By John Fialka, E&E News reporter, Published: Tuesday, May 23, 2017
The second of a two-part series. Part one can be found here.
“The history of aviation is marked by people achieving extraordinary things, despite the conventional wisdom of the time telling them it couldn’t be done.” — Air Transport Action Group
In May 2016, investigators from the Government Accountability Office assembled a panel of 19 experts in Washington to explore what had happened to a program to develop a commercial market for advanced biofuels.
It had been 12 years since Congress began to demand action on transportation fuels that would cut greenhouses gases by at least 50 percent, but the upshot was that after a great deal of hype and billions of dollars’ worth of investments, nothing much had happened.
In one sense, this was a kind of financial autopsy. The GAO found that U.S. government agencies had spent $1.1 billion in research and development between 2013 and 2015. Meanwhile, private investors had plunged a multiple of that amount in stocks of startup companies, some of which vanished in bankruptcies.
Brazil had had success with an effective biofuel, but in the U.S., the GAO found plenty of blame to go around. Congress had created a tax incentive for producers of renewable fuel at $1.01 a gallon and ordered U.S. EPA to create a renewable fuel standard that required an expanding annual production output running through 2022.
But the markets were still telling EPA that biofuels couldn’t compete. Between 2011 and 2017, the price of a barrel of oil plummeted from $114 to around $50 a barrel today. Although EPA sometimes cut its production schedules for advanced biofuels by as much as 40 percent, producers responded with only a trickle of product.
Congress helped drive future investors away by sometimes arguing over renewing the biofuel tax credits until after they expired. The uncertainty that created, the experts told the GAO, was a “major barrier for commercialization.”
In all, the experts said that processes for making advanced biofuels were “well understood,” but they predicted that it might take another dozen years or more to bring them to market.
This was dismal news for the Air Transport Action Group and other committees formed by the airlines and aircraft makers, such as Airbus and Boeing, to respond to the growing international pressure for reducing greenhouse gas emissions. While the auto industry can move to electric cars and electricity producers can also cut their emissions by resorting to solar and wind power, there are no electric airplanes in sight for airlines. They need the greater energy density of liquid fuels to carry an estimated 3.57 billion passengers a year.
Another group also felt the pain. “A dismal picture? Well, we’re the collateral damage association,” remarked Michael McAdams, president of the Advanced Biofuels Association, which represents the industry in Washington. Over the last three years, it lost about half its members. Currently, he represents 40 companies hoping the industry survives.