USDA commits $8.8m to biofuel production

The US Department of Agriculture (USDA) is investing $8.8 million in advanced biofuel production from non-food plant sources.

Funding from the USDA’s Advanced Biofuel Payment Program will go to facilities using renewable biomass fuels, other than corn ethanol, in 39 states. Funding amounts will be based on the volume of advanced biofuels produced.

The US is a major producer of corn-based fuel ethanol and its inclusion in gasoline blends in the US is mandatory, often perceived as a help to US corn growers.

However, lack of quantifiable measures over resulting land-use changes, nitrogen pollution and potential strain on food supplies from ethanol have led to heavy criticisms from environmentalists.

A prolonged slump in oil prices has also challenged nascent alternative biofuel projects.

North Bridge Venture Partners and Google Ventures-backed Cool Planet has shifted its focus away from biofuel production to advancing a biochar-based soil treatment made from fuel production by-products. The company remains optimistic on the long-term potential for its biofuel business, head of global business development Wes Bolsen told Agri Investor this year, but said the current energy market makes expanding existing operations prohibitively challenging.

“You aren’t going to accelerate your fuel business in this atmosphere,” he said.

Impact investors have also turned to biofuels, focusing on using waste products and non-fuel crops as a potential low-carbon petrol substitute. In December, California-based Biodico opened a sustainable biofuel facility in California, with equity financing of $12.5 million from high net worth individuals.

Despite the challenging biofuels investment environment, the USDA has signalled it will continue to support advances in production. In May, the agency committed $10 million towards university research to improve the efficiency and reduce the cost of forest-based biofuel production.