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Multiple problems with bioenergy program

Hydrocarbon Engineering,

A report released by the US DOE Office of the Inspection General (OIG) on 12th September, determined that the agency has failed to demonstrate the commercial viability of integrated biorefineries as required under the Energy Policy Act of 2005 and the Energy Independence Act of 2007.

The report says that as of March 2013 the DOE’s Bioenergy Technologies Office had spent US$ 603 million of its obligated US$ 929 million. Of the 29 projects that were awarded funding under the bioenergy program, the Department could demonstrate the successful operation of just three biorefineries, none of which were commercial scale. Also noted was the Department’s failure to meet its goal of the production of 100 million gallons of advanced biofuels annually by 2014, not altogether surprising since more than half of the projects slated to help meet the goal were terminated.

Comments from Drevna

AFPM President Charles T. Drevna said, ‘this report is yet more evidence of how government policies that pick winners and losers in the marketplace end up in colossal failure. It is just the latest in a slew of examples highlighting how flawed energy policies based on subsidies and mandates, rather than markets and entrepreneurship, are detrimental to American consumers and the economy.’

Key findings

  • The Energy Policy Act mandate to demonstrate the commercial application of integrated biorefineries had not been met and the Department was not on target to meet its biofuels production capacity goal.
  • The Department had not successfully achieved commercial scale operations even though the Funding Opportunity Announcements issued in 2006 and 2007 indicated that the proposed projects should be operational at the commercial scale within 3 – 4 years.
  • The 2009 FOA indicated proposed demonstration projects would be operational as soon as possible after award and proceed rapidly to commercial scale operation. In fact, 6 of the 15 (40%) demonstration scale and commercial scale projects selected from the FOAs were mutually terminated by the Department and the recipients after expending more than US$ 75 million on Government funds, including one recipient that had spend US$ 44 million before losing its primary investor.

Adapted from a press release by Claira Lloyd.


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