Program. A group of policy makers want to end the program, which right now is funded with Reinvestment and Recovery monies. However, energy companies, such as Pleasanton, California-based Fulcrum Bioenergy, would be dead in the water. CEO Jim Macias said if this program ends “it would be a tragedy.” Not only for his company, but for the entire alternative energy industry as a whole.
Fulcrum Bioenergy is in the process of building a waste-to-ethanol plant just outside of Reno, Nevada using ordinary household garbage and converting it to ethanol, electricity and biochemicals. The plant is fully permitted, engineered and equity financed and the company is in the final stages of documentation to close on a DOE Loan Guarantee that is the final piece for their financing. Once that piece is in place, Fulcrum will start construction and begin producing renewable ethanol at the end of 2012. It is important to note that Fulcrum has been working on the DOE loan for more than 2 years.
When the first plant in Reno is complete, it will produce 10 million gallons of ethanol per year and 16 megawatts of electricity. From there, Fulcrum plans to roll out 20 more sites, already selected, and Macias said the feedstock contracts are already in place. When these 20 sites are in production, they will produce 1 billion gallons of ethanol per year from garbage.
Yet if the DOE Loan Guarantee program gets axed not only would his project die, but any project that has been awarded DOE Loan Guarantees since 2009 would lose their funding.
“It’s very challenging for first-of-a-kind commercial plants to to get fully funded in normal economic times, and federal support for new technologies like this, loan guarantees play a very valuable role in closing the funding gap. We’ve raised all the equity capital to construct it including coverage for potential overruns, and the DOE loan guarantee provides a very important step to help these emerging technologies.”
Macias said its important for emerging technologies to receive government support during good economic times, but even more critical now due to the lack of capital fund and bank credit caused by the ongoing recession. He stressed that the loan guarantee program has played a critical role in helping these technologies that are ready for commercial demonstration to get there.
Macias concluded that if the DOE Loan Guarantee Program is rescinded, it would set back the industry. He also said it would be “devastating to breaking our [America’s] dependence on imported oil and reducing the price of oil.”
You can listen to my full interview with Fulcrum Bioenergy CEO, Jim Macias here: Jim Macias Discusses DOE Loan Guarantee Program