All Hands on Deck Needed to Fulfill Biofuels Promise   

By David R. Rubenstein, CEO, California Ethanol + Power
Special to The Digest

Just after Thanksgiving, the United States Environmental Protection Agency announced its proposed update for the federal Renewable Fuel Standard, a landmark clean fuels policy that has helped generate jobs, reduce oil imports and reduce air pollution. The EPA’s revised policy envisions a steady increase of biofuels blended with gasoline through 2025, which some in our industry say could lend support to lifting seasonal limits on the sale of E15 (15 percent ethanol) fuel and have extremely significant effects for the ethanol market. 

The proposed rule also includes a system allowing electric vehicle manufacturers to register with the EPA and generate credits based on electric Renewable Identification Numbers for power produced from qualifying renewable biomass, including biogas from methane digesters. This policy would align with the White House’s goals to boost electric vehicle use, while concurrently promoting the use of alternative fuels.

As developers of our country’s first advanced sugarcane ethanol biorefinery, biomethane and bioelectric generating facility, we applaud the move by this Administration to provide consumers with more options while diversifying our nation’s energy mix. Approved and permitted for construction in California’s Imperial Valley near Brawley, the Sugar Valley Energy (SVE) campus reflects a commitment to both our country’s energy security as well as our region’s great legacy as an agricultural power.  

Once operational, SVE will produce 71 million gallons of ultra low-carbon sugarcane ethanol and 760 million cubic feet of pipeline-grade biogas, and provide a 42.9 MW bioelectric generation facility for the region. Through its development and construction, SVE will generate more than $1 Billion in economic activity and support more than 15,000 jobs in the Southern California region. 

The policy history leading to this point is a bi-partisan one, starting with the 2007 Energy Independence and Security Act signed into law by then-President George W. Bush. In addition to the Renewable Fuel Standard, the law enacted Corporate Average Fuel Economy Standards and appliance/lighting efficiency standards.  Stated goals included moving the United States toward greater energy independence and security; increasing production of clean renewable fuels, increasing the efficiency of products and buildings, and improving vehicle fuel economy. The sweeping act also promoted research on greenhouse gas capture and storage options and deployment thereof. 

More recently the Inflation Reduction Act (IRA) of 2022 heralded the single largest investment in climate and energy in American history.  Taking earlier set policy goals further, the IRA would enable America to help tackle the climate crisis, advance environmental justice, secure America’s position as a world leader in domestic clean energy manufacturing, and put the United States on a pathway to achieving the current Administration’s climate goals, including a net-zero economy by 2050.

The latest proposal for the FY2022 Budget Reconciliation bill includes investing approximately $369 billion in Energy Security and Climate Change programs to lower energy costs, increase cleaner fuel production, and reduce carbon emissions by roughly 40 percent by 2030.  The agreement calls for comprehensive permitting reform legislation to be passed before the end of the fiscal year, which is seen as essential to unlocking domestic energy and transmission projects that would lower costs and help meet emissions goals.

For those of us in the industry, this is extraordinarily welcome news. SVE has been in the pre-development stage for nearly a decade and the project has significant momentum as we work to finalize our construction financing. Those in state and federal regulatory roles should also welcome calls for permitting reform, recognizing the significant matters at stake for projects that, unlike SVE, are not yet shovel-ready.

As collective stakeholders of our energy security and environmental future, perhaps the last frontier of policy opportunity we must look to are the markets and devising financial instruments to provide the economic incentives to get more of these critical projects funded and constructed. A successful incentive formula will ensure that worthy projects with proven technology will move forward without delay in order to contribute to our country’s policy goals.  

“Green” bonds are extremely useful for environmental projects. They are an attractive option not just for the investors but for issuers as well. The demand for such bonds is continuously growing. According to the Climate & Development Knowledge Network, the demand for these bonds is at least $12 trillion. 

But financial regulators and credit rating agencies must come up with a more conducive environment for Green bonds, including establishment of benchmarking, proper rating guidelines, and acceptable standards.  For Green bonds to fulfill their promise, collaborative effort is needed to bring more institutional capital to the table.  

As we give thanks during the Holidays, we pledge to work with all interested parties toward that goal.

David Rubenstein is President and Chief Executive Officer of California Ethanol + Power, a development company that intends to develop, construct, operate and own numerous facilities that will convert locally grown sugarcane into Essential Ethanol sustainable, renewable, and extremely low carbon transportation fuel that will assist California in meeting its groundbreaking AB32 objectives.