(June 15, 2010)  Washington – The Renewable Fuels Association (RFA) today expressed support for the position of the Union of Concerned Scientists that more federal assistance is needed to commercialize next generation biofuels like cellulosic ethanol. However, the RFA takes exception with UCS’s calls for a performance based tax incentive and claims that current ethanol tax incentives are wasteful included in a report released June 14.

“In the current economic climate, the federal government has a role to play in ensuring the commercialization of next generation biofuels, such as cellulosic ethanol,” said RFA President and CEO Bob Dinneen. “Workable loan guarantees, market-based tax incentives, and other federal policy efforts are needed to take promising biofuel technologies from the laboratory bench to the commercial market. We fully support such efforts.”

Dinneen continued, “Seeking to cannibalize existing industries, as the Union of Concerned Scientists calls for, would not accelerate the deployment of next generation biofuel technologies. Rather, losing existing biofuel production and infrastructure would hamper such efforts. The infrastructure and market upon which cellulosic ethanol and other technologies will rely is currently being built by today’s ethanol industry. To undercut that build out would increase the barriers for new ethanol producers, not lower them.”

The RFA has been critical of the Department of Energy’s progress in making loan guarantees available to next generation biofuel companies. In October 2009, the RFA sent a letter to Energy Secretary Stephen Chu outlining the concerns of RFA cellulosic ethanol members. That letter, as well as a follow up letter to DOE officials after a meeting this spring, can be found here and here.

In addition, the RFA has submitted comments on proposed Department of Agriculture loan guarantees. Those comments can be found here.

The RFA takes exception with the UCS and other environmental activists over the characterization of current ethanol tax policy. The policy has been extraordinarily successful, helping the industry support nearly 400,000 jobs while continuously improving its environmental profile. According to a recent article in the scientific journal Biotechnology Letters, ethanol production alone has seen a 28 percent reduction in energy use, a 32 percent reduction in water use, and a 5.3 percent increase in ethanol yields all in less than a decade. Conversely, deep water drilling and tar sands extraction continue to drive oil’s carbon footprint even higher.

In addition, new research published in the Proceedings of the National Academy of Sciences found that agricultural gains in yield and efficiency have not only allowed farmers to feed more people, but have avoided significant volumes of greenhouse gas emissions that would have resulted from previous subsistence farming practices.

The RFA also has reservations about performance-based metrics for tax policy given the uneven evaluation of the greenhouse emissions of ethanol versus gasoline. Currently, ethanol is penalized for indirect effects and other unproven theories in a manner not reciprocated on the oil and gasoline industry. As such, any measurement is skewed. Only when such measurements are equitable and based on the best available science would such performance-based incentives be possible. That scenario simply doesn’t exist today.