Washington Guarantees Biofuels Loans Totalling $650M

Diamond Green Diesel, Coskata, and Enerkem all receive loan guarantees, in addition to the guarantee given to INEOS-New Planet Energy we saw recently.
Releasing the guarantees, Agriculture Secretary Tom Vilsack reaffirmed the USDA’s commitment to biofuels, recently a matter of doubt to some industry participants: "Our belief is the industry is here to stay. There is still tremendous opportunity here."

As much as 40% of US corn is used in bioethanol, fueling worries over food prices and shortages. The US government ihas therefore been pushing advanced, “cellulosic” biofuel technology using a variety of non-food feedstocks for bioethanol production; development slowed during the recession, and a few hiccups in White House, USDA/DOE policy generated anxiety in the biofuels/corn lobby; and now the government clearly wants to get things back on track.. Making these new technologies a commercial success is difficult; they have to compete with fossil fuels and also with biofuel produced from food crops. A number of small companies had to scale back production last year for that reason.

“Loan guarantees” are not direct cash grants. They mean the government acts as a backstop in case of default, paying off the defaulted loan, making it easier to get big loans from risk-averse banks. Most of these guarantees are from US Department of Agriculture: chemicals specialists INEOS at $75M, “Flexethanol” producers Coskata’s at $250M and Enerkem’s at $80M. Diamond Green Diesel (a new joint venture between petroleum company Valero Energy and Darling International) will receive $241M courtesy the Department of Energy; the DoE is also the source of Myriant’s bio-based chemical loan guarantee, and about a dozen biorefinery pilots in a previous round of Stimulus funding.

Coskata are using the cash for a cellulosic ethanol plant in Alabama, which will use woody biomass as a feedstock. When online they expect to produce 55 million gallons of ethanol annually. Enerkem will use its share to build a 10 million gallon facility in Mississippi to convert waste into bioethanol. Diamond Green’s chunk goes towards a 137 million gallon plant in Louisiana, using waste fat (cooking oil, animal fat, etc) as a feedstock.