Infrastructure: The Sleeping Giant
A new study highlights a “sleeping giant” for biofuels around the world: infrastructure. According to the Biofuels Infrastructure Task Force, convened by the National Commission on Energy Policy (NCEP), which examined the infrastructure implications of the U.S. RFS, implementation of the new standard will stress existing infrastructure. The task force notes that new investments will be required at every step in the distribution chain and current public incentives and subsidies should be refocused to include a greater emphasis on biofuels transport, refueling infrastructure, and related vehicle technologies. Loan guarantees or tax credits could be effective ways to support needed infrastructure investments.
The task force suggests that while U.S. biofuels policy has emphasized production and blending incentives, going forward such incentives might need to include infrastructure. Couldn’t agree more! Infrastructure has been a major factor delaying implementation of biofuels programs in a number of countries around the world, most recently, Jamaica. The issue is more critical for developing countries.
Another key recommendation concerns market confidence. The task force notes, “Market confidence in the government’s commitment to the RFS is a prerequisite for timely private large-scale biofuels investments.” Governments absolutely have to provide certainty to market players by establishing a long-term regulatory pathway (the rules of the game) for biofuels implementation. That has not been experienced in the U.S. with the RFS which has been revised twice by Congress and the proposed rulemaking to implement the latest version stalled within U.S. EPA. The uncertainty created has no doubt impacted the biofuels markets here.
Tags: Biodiesel, biofuels, Ethanol, Infrastructure, renewable fuels standard, RFS
