Biofuel: Busting or Booming?
Biden Administration Awards $90.3 Million in Grants
The desire for biofuel to reshape the renewable energy sector has been strong, yet real life demand has never quite matched that vision. There’s a strange gap that the industry hasn’t been able to span. But a recent increase in grant funding from multiple agencies could narrow this gap by tackling the heart of biofuel’s momentum issue, robust infrastructure.
Collectively the USDA along with Higher Blends Infrastructure Incentive Program, Rural Energy for America Program and the Inflation Reduction Act are pouring millions of dollars in grant money into biofuel infrastructure that they hope will spark a boom in the industry while also creating more jobs, stabilizing rural communities and reducing emissions.
Bridging the Gap
While renewable diesel has gained momentum in large part because it can be produced in the same facilities as petroleum, commercial production for biofuel has remained elusive. Because of this, biofuel has never been the cost-effective fuel option; so much so that we’ve already seen production shut down in some plants and consolidation of the market.? It's more expensive to make and unlike renewable diesel, it can’t be stored or pumped using existing equipment.?
Rather than subsidize crops for farmers or fund the manufacturing of more flexible fuel vehicles, all of the $90.3 million dollars in grants has been awarded to infrastructural projects that can support growing production and sales of biofuel.? If the holding tanks and fuel pumps are ready to go, perhaps demand will increase enough that farmers will start to get more money for their crops. Likewise, large scale production could work to minimize costs enough that consumers are inclined to purchase more blended fuel.
It isn’t a ground up approach. Instead, it's aimed at the center of the supply chain. Strategically funding fuel sales related projects intends to create a place for crops to go. You might see 10% ethanol fuel blend (E10) at your local gas station, but odds are pretty good that you don’t see E15 available. That’s because the gas station would need a new pump or holding tank to accommodate the higher blend of biofuel.? We can grow the crops and even produce the ethanol, but there are not enough places to sell it, so demand is unlikely to grow.
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To bridge the current price gap, it is estimated that the U.S. would need 60,000 gas stations capable of holding and pumping E 15.? This multiple agency funding could kickstart a boom in biofuel infrastructure and chip away at that number. Casey’s fuel station, one of the largest chains in the Midwest, has been awarded $5 million to install 111 blended pumps and holding tanks in five states. Projects like this will make the blended biofuel more accessible and hopefully result in increased demand.
Fueling the Economy
Targeting the heart of the supply chain also works to create more jobs in the United States and stabilize the economy.? Caseys represents just one of hundreds of building projects funded by the grants. Once they get underway the projects will require an increase in labor force from construction workers, to drivers, to chemists and farmers.
Since 2012 the Renewable Fuels Association has viewed the biofuel sector as a prime place for creating more jobs in America. They estimate that a biofuel industry capable of producing 1 billion gallons of fuel could create 39,027 jobs and have a positive impact on many sectors. In that case, the funding is about more than just gas pumps, it’s an investment in a potential economic upturn for several industries that have been under financial strain in recent years.
If it works as planned, then the grant money could work to infuse rural economies with new incomes and at the same time create energy security.? Collectively, biofuel has received more funding than any other climate focused project and with these new grants the focus is on assisting rural America. The dollars seem to underscore a “make it work” mindset around cleaner energy options. While it has sometimes felt like a bust the current reality suggests we will build until it booms.
Originally Published on Stratagerm's Blog on November 12, 2024
Part of the issue is marketing it as E15. Most MN pumps show it as E88 and its often at the same price or just under 87 octane. As E88 most consumers will gladly take the extra octane for a discount but as E15 its just confusing to consumer and find they avoid it out of uncertainty.